Are corporations going to save America?

With the recent Executive Order banning entry of people from seven Middle Eastern countries, the nation is in uproar. This order also includes refugees, who were fleeing violence and oppression in Syria, among other countries.

The fact that several companies such as Lyft and Starbucks have stepped up and spoken out against this order is heart-warming. While Lyft donated a million dollars to ACLU, Starbucks has announced that it will hire 10,000 refugees over the next five years, globally. Others such as Uber, have stood by the government’s decision – either by inaction or by remaining silent. And for this, many of their customers are punishing them.

What does this mean, fundamentally? At the surface level, it looks like a bunch of corporations standing up to the President of the US.

At a deeper level it could mean that even the President of the US cannot stop globalization. It also means that corporations are interested in keeping diversity intact, especially in a country such as the US, which was built by immigrants and refugees.

What does this signal for the future of Corporate Social Responsibility? We will have to wait and watch, as this could mean a new era of social justice issues taking forefront, rather than other forms of CSR activities being pursued.

At least for now, this is a welcome sign that some of the biggest and most influential firms will not stand by when the fundamental values of their business are threatened.  They may at least contribute to the ‘saving of America’ from forces that want to make it exclusive, mean and small.

How to measure what matters : Nonprofit management 101

The nonprofit industry is obsessed with one thing : measurement. For those who do research or are involved in actual program delivery in the nonprofit sector, this desire to ‘measure spoons’ as Alnoor Ebrahim, a Harvard University professor calls it, can translate into a variety of things. There are a great many metrics that are often considered, when evaluating if a nonprofit is doing its job. For instance, people ask if the proportion of money spent on programs versus program administration (overheads) is ‘reasonable’. There are industry norms, suggesting that if an organization spends ‘too much’ then it is wasting people’s money. We base many of these arguments on the fact that they are the ‘rational’ thing to do. In a world, where philanthropy i.e., scientific way of doing charity has overtaken all other forms, this call for rationality and scientific ways of measuring this is but natural. But the really rational or ‘substantively rational’ question should be: what should we measure. And why? What impact does this have, in the long term.

Max Weber was one of the more prominent thinkers who write largely about rationality and how it is shaping our world. This short paper offers an in-depth discussion of the different types of rationalities that Weber expounded, upon. To summarize it, he posited there being four different types of rationalities: practical, theoretical, substantive and formal.

The ‘disenchantment’ of the world that leads to greater ‘rationalities’ of the formal, practical and theoretical type are evident in the field of philanthropy, as well. By this, I mean, there is a move away from ‘feeling’ or ‘reasoning based on an other-worldly’ sense of why we do charity or philanthropy. There is a growing sense that an act is justified or carried out towards an end. As Kalberg (1980) points out, the four types of social actions: affectual, traditional, value- rational, and means-end rational action are the core traits of ‘human’ actions and are outside of historical man.

Substantitive rationality ‘directly orders action into pattern.’ In seeking this form of rationality, one asks, not “what good is there at the end of the action” but rather, “should one even carry this out” and “what good will come out of this action,” in other words, this form of thinking is based on an ethical disposition of what is right and wrong.

Coming back to our initial discussion, if one were to use a substantive rational dispositions, one might : what is being measured and why? Does what we measure matter? And if so, how?

Ebrahim warns us in his piece Let’s be realistic about measuring impact, that “ It is crucial to identify when it makes sense to measure impacts and when it might be best to stick with outputs — especially when an organization’s control over results is limited, and causality remains poorly understood.”He suggests that simply repeating the mantra that measurement matters won’t get us there. There needs to be a long-term commitment to research and collaboration.

 

As Dan Pallotta argues in his book The Uncharitable that how we measure overheads is problematic. He gives the example of two soup kitchens: Kitchen A and Kitchen B. Assuming that Kitchen A spends only 10% of their revenues on overheads and Kitchen B spends about 30%. If this were all one knew, then one would judge Kitchen B harshly, saying they are producing a lot of waste. However, if one discovers that Kitchen A offers very bad quality soup, in poor conditions, while Kitchen B produces very high quality soup, at a great environment, then our perception of the services may change. This is a classic example of using substantive rationality, in making decisions.

There is a strong argument to be made for measuring only a few things, but asking more hard-nosed questions that get to the heart of why we are measuring a thing and at what point in time of the project life-cycle. Not to do so may actually lead to bad and hasty decision making.