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Software Bounty: $250 for blackberry email tweak
Wanted: a work-for-hire (so it can be released under a CC license for non-commercial use, exact license TBD) software "widget" that, at a minimum, works on a GSM Blackberry Pearl (AT&T) using Hosted BES from Intermedia.
GiveWell fiasco -- what's different? Well, the time to start an organization related to "charity ratings" in any way: not right now. GiveWell, mentioned in an earlier post, has admitted to astroturfing charges. (Astroturfing is when you pretend that there's a grassroots supporters of your business or cause. Basically, one of the founders asked questions under a fake name and then answered them under a different name.) What a mess, and what a shame.
Perhaps this episode highlights the key distinction between GiveWell's approach: rather than think that we know better than the nonprofits themselves how to solve the problems they're working at every day, we believe that unlocking and sharing their knowledge, and revealing that to donors in a coherent manner, will reveal the better ways to solve the problems. What does that actually mean? It means that while we think we know better than most how to present and compare information, we're not likely to try to substitute our judgment for someone else's -- which makes the GiveWell activity much less likely for us just in terms of underlying incentive. In other words, when you think you're smarter than other people, you start wanting to make decisions for them. Our approach is founded in the most historical American notions of freedom: the freedom for everyone to make up her own mind. Also, we have specifically decided to preserve the strategic element in our comparisons by only discussing & comparing organizations in each strategy within a sector.
By presenting the information we receive from organizations in a standard format, we hope to work from the other side of the river from WhatWorks.org, building a bridge that should eventually join the two projects. While they are creating standards and forms, an idea we support, we recognize that harnessing the wisdom of the organizations by the organizations has immediate potential for impact. In other words, isn't a nonprofit more likely to adopt a strategy knowing it has worked elsewhere than through a standard or form that describes or implements that same strategy? It shouldn't be that way, but it is.
Operational excellence is evolutionary -- it is refined by recurring methodical review of what went well, what went wrong, and what should be changed as a result. Our goal is to capture information organizations in different stages of those reviews, collate it into a cohent body of work, and share it openly, allowing it to be review and commented on by the community. Why should there be a community approach rather than a top-downish (and we don't mean that in a perjorative way) approach like Whatworks.org? The right answer is that the system needs both. We've always assumed that after the collection of "practices" in a sector, we would actually draw out the "best practices" identified by the community, create a workable plan primarily by ourselves, and then expose that plan to the community for further comment.
There is a lot of discussion about evaluations and their cost. That problem is one triggered by the top-down approach. We're saying something similar and something different. The first point is that we absolutely agree that evaluations have to take place or we all risk wasting an awful lot of time. The second is that it makes sense, from an efficiency perspective, to see what organizations are doing themselves to evaluate their efficiency and effectiveness. That much the GiveWell folks have right: the proxies often touted are primarily useful for identifying waste, not for identifying true program impact. If that weren't true, then why would the Robin Hood Foundation expend the time and money to create an evaluation system? Wouldn't they just use the financial data umbrella sites? The fact that those smart people with money to spend, just like similar programs at other large foundations, want to spend it wisely. Some of them, more than one, have decided to evaluate impact in some way. We want to support that by making it easier, rather than harder, for nonprofits to engage donors in those evaluation discussion.
Measuring Nonprofit Performance - other approaches In refining our vision for the Wolfhound Fund, we've come across different ideas that are relevant to our plans but don't capture the entire idea. In this post, we'll discuss some other approaches, but note that we will not go over what we've already discussed, namely Robin Hood.
The NYT recently published an article on GiveWell, a new organization that seeks to collect information about measurable results obtained by charities and uses that information to rank charities it has evaluated. They are incredibly open in their approach and vow to make the information, the evaluations, and their methodology available to the public. We think this is absolutely the right approach. The most disturbing thing they reveal is that many of the larger foundations they contacted would not disclose their rationales, decision-making process, or grant recipient information to the GiveWell parent foundation. We are shocked; we have been hoping to, in the course of developing our metrics in an open platform that we would be supported by foundations who have presumably spent a lot of time evaluating various programs. We have not yet contacted these organizations to "seed" the discussions with existing metrics, but it's certainly on the list.
The WSJ recently published an article on due diligence on donations. They note the typical first step of evaluating along standard financial measures, using the excellent resources that make those results, and the Form 990s from which they are derived, available. Notably, they identify GiveWell as one of the new organizations helping evaluate charities in a different way. The article mentions several other groups that take a similar approach to evaluating measured results. One theme is that many organizations do not attempt to research and measure their results; this statement does not surprise us given our experience with organizations.
First, for-profit businesses seldom actually evaluate whether they are creating value, and the myriad financial publications seem almost unwilling to identify those companies that are regularly destroying value -- not just those that are actually losing money or not producing cash, but those that are underperforming by not earning the cost of capital. This notion led us to believe philosophically that many nonprofits were not instituting similar rigor in their operations.
Second, our personal experience in forming nonprofits and advising founders indicates that often, the same fervent belief and desire to help that sparks the impulse to start an organization and bear those early burdens also negates the natural skeptic within those same founders; they start organizations because they believe. This mindset isn't to be ridiculed; it's to be understood. All organizations, whether for-profit, nonprofit, family, or recreational, start with some leap of faith, however small or large. Our response and reaction to this circumstance is to rely on a liberal arts education and quote Milton: "I can not praise a fugitive or cloistered virtue;" our second response: "The unaimed arrow never misses." More melodramatic is Socrates: The unexamined life is not worth living.
WSJ also gives a sidebar mention and link to The Center for What Works. They provide a variety of benchmarking materials to nonprofits, and even provide basic education about benchmarking and how the process works. They give a great introduction for their audience, who typically doesn't come from a big-firm corporate culture where benchmarking, the development of Key Performance Indicators, and a dashboard/balanced scorecard/3x5x15 report to track it all are more common. While WhatWorks has benchmarking information, it does not
Their initial work on developing a standard taxonomy (PDF) for various types of outcomes is exactly the type of thing we want to create. Building on this standardization effort by adding domain/sector-specific metrics is one way of visualizing the Wolfhound Fund's approach. In addition, they've taken this general taxonomy and actually applied it to 14 specific program areas, revealed at this page. If anything, these magnificent efforts clearly show the way and exemplify the type of standardized tools we believe should be produced for, and more importantly by, nonprofits and the extended community of stakeholders, including donors and program recipients.
What separates the Wolfhound Fund from these organizations who have already started collecting research and making evaluations? Three things: first, we come from a strong background combining military leadership with traditional financial analysis, which has made us experts in the tools, language, and very idea of converting strategy into action through leadership, training, execution, and management; second, we believe that the organizations that are measuring their results are the best place to start the discussion -- we hope to build on the thousands of internal discussions in dozens of organizations who have already addressed these questions rather than seek to substitute our judgment for theirs; third, we aim to collect this information from a broader cross-section of the charitable universe so that donors interested in a sector, such as homelessness, can evaluate charities with different strategies that are not directly comparable. That second order decision, of choosing a strategy to combat a problem, is not the primary inflection point the Wolfhound Fund seeks to influence but one that we hope to illuminate just the same.
Fundamentally, we believe that an open-source, continuous improvement model is the best way to create self-correcting, self-improving, and self-proving tools for creating positive change. This is a small part of the overall problem, and we in no way compare ourselves, sitting alongside board members and donors, as remotely as committed as those who actually run homeless shelters, who show up to hearings for protective orders, who perform surgeries in developing countries, who counsel and guide troubled youth. Our goal is to help the outsiders find those people who do these jobs better than everyone else and who have built programs to put themselves out of business.
Introducing the Wolfhound Fund
To make as much of an impact as possible in the shortest time, we would like to launch using a wiki format, which would allow stakeholders to provide information on metrics and measurements as well as provide a forum for discussion as the information is reviewed. [As an aside, while our primary webhost finalizes its support for Mediawiki, we're looking for a fairly priced private hosting solution that will allow us to host the wiki under the wolfhoundfund.org domain and migrate it if we choose to do so; recommendations are welcomed.] We'll start scouring the universe of nonprofit resources to seed the discussions with strategy trees for the various issues as well as piecing together metrics for each strategy and disclosed measurements for nonprofits revealing such information.
We're excited about this and hope that we can help spotlight those nonprofit entrepreneurs who are changing the world for the better by wringing every benefit out of every hour and every dollar.
Gates, Buffett, and sour grapes. We recently came across this brief interview from a "political philosopher." Of course, that's not going to mix well with our nothing-but-the-fundamentals view of business and achieving goals. (We tend to leave the philosophy for the goal-setting.)
In brief, the gentleman says that Warren Buffett's generous gift to charity, rivaling the US's most revered benefactors, is broken for a couple reasons: first, we should have more foundations rather than fewer; second, the Gates Foundation will be a monopoly, which isn't good for it or for philanthropy; third, Buffett has no right to use his money for private charity unless he does better than the public, i.e., government sector.
Here are some of the other points that concern us about the article:
1. The statement that "All wealth is derived from the commonwealth" gets us in a tizzy. It brings to mind a quote from one of our well-read lawyers: "I think we fought a war over that once." The reference should be to the Declaration of Independence: "--That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed." Governments exist because we choose to give them money and power and to reasonably submit to their will. The state is the charity, not the free market.
2. The fellow also seems to misunderstand why the free market is generally considered to be a good thing by proponents. No one really cares about there being a multitude of market participants serving the marketplace. A fragmented market is no guarantee of quality. However, if firms can evolve because of competitive pressures, then multiple companies will (and ought to, in the prescriptive sense) go out of business as failures. All that's required to make this work is competitive pressure; you don't really need a plethora of firms in the market. Hint: that's why the DOJ/FTC are concerned about "market power" and not concentration. If it's easy to enter a market, competition does not have to be real to be felt and responded to. Well-run companies improve their products and services before competition can harm their businesses. Self-cannibalization is the smartest path; we recall a book title along the lines of "eat your own lunch before someone else does."
3. " Bundling software and hardware, a kind of monopoly, was a bad thing for Gates' Microsoft. That's why the government sued." We're just confused by this, which makes us wonder why someone would write it. Our understanding is that it's pretty clear that monopolies price higher in a way to maximize their benefit, to the detriment of society. This is the first time we've heard of the argument that it's a bad thing for a monopoly to be a monopoly. It's possible that this argument would make sense if you made a few assumptions, such as that the company had no other ideas about how to deploy capital and so research and development efforts languished. That begs the question of whether companies need to perpetuate their existence. Schumpeter would probably disagree that there's any inherent benefit to companies qua companies continuing to exist. That's a different question from dislocation effects that are experienced (or suffered, depending on where you stand) from creative destruction. The whole point of a monopoly might be to extract capital from society, redistribute it to stakeholders and investors and then let reinvestment take the "let a thousand flowers bloom" approach. If monopolies are efficient at turning revenue into profit, then that isn't a ridiculous idea.
4. The government sector's efficacy notwithstanding, there is a long tradition in America of doing more than the government does. For example, some people might say that the federal government should not fund an activity, such as a church. So private persons elect to do that. The next step is to recognize that some people think the government should spend more money on an activity, such as environmental protection. So private persons elect to do that. We balance the income and expenditure issues at the federal, state, and local levels through the miracle of politics (the balancing of competing interests is the essence of politics), and then people operate against that backdrop.
Now for the efficacy question: we often read about factors that seem like they are related to charitable efficacy and efficiency, but they are really stories about things that are proxies at best for those things. For example, administrative expenses as a percentage of overall expenses is a common item used to rank/evaluate charities. Clearly, money spent on administration is not available for charitable activities. However, does anyone believe that operating without administrative expenses is likely to increase actual efficacy, the securing of positive results, however measured, from the charity's activities?
The issue of separating efficacy from efficiency from proxies for those items is a question that has interested us for nearly two years now, and we are finally ready to do something about it. We are completing an article detailing the issues surrounding the problem as well as finalizing plans for the launch of a nonprofit organization to guide the creation, collection, collation, and synthesis of measures of charitable efficacy for various types of organizations. Notably, the Robin Hood Foundation (http://www.robinhood.org/index.cfm) undertook some of this type of investigation (http://www.robinhood.org/approach/metrics.cfm) to support and tune (http://www.robinhood.org/approach/results.cfm) its own grantmaking, but we believe a comprehensive approach would benefit society -- recipients of charitable activity, donors, employees, officers, and directors of charitable organizations, and indeed, those organizations that do better than others. As a society, we should want to reward those organizations that are making a difference from those that are not.
Clearly, an apples-to-apples comparison is required; it makes little sense to compare Habitat for Humanity's impact on homelessness to that of a legal aid foundation that represents the homeless from an advocacy group that drafts, comments on, and challenges legislation. While reasonable people may disagree and debate the wisdom of different allocations of funds among those various efforts, that debate is much more complicated and unlikely to be resolved by our project. What we hope to do is clarify whether "hovels for humanity" is more or less efficient at implementing the same anti-homelessness strategy as Habitat. We'll soon create a separate post to draw the parallels between our current financial analysis approach to for-profit companies and this evolving approach for analyzing non-profits. We are currently investigating wiki platforms for the initial launch of the project so we can start moving while we finalize the plan.
Feature: allows for an option-type (i.e., one time) setting to auto-BCC a single address on every email sent from the device.
Reference: When using the blackberry in a non-corporate environment, using the Blackberry Internet Service, it is possible to set an option that allows the user to BCC an address on every email. However, when we shifted to a hosted Blackberry Enterprise Server platform, that option disappeared. We want to be able to BCC ourselves automatically rather than type in the address each time. The solution could take many forms, as long as the feature is delivered without other errors. Constraints caused by the solution may be acceptable.
Labels: nonprofit, software bounty, tips
Thursday, October 02, 2008 :: posted by Rick Colosimo @ 4:31 PM
GiveWell fiasco -- what's different? Well, the time to start an organization related to "charity ratings" in any way: not right now. GiveWell, mentioned in an earlier post, has admitted to astroturfing charges. (Astroturfing is when you pretend that there's a grassroots supporters of your business or cause. Basically, one of the founders asked questions under a fake name and then answered them under a different name.) What a mess, and what a shame.
Perhaps this episode highlights the key distinction between GiveWell's approach: rather than think that we know better than the nonprofits themselves how to solve the problems they're working at every day, we believe that unlocking and sharing their knowledge, and revealing that to donors in a coherent manner, will reveal the better ways to solve the problems. What does that actually mean? It means that while we think we know better than most how to present and compare information, we're not likely to try to substitute our judgment for someone else's -- which makes the GiveWell activity much less likely for us just in terms of underlying incentive. In other words, when you think you're smarter than other people, you start wanting to make decisions for them. Our approach is founded in the most historical American notions of freedom: the freedom for everyone to make up her own mind. Also, we have specifically decided to preserve the strategic element in our comparisons by only discussing & comparing organizations in each strategy within a sector.
By presenting the information we receive from organizations in a standard format, we hope to work from the other side of the river from WhatWorks.org, building a bridge that should eventually join the two projects. While they are creating standards and forms, an idea we support, we recognize that harnessing the wisdom of the organizations by the organizations has immediate potential for impact. In other words, isn't a nonprofit more likely to adopt a strategy knowing it has worked elsewhere than through a standard or form that describes or implements that same strategy? It shouldn't be that way, but it is.
Operational excellence is evolutionary -- it is refined by recurring methodical review of what went well, what went wrong, and what should be changed as a result. Our goal is to capture information organizations in different stages of those reviews, collate it into a cohent body of work, and share it openly, allowing it to be review and commented on by the community. Why should there be a community approach rather than a top-downish (and we don't mean that in a perjorative way) approach like Whatworks.org? The right answer is that the system needs both. We've always assumed that after the collection of "practices" in a sector, we would actually draw out the "best practices" identified by the community, create a workable plan primarily by ourselves, and then expose that plan to the community for further comment.
There is a lot of discussion about evaluations and their cost. That problem is one triggered by the top-down approach. We're saying something similar and something different. The first point is that we absolutely agree that evaluations have to take place or we all risk wasting an awful lot of time. The second is that it makes sense, from an efficiency perspective, to see what organizations are doing themselves to evaluate their efficiency and effectiveness. That much the GiveWell folks have right: the proxies often touted are primarily useful for identifying waste, not for identifying true program impact. If that weren't true, then why would the Robin Hood Foundation expend the time and money to create an evaluation system? Wouldn't they just use the financial data umbrella sites? The fact that those smart people with money to spend, just like similar programs at other large foundations, want to spend it wisely. Some of them, more than one, have decided to evaluate impact in some way. We want to support that by making it easier, rather than harder, for nonprofits to engage donors in those evaluation discussion.
Labels: nonprofit
Thursday, January 03, 2008 :: posted by Rick Colosimo @ 1:13 PM
Measuring Nonprofit Performance - other approaches In refining our vision for the Wolfhound Fund, we've come across different ideas that are relevant to our plans but don't capture the entire idea. In this post, we'll discuss some other approaches, but note that we will not go over what we've already discussed, namely Robin Hood.
The NYT recently published an article on GiveWell, a new organization that seeks to collect information about measurable results obtained by charities and uses that information to rank charities it has evaluated. They are incredibly open in their approach and vow to make the information, the evaluations, and their methodology available to the public. We think this is absolutely the right approach. The most disturbing thing they reveal is that many of the larger foundations they contacted would not disclose their rationales, decision-making process, or grant recipient information to the GiveWell parent foundation. We are shocked; we have been hoping to, in the course of developing our metrics in an open platform that we would be supported by foundations who have presumably spent a lot of time evaluating various programs. We have not yet contacted these organizations to "seed" the discussions with existing metrics, but it's certainly on the list.
The WSJ recently published an article on due diligence on donations. They note the typical first step of evaluating along standard financial measures, using the excellent resources that make those results, and the Form 990s from which they are derived, available. Notably, they identify GiveWell as one of the new organizations helping evaluate charities in a different way. The article mentions several other groups that take a similar approach to evaluating measured results. One theme is that many organizations do not attempt to research and measure their results; this statement does not surprise us given our experience with organizations.
First, for-profit businesses seldom actually evaluate whether they are creating value, and the myriad financial publications seem almost unwilling to identify those companies that are regularly destroying value -- not just those that are actually losing money or not producing cash, but those that are underperforming by not earning the cost of capital. This notion led us to believe philosophically that many nonprofits were not instituting similar rigor in their operations.
Second, our personal experience in forming nonprofits and advising founders indicates that often, the same fervent belief and desire to help that sparks the impulse to start an organization and bear those early burdens also negates the natural skeptic within those same founders; they start organizations because they believe. This mindset isn't to be ridiculed; it's to be understood. All organizations, whether for-profit, nonprofit, family, or recreational, start with some leap of faith, however small or large. Our response and reaction to this circumstance is to rely on a liberal arts education and quote Milton: "I can not praise a fugitive or cloistered virtue;" our second response: "The unaimed arrow never misses." More melodramatic is Socrates: The unexamined life is not worth living.
WSJ also gives a sidebar mention and link to The Center for What Works. They provide a variety of benchmarking materials to nonprofits, and even provide basic education about benchmarking and how the process works. They give a great introduction for their audience, who typically doesn't come from a big-firm corporate culture where benchmarking, the development of Key Performance Indicators, and a dashboard/balanced scorecard/3x5x15 report to track it all are more common. While WhatWorks has benchmarking information, it does not
Their initial work on developing a standard taxonomy (PDF) for various types of outcomes is exactly the type of thing we want to create. Building on this standardization effort by adding domain/sector-specific metrics is one way of visualizing the Wolfhound Fund's approach. In addition, they've taken this general taxonomy and actually applied it to 14 specific program areas, revealed at this page. If anything, these magnificent efforts clearly show the way and exemplify the type of standardized tools we believe should be produced for, and more importantly by, nonprofits and the extended community of stakeholders, including donors and program recipients.
What separates the Wolfhound Fund from these organizations who have already started collecting research and making evaluations? Three things: first, we come from a strong background combining military leadership with traditional financial analysis, which has made us experts in the tools, language, and very idea of converting strategy into action through leadership, training, execution, and management; second, we believe that the organizations that are measuring their results are the best place to start the discussion -- we hope to build on the thousands of internal discussions in dozens of organizations who have already addressed these questions rather than seek to substitute our judgment for theirs; third, we aim to collect this information from a broader cross-section of the charitable universe so that donors interested in a sector, such as homelessness, can evaluate charities with different strategies that are not directly comparable. That second order decision, of choosing a strategy to combat a problem, is not the primary inflection point the Wolfhound Fund seeks to influence but one that we hope to illuminate just the same.
Fundamentally, we believe that an open-source, continuous improvement model is the best way to create self-correcting, self-improving, and self-proving tools for creating positive change. This is a small part of the overall problem, and we in no way compare ourselves, sitting alongside board members and donors, as remotely as committed as those who actually run homeless shelters, who show up to hearings for protective orders, who perform surgeries in developing countries, who counsel and guide troubled youth. Our goal is to help the outsiders find those people who do these jobs better than everyone else and who have built programs to put themselves out of business.
Labels: nonprofit, wolfhound fund
Tuesday, January 01, 2008 :: posted by Rick Colosimo @ 1:26 PM
Introducing the Wolfhound Fund
Michael Princi and Rick Colosimo announce the founding of The Wolfhound Fund, a nonprofit entity, whose mission is to help nonprofits and their officers and directors with increasing the returns on the social capital invested in and by the organization. This ROSC measure corresponds to the use of ROIC for for-profit entities. In general, ROSC seeks to account for all the inputs of society to an organization, from donations to volunteer time to the federal tax shield, which are transformed by the organization into outputs including services, cost of services, and operating expenses in much the same way that ROIC describes how a for-profit company increases revenue, turns invested capital into revenue through capital efficiency, and turns revenue into operating profit through operating efficiency. It is our deep experience investigating and understanding this foundation, the operating performance of traditional companies, in hundreds of examples that has led us to the realization that similar performance metrics for nonprofit organizations would greatly enhance strategic review by nonprofit boards and improve transparency for donors.
The Wolfhound Fund will oversee the collection, creation, collaboration, and refinement of metrics for effectiveness and efficiency for nonprofit organizations, allowing entities to benchmark themselves against organizations pursuing similar strategies. For example, legal aid groups that represent the homeless in government benefits litigation should not be compared, from an operational prospective, against those groups that provide typical homeless shelter benefits. While donors and organizations may debate the relative merits of pursuing different strategies, our goal is to assist the management, the officers and directors, of these organizations assess how well they are executing their chosen strategy. In our personal and professional backgrounds, we have always presented our advice thoroughly grounded in the operational world, and that's the level at which the Wolfhound Fund itself will operate.
To make as much of an impact as possible in the shortest time, we would like to launch using a wiki format, which would allow stakeholders to provide information on metrics and measurements as well as provide a forum for discussion as the information is reviewed. [As an aside, while our primary webhost finalizes its support for Mediawiki, we're looking for a fairly priced private hosting solution that will allow us to host the wiki under the wolfhoundfund.org domain and migrate it if we choose to do so; recommendations are welcomed.] We'll start scouring the universe of nonprofit resources to seed the discussions with strategy trees for the various issues as well as piecing together metrics for each strategy and disclosed measurements for nonprofits revealing such information.
We're excited about this and hope that we can help spotlight those nonprofit entrepreneurs who are changing the world for the better by wringing every benefit out of every hour and every dollar.
Labels: nonprofit, wolfhound fund
Monday, December 31, 2007 :: posted by Rick Colosimo @ 4:14 PM
Gates, Buffett, and sour grapes. We recently came across this brief interview from a "political philosopher." Of course, that's not going to mix well with our nothing-but-the-fundamentals view of business and achieving goals. (We tend to leave the philosophy for the goal-setting.)
In brief, the gentleman says that Warren Buffett's generous gift to charity, rivaling the US's most revered benefactors, is broken for a couple reasons: first, we should have more foundations rather than fewer; second, the Gates Foundation will be a monopoly, which isn't good for it or for philanthropy; third, Buffett has no right to use his money for private charity unless he does better than the public, i.e., government sector.
Here are some of the other points that concern us about the article:
1. The statement that "All wealth is derived from the commonwealth" gets us in a tizzy. It brings to mind a quote from one of our well-read lawyers: "I think we fought a war over that once." The reference should be to the Declaration of Independence: "--That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed." Governments exist because we choose to give them money and power and to reasonably submit to their will. The state is the charity, not the free market.
2. The fellow also seems to misunderstand why the free market is generally considered to be a good thing by proponents. No one really cares about there being a multitude of market participants serving the marketplace. A fragmented market is no guarantee of quality. However, if firms can evolve because of competitive pressures, then multiple companies will (and ought to, in the prescriptive sense) go out of business as failures. All that's required to make this work is competitive pressure; you don't really need a plethora of firms in the market. Hint: that's why the DOJ/FTC are concerned about "market power" and not concentration. If it's easy to enter a market, competition does not have to be real to be felt and responded to. Well-run companies improve their products and services before competition can harm their businesses. Self-cannibalization is the smartest path; we recall a book title along the lines of "eat your own lunch before someone else does."
3. " Bundling software and hardware, a kind of monopoly, was a bad thing for Gates' Microsoft. That's why the government sued." We're just confused by this, which makes us wonder why someone would write it. Our understanding is that it's pretty clear that monopolies price higher in a way to maximize their benefit, to the detriment of society. This is the first time we've heard of the argument that it's a bad thing for a monopoly to be a monopoly. It's possible that this argument would make sense if you made a few assumptions, such as that the company had no other ideas about how to deploy capital and so research and development efforts languished. That begs the question of whether companies need to perpetuate their existence. Schumpeter would probably disagree that there's any inherent benefit to companies qua companies continuing to exist. That's a different question from dislocation effects that are experienced (or suffered, depending on where you stand) from creative destruction. The whole point of a monopoly might be to extract capital from society, redistribute it to stakeholders and investors and then let reinvestment take the "let a thousand flowers bloom" approach. If monopolies are efficient at turning revenue into profit, then that isn't a ridiculous idea.
4. The government sector's efficacy notwithstanding, there is a long tradition in America of doing more than the government does. For example, some people might say that the federal government should not fund an activity, such as a church. So private persons elect to do that. The next step is to recognize that some people think the government should spend more money on an activity, such as environmental protection. So private persons elect to do that. We balance the income and expenditure issues at the federal, state, and local levels through the miracle of politics (the balancing of competing interests is the essence of politics), and then people operate against that backdrop.
Now for the efficacy question: we often read about factors that seem like they are related to charitable efficacy and efficiency, but they are really stories about things that are proxies at best for those things. For example, administrative expenses as a percentage of overall expenses is a common item used to rank/evaluate charities. Clearly, money spent on administration is not available for charitable activities. However, does anyone believe that operating without administrative expenses is likely to increase actual efficacy, the securing of positive results, however measured, from the charity's activities?
The issue of separating efficacy from efficiency from proxies for those items is a question that has interested us for nearly two years now, and we are finally ready to do something about it. We are completing an article detailing the issues surrounding the problem as well as finalizing plans for the launch of a nonprofit organization to guide the creation, collection, collation, and synthesis of measures of charitable efficacy for various types of organizations. Notably, the Robin Hood Foundation (http://www.robinhood.org/index.cfm) undertook some of this type of investigation (http://www.robinhood.org/approach/metrics.cfm) to support and tune (http://www.robinhood.org/approach/results.cfm) its own grantmaking, but we believe a comprehensive approach would benefit society -- recipients of charitable activity, donors, employees, officers, and directors of charitable organizations, and indeed, those organizations that do better than others. As a society, we should want to reward those organizations that are making a difference from those that are not.
Clearly, an apples-to-apples comparison is required; it makes little sense to compare Habitat for Humanity's impact on homelessness to that of a legal aid foundation that represents the homeless from an advocacy group that drafts, comments on, and challenges legislation. While reasonable people may disagree and debate the wisdom of different allocations of funds among those various efforts, that debate is much more complicated and unlikely to be resolved by our project. What we hope to do is clarify whether "hovels for humanity" is more or less efficient at implementing the same anti-homelessness strategy as Habitat. We'll soon create a separate post to draw the parallels between our current financial analysis approach to for-profit companies and this evolving approach for analyzing non-profits. We are currently investigating wiki platforms for the initial launch of the project so we can start moving while we finalize the plan.
Labels: nonprofit, wolfhound fund
Thursday, December 27, 2007 :: posted by TSC team @ 3:00 PM
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