Competitive philanthropy

Here's a silly idea, why don't we use competition--that tool that drives innovation and initiative--to inspire achievement in philanthropy.

There are a number of incentives cited by those who give: 1) some feel that giving is objectively important and are driven by a sense of duty, 2) some enjoy the feeling that they have done "good," and 3) some believe strongly in the causes which they support (and may even hope to personally enjoy the benefits of their charity). Additionally, there is giving that is directly self-serving (not that this is necessarily wrong), e.g. donating to a university that you hope will one day accept your daughter.

The relationship between the first three motivations is complex, and from personal experience, determining the relative contributions of each to any decision to give is quite challenging. But for the moment I'm going to ignore the root incentive. Say I do decide to donate $25 to the Red Cross, or to an entrepreneur in Pakistan. I wonder, would I enjoy twice the benefit had I donated $50 instead? Probably not. When it comes to charity, the benefits rarely scale with the cost. If I could somehow graph the benefit I receive (whatever the mechanism may be), I would see the typical curving line of a good with decreasing marginal utility. For that reason, at some point, my additional dollar would be better spent contributing to tonight's dinner, or any other line-item in the massive portion of my non-giving budget.

So this is all fairly obvious, but it represents a serious problem for philanthropy. Some people's utility curves will decrease faster than others, and for many (particularly in the face of economic uncertainty), their curves will cross the Y-axis at such a low point as to prevent the donation of the first dollar.

Attempts to increase individuals' interest in giving isn't new. I've seen marketing appeals towards the previously mentioned sense of duty, feeling of "good", and of course promotions of the importance of a particular cause. I'm unconvinced that these strategies could become very much more effective.

I'd rather consider some other factors of influence, for example: ease of donation, financial burden, transparency of impact, and expected recognition. One of the most exciting recent breakthroughs in charity has been that of Kiva, and I believe their success has mostly to do with their innovations in the first three of these levers.

First, with Kiva, donation is trivial (it takes seconds) once you have a basic account. Second, the financial burden feels extremely manageable since Kiva transacts in micro-loans with repayment rates typically in the high 90's. Finally, donors see who is receiving their loan, which organization is managing it, and receive updates on the status and impact of each investment.

Still, Kiva exists as a completely non-competitive system for obvious reasons--there is something seemingly distasteful about direct competitions involving the exchange of money. This obstacle is a cultural one, and I believe there is a way around it. What if we could devise a system in which investors or donors compete for recognition, and what if that recognition was based not on one's capacity to give, but of one's willingness to give within their capacity.

Awarding philanthropy is no new concept; consider plaques on university buildings, names printed in concrete, credits following public television programs. But those competitions don't take place on a level playing field, most of the world can't afford thousands of dollars of charitable giving. But anyone with a non-zero disposable income (and let's not forget that this certainly isn't everyone) can afford to give something. The problem is, the incentives aren't clear.

The experiment could start small. Kiva, or any similar service, could offer participants to opt-in, report an estimate of their personal income and costs, and be ranked according to the percentage of their capacity they choose to give.

There are technical obstacles, of course. How do you accurately estimate capacity? Is there any way to ensure honest self-reporting? And even with perfect honesty, how do we define capacity? Which costs are living costs and which are luxury goods that should not count against disposable income?

And there are additional concerns. Would we reduce the incentives for some of the largest, wealthiest donors? Are we discrediting in-kind donations, volunteering, and philanthropy of a non-monetary nature?

These issues make such an idea extremely tricky to implement, but nonetheless, imagine a world where individuals and organizations compete to give within their means. I think its possible to paint a very interesting picture. Then again, we might run the risk of dehumanizing charity altogether.

There must be some way to turn donors into heroes. Those making the biggest sacrifices should be awarded the highest praise.