Forge and Radical Transparency

For any of you who haven't been following the story, FORGE is said to be a model for the future of philanthropy in two key respects. One is the nature of its work in Africa. According to one consultant who studied FORGE in relation to other development organizations, FORGE is a "pathfinder"--unlike (allegedly) traditional NGOs and governmental organizations, Kjerstin has created a unique and unparalleled decision to "shift the paradigm from structuring refugee camps as 'warehouses of pity' to treating them as opportunities for education, job training and other forms of development." Her decision to pay refugees for their work as opposed to using them as volunteers may have created a financial shortfall, but it is also (allegedly) a more sustainable innovation that holds the promise of breaking the cycle of despair that other charitable projects only serve to perpetuate.

Perhaps more importantly, FORGE is said to be an innovator in its commitment to "radical transparency." When Kjerstin disclosed her organization's financial troubles on Social Edge, her FORGE blog became "The Most Important Nonprofit Blog" for taking "the risk to be transparent." This decision had clear benefits--the consultant mentioned above offered his assistance pro bono, while Sean and others in his network offered substantial financial support. This, Kjerstin and others conclude, is proof that Kjerstin's blog provides an example of how "radical transparency" can help a charity increase trust and thereby attract needed support.

Like I said in my EULA, if this is your take on things and you want to support FORGE, go for it. Submitted for your approval, here are a few additional thoughts:

• There are any number of experts in international development who would disagree with the claim that FORGE is innovative in promoting self-sufficiency through education, vocational training and paid work.  NGOs and government agencies have been doing this for refugees literally around the globe for decades. The assertion that "no other entity . . . is pursuing this paradigm" is charitably an overstatement, and it could be seen as an insult to generations of aid workers who have struggled to find ways to help refugees advance. When an NGO chooses to rely on volunteers or providing donated goods, that's not necessarily a sign of a hidebound commitment to maintaining "warehouses of pity"--rather, as is all too often the case, it may be the most viable strategic option in the face of systemic corruption, hostile attacks, limited resources, bureaucratic intransigence or legal restrictions on employment.
  
  
• More generally, the contrast between palliative relief versus systemic change was around long before social enterprise supposedly discovered it. The trope should be familiar to anyone who has studied the history of philanthropy since the Industrial Revolution, when "scientific" charity rooted in the dynamics of social systems distinguished itself from churches and charities that supposedly treated the symptoms of poverty with no regard for a cure.
  
  
• I mention the above not as reasons for withholding support from FORGE, but rather, as resources for improving it. Social enterprise does itself no favors by depicting everything it does as disruptive innovation. What tends to happen when you look past other examples is you deprive yourself of the insight that can be gained by studying their experience--a form of operational blindness that in turn leads to repeating old mistakes.
  

• Although FORGE received generous assistance in response to a fundraising appeal that described its problems, this is not necessarily a guarantee of success. As more charities mimic this behavior, we can expect it to become less effective--the distinctiveness of the signal will inevitably fade, and people asking for money while blogging their problems will seem routine to a fault.
    
• An instructive experience in this regard is the history of what is variably called cyberbegging or blograising, an Internet meme that may have indirectly shaped Kjerstin's decision to raise funds by blogging about FORGE's financial shortfall. Kjerstin's blog is analogous to sites inspired by SaveKaryn.com, generally regarded as the first Web page in which a person tied fundraising to personal revelation and a specific goal--specifically in that case, a woman mired in credit card debt confessed her faults, promised to change and asked visitors to pay off her bills. The site garnered considerable international attention as an example of how new media enabled people to solve their financial problems by posting the details on the web, but as her imitators soon discovered, the novelty quickly wore off. Pay-my-debt websites got pennies on the dollar, if anything. Blog tip jar buttons have been about as successful.
  
  
• Potentially more problematic, once the novelty of a new medium wanes, stigma psychology tends to return--faults become something from which we are once again averse, with the result that more money will flow to organizations that seem more stable and successful.
  
  
• Blograising has subsequently evolved in ways that Forge unsuccessfully tried to copy in its revamped online donation program, which illustrates once again that successful models are not necessarily replicable. Prosper, Donors Choose and Kiva are examples of organizations that have succeeded by creating hubs for personalized support, but one key difference is that these organizations are aggregators for an array of discrete projects or people needing assistance, not a single organization seeking support for its own work. From the perspective of the psychology of altruism, that matters.
  
  
• Moreover, online support networks tend to exhibit scale-free clustering--in other words, a few organizations will get most of the money. Claims made for the so-called long tail misapprehend crucial aspects of scale-free aggregation, as illustrated by recent research. Just as copying Kiva's website did not enable FORGE to copy Kiva's success, an organization that expects "radical transparency" to generate the same amount of support as it did for FORGE will likely be disappointed. The rich will once again get richer, while the organizations that turned toward what they thought was the future of fundraising will wonder what they did wrong.
  
  
• In this regard, charities should also be careful with the lessons they draw from the initial success of fundraising on new media. TV telethons, the 'tronics revolution, the dot-com boom--for reasons I'll chat about more elsewhere, we have a natural proclivity for seeing new technology as money-making machines. Amplifying this is the all-too-human proclivity for confirmation bias--the tendency to test our hypotheses in ways that are likely to confirm them. What this tends to mean in practice is that when we see something we would like to see, we try to make it work and then cite its success as proof that the model is replicable. However, once the practice goes to scale support-for-the-sake-of-supporting tends to be unsustainable, leading the system to trend down to a far lower (and more normal) equilibrium.
  
  
• This pattern has applications far beyond copying Kiva, Donors Choose or online tip jars. Right now we see a flood of people--rightly and admirably--trying to make Facebook and Twitter succeed as fundraising tools. Some projects have done well, and others no doubt will. However, a not insubstantial proportion of the fundraising there now reflects more than just support for the individual charities--it flows from a desire to see online social networking thrive. Again, this isn't in itself a bad thing--we just have to factor it into our analyses and predictions.
  
  
• Social entrepreneurs should generally be cautious in idealizing securities regulation or tax reporting as models of transparency for charity. This isn't the place to go into a long disquisition why, but speaking as someone who taught both advanced taxation and securities law before becoming a full-time professor in charity, I can assure you that these systems are rife with long acknowledged problems.
  
  
• Is this to say that charities should not be transparent? No, not at all. Rather, I merely want to note that the issue is far more complex than it might seem. Transparency can be expensive, time-consuming and, yes, embarrassing. It can also degrade trust, destroy careers, drive away support and even in certain contexts be a violation of law or professional ethics.
  

There's a lot more to be said, but this blog is turning into a book and there's much more I have to do today. If I had to point to a single takeaway, it would be a point that is a recurring theme in my work--the importance of blending adaptive change with a deep sense of history and human complexity. Barack Obama's observation re the work of Reinhold Niebuhr captures where I'm coming from quite nicely:

[Niebuhr] is one of my favorite philosophers. I take away the compelling idea that there's serious evil in the world, and hardship and pain. And we should be humble and modest in our belief we can eliminate those things. But we shouldn't use that as an excuse for cynicism and inaction. I take away . . . the sense we have to make these efforts knowing they are hard.