The limit of objectivity

The new era of philanthropy is driven by objectivity. For the modern poverty interventionist and philanthropic investor, we want proof our interventions create real, measurable social impact. Indeed, the shift in language away from donor in favor of investor is emblematic of a collective desire for objectivity.

Despite the benefits of increasing objectivity in a sector that has historically been burdened by anecdotes, objectivity has its limits. Sean Stannard-Stockton wrote a post on his Tactical Philanthropy blog about the Rise of Issue-Agnostic Philanthropy. Issue-agnostic investing is where a funder invests in agencies where she will have the greatest impact, irrespective of philanthropic focus.

I’m all for outcomes-oriented social investing. A focus on outcomes and social impact not only helps move funds toward organizations implementing proven interventions, it also incentivizes organizations to objectively evaluate their own work. To that end, I fully support agency-agnostic investing, where a funder invests in the most effective organization in a particular region that focuses on a specific issue.

But the idea of issue-agnostic philanthropy illustrates the true limit of objectivity. The decision to give originates from an inherently subjective sense of social responsibility. Taken to its logical extreme of truly being agnostic, how would one even decide what investments are philanthropic? If an investor’s single goal was impact magnitute, that investor would probably be better served investing in a massive for-profit than any charitable organization.

In fact, the idea of issue-agnostic philanthropy could create a dangerous incentive in the social sector. If all funders focused on was big impact regardless of focus area, funders would drive funds away from harder to solve problems, like chronic homelessness, into more superficial yet easier to impact causes.

Deciding what focus area to invest in is the most important decision a social investor makes. That decision is the one where the investor decides what change she wants to see in the world. I can see how objectivity is valuable at the point of selecting agencies to implement one’s social vision, but how could the social vision itself ever be objectively chosen?

How can one honestly decide between investing in the environment versus poverty, objectively? We suck at comparing the impact of two anti-poverty programs, how can we possibly claim to be able to compare the impact of a particular poverty intervention against the social value of planting a tree? It’s an impossible premise.

While our sector has benefited from drawing some inspiration from financial investing, social investing is still a very different, unique practice. In for-profit investing an investor can more easily be industry-agnostic because to the financial investor, monetary gain, not industry progress, is the driver of the investment. But in the social sector, the impact we seek is issue-specific, making it impossible for philanthropic investments to be issue-agnostic.

Compensation for those who do the real work

We have covered a bit of the back and forth between Ken Burger from Charity Navigator and Dan Pallotta regarding executive compensation on this site. I even offered my own two cents on the topic back in April.

In his reply to Dan Pallotta, Ken Burger writes that there is a compensation issue greater than that of what we are paying the people at the top of the ticket. Ken argues the real compensation crisis we face is the low wages front-line social sector staff receive. He writes “…Boards and CEO’s should focus on retaining, promoting and rewarding those who perform and deliver vital direct services to people in need.”

I had a customer a little while back who was the executive director of a mid-sized social service agency. She would often complain that her employees were “idiots”. And she was right, they were (I didn’t think much of her either however).

The executive director’s agency was experiencing intense growth. The board was presumably happy with the multitude of new grants the agency was securing, and its expanding service repertoire.

The agency had hit a point where it needed to increase the quality of its human capital, not the size of its staff. But with each new grant came at least one new hire.

I wondered why the executive director kept hiring new people at relatively low wages. It seemed to me the organization’s money would be better spent hiring fewer people who could command higher salaries and add more value.

However, the grants the agency was securing left the executive director no room to negotiate employee salaries. Each new grant funded a new program, and with it a new position. Therefore, while the agency was awash in grant monies, it had no significant discretionary budget with which to reward higher performance.

The agency could not hire fewer people at higher wages even if it wanted to.

This is a serious issue for the social sector. We need to rethink the way we structure grant requirements. Executive management should have the freedom to use their agencies’ funds to compete for front-line talent. In order to do that, funders need to loosen their grip on guiding exactly how funds are used.

The overburden of funding restrictions renders moot the argument over executive compensation. The intensive regulations and particular stipulations of how grant monies can be used make the difference between Steve Jobs and a puppy with a fedora negligible. If executive management does not have the discretion to do what is in the best interest of its agency with the money it has, then it doesn’t really matter who runs our non-profits.

The social sector network

Last Friday, the movie The Social Network, a semi-fictional account of Facebook’s founding and the drama and backbiting that followed, debuted to strong reviews. Social networking is a big part of a lot of people’s lives, and has become a part of the social sector.

Non-profits try to raise money online through applications like Causes, and philanthropy folks use social networks to connect with one another and share ideas (many of you are likely reading this post because you saw it pop up in one of your social streams).

We have covered on this site some of the pitfalls that social media and emerging technologies present in the social sector when used in ridiculous ways. By and large though, I do believe social networking has been a benefit to those of us in the social sector. But what about the recipients of it and the issues we care about?

Much has been made of the digital divide, the technological schism between the privileged, educated, wired elite and people struggling to get by. If the social sector exists to address human issues that impact those with the least amongst us, and those people are not online, then what the heck are we (me) doing Tweeting and posting on Facebook throughout our days?

Bill Easterly, a self-anointed king of development common sense seems to do nothing but post to his blog and send unanswered shots at Jeffery Sachs. Is this God’s work?

Don’t get me wrong, I am a consumer of Easterly’s venom. But if the point of the social sector is to solve social problems, shouldn’t we focus on connecting to people in need and affecting real issues? Does social networking have any real ability to create social impact?

Malcom Gladwell in a recent piece in The New Yorker magazine argues that it doesn’t. Gladwell writes:

Facebook activism succeeds not by motivating people to make a real sacrifice but by motivating them to do the things that people do when they are not motivated enough to make a real sacrifice.

However, Gladwell’s argument ignores a critical counter example David Kilkpatrick writes about in his book The Facebook Effect. Kilkpatrick recounts the story of how a Colombian activist organized mass protests against the violent brutality of the guerrilla organization known as the FARC, organizing massive protests in cities across the world.

But the FARC example only demonstrates that people connected online can effectively advocate for themselves. We in the social sector focus on empowering others. So while I don’t buy Gladwell’s argument that social networking categorically cannot effect social change, I think there are serious limitations, especially when the people we aim to serve are absent from online social networks.

My friend Mark Horvath, popularized on Twitter as @hardlynormal is trying to push the bounds of social networking’s reach by bringing homeless people online to Twitter and Facebook. Mark won a Pepsi Refresh challenge to create a website called We Are Visible, which teaches unhoused persons how to get online, and aims to connect them with virtual case managers.

We Are Visible is a new project, so its success remains to be seen, but I like the general idea behind it of breaking down the digital divide. Regardless, the reality is that much of our work has to be offline, since the people we serve are by definition more isolated than ourselves.

Social networking has been a great benefit to the social sector, and to me as a professional. It has given me the opportunity to learn from and interact with practitioners that would have been inaccessible to me otherwise. This in turn has made the work I do in the communities I serve better, resulting in a real-world, offline impact.

Social networking is a tool, it is not an end all to social harms. We can turn Twitter (RED) for a day, and chalk it up to raising awareness. But such efforts ring hollow to people in need, unaware of our good intentions, and unaffected by inaction.

Social media for social change does make sense to me. It makes sense as a facilitator of ideas. Whether or not it can facilitate more is yet to be seen. Until then, Twitter will remain an important part of my professional arsenal, and the Facebook movie will hands down remain my favorite film of 2010.