Yes. That’s a corn field… but, you could call it a dugout for our purposes today. Daniel Stid, of Bridgespan Group, takes this Field of Dreams cue to ask a few tough questions to you, and to us at Markets For Good. We’re always excited to dig in to real discussion and debate to sort through conversation for ways forward. There are a lot of ideas buzzing about data that look mighty good on whiteboards and sound great spoken from your wireless mic. And, beyond that (we’re not pessimists), there’s a lot of actual “doing” in the sector as organizations are finding ways to make data work for them and their missions. But will these ideas and work change people’s lives? That’s why we’re here, not “ultimately,” but at the outset. Daniel Stid asks what happens after we build this upgraded information infrastructure to clue us in on how to think – and how to LEAD – while we work to that end.
In its initial concept paper, Markets for Good has put forward an inspiring vision, one of “a social sector powered by information, where capital flows efficiently to the organizations that are having the greatest impact, programs and interventions are more effective and responsive, beneficiaries have a voice, and there is a dynamic culture of continuous learning, development, and innovation.”
Markets for Good proposes that the key to realizing this vision is building out the sector’s information infrastructure, i.e., “the architecture that can help to connect, organize, and structure information so that it can be supplied and used more easily.”
As we undertake this construction, however, let’s ask ourselves whether, if we build it, the putative buyers and sellers in the envisioned marketplace—the philanthropists and nonprofits spending and soliciting money within it—will use it as planned. In short, will better information change their behavior?
A premise of Markets for Good is that we don’t really have such markets yet because the available data is “limited, unstructured, and unused.” But as Friedrich A. Hayek noted in “The Use of Knowledge in Society,” it is precisely in the dim light of these circumstances that markets serve as the best means for allocating scarce resources and in which they flourish. The social sector’s challenge may not be to establish market dynamics, but to temper those already at work.
On Giving and Data
Consider the motives and behaviors of individual philanthropists in this market. Indeed, take out your tax return or checkbook and assess what prompted your own contributions in 2012. Was evidence of impact always the driving concern? Speaking for our household, the other motives included maintaining ties to alma maters, fulfilling religious obligations (and thereby avoiding guilt!), supporting leaders we admire, and giving to causes at the request of friends as they have done in response to our requests. Was your charitable giving prompted by a similar range of motives? How much of it would be influenced by better evidence of impact?
What about the presumably more rational grant-making of institutional philanthropy? I’d like to think that foundations recognize the importance of evidence and thus support promising grantees in establishing the data systems, infrastructure, and evaluations they need to assemble it. I’d also like to think that foundations relentlessly seek out evidence to test their own theories of change and refine them when they encounter countervailing data. In my experience, though, foundations that behave in this way are exceptional relative to a somewhat dismal norm.
Defending Our Positions
The motives and behaviors of nonprofits seeking funding may be just as impervious to better information as those providing it, albeit for different reasons. We shouldn’t be surprised when nonprofits seek to share information about their work in ways that maximize the contributions they receive. Nor should we be surprised when funders’ external demands for evidence of impact leads nonprofits to assume a defensive stance in which they seek to present the best possible case for their performance. Alas, this defensiveness too often prevents organizations from doing the deeper work of measurement, reflection, and learning that could actually improve their results. Will the drive for more transparency pull nonprofits out of their defensive positions, or will it push them to hunker down even more?
In this same light, we could question whether nonprofits seeking funding will readily conform to more standardized definitions of their work and outcomes as envisioned by Markets for Good. More robust markets tend to accelerate the quest for defensible positioning and breed more differentiation, not less—as anyone who has stood bewildered in front of drug store shelves trying to choose among myriad brands, prices, sizes, and features of pain reliever or tooth paste can attest.
The Way Forward
All this is not to say that we shouldn’t improve the social sector’s information infrastructure. As we do so, though, let’s bear in mind that the information produced by it will be used by individuals and institutions driven by a wide range of motives, of which maximizing social impact is but one (and not always preeminent). Individuals and institutions will adapt and use this improved information (or not) to suit their own purposes. If we want more money to go to better solutions and continuous improvement in social impact, we will also continue to need sustained leadership and moral suasion geared toward these ends.