Thursday, October 27, 2005

The Business of Beneficence

It's generally accepted that private businesses competing in a free market tend to spend money more efficiently than their bureaucratic public-sector counterparts. This leads me to wonder why we don't have "charity companies" to investigate various charities and 'good causes', etc., and determine where aid money could be best spent to do the most good. They could make a profit by charging a small fee for their investigative services. Moreover, competition would keep them honest: the threat of a new charity company down the street that gives you 'more bang for your buck' would send their profits plummeting. To attract customers they would keep open records tracking the humanitarian benefits resulting from their recommended investments. (Competitors would no doubt keep an eye out for any duplicity which could be exposed for their own gain.) Governments would no longer sink millions of aid dollars into hopeless schemes or corrupt governments' coffers. They would subcontract out their aid budget to whoever could (be relied upon to) achieve the most good.

Has anyone tried this before? And if not, why not?


  1. 1) the difficulty in measuring the good that a charity does
    2) the powers that be amongst charities would oppose it (in terms of self preservation)
    3) it would tend to pull away from donors preference - towards actual good - this would be opposed by donors.

    you might well waste more good trying to achieve the optimum situation than actually just ignoring the problem. - or maybe not....

  2. The customers (donors) could specify what sort of results they are looking for, e.g. maximising number of lives saved, literacy rates or other educational achievements, helping people in a particular group (e.g. New Zealanders, or blind people, or blind NZers...), etc.

    So I think customer choice could help overcome your problems #1 and 3. As for #2, the charities couldn't afford to look like they have something to hide. They at least have to put forward the appearance of being proud of their achievements, and willing to put them under the spotlight. (Indeed, they should do this anyway, regardless of whether you have the sort of 'charity broker' middlemen that I suggested above. Individual donors should be able to 'shop around' and see what good various charities would do with their donations, before making an informed decision.)

  3. Okay, is this an ivory-tower test or what?

    If you couldn't shout "United Way" inside of three seconds, you suffer from ignorance of the real world.

    And of course there are problems with such funds. For example, I don't contribute to Unite Way because they give money to the homophobic, anti-atheist, Mormon-dominated boy scouts. In addition, their alliances with corporations to squeeze money out of employees are disgraceful: when I worked for Control Data, a large midwestern computer company 30 years ago, my refusal to donate won me an intimidating meeting with one of the company VP's. I still didn't contribute.

    There are many competitors in combined charitable giving.

  4. It might require more information than your average person can use to make an informed decision.
    And it might become just like the current system

  5. I can imagine people saying "i want to save lives" then their money goes to a charity that is anti abortion the person gets al confused until they realise "in a sense" that is the best way to save lives. Or conversely one that steralizes the water in african countries.

  6. But surely unsatisfied customers are bad for business.

    Matt, thanks for the link. sound like the kind of investigative service I had in mind. (Though it isn't a business, and they say it never makes explicit recommendations. Just provides the info so consumers can make their own informed decisions. Sounds pretty good, to me.)

    Mike, guilty as charged. I've never heard of "United Way". This "combined charitable giving" sounds a bit different from the uncommitted investigative businesses I had in mind, however.

  7. well if unsatisfied customers are bad then there is an incentive to immitate the current system. Ie

    A -- put the money where they would have put it.

    for example imagine a person who wants to donate to the blinda foundation but give it to you with some instructions - you can give it to the blind foundation and he wil be satisfied (and feel somewhat smart) or you can give it to "bobs blind institute" and the customer may or may not on further investigation be satisfied.

    Except for with certain people who would trust the company - but if they trust the company then they are probably not watching what it does very closely.

    Anyway we seem to be mixing objectives between doing what people want and beneficence.


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