Let's buy out the World Bank

Here is a post I wrote last December about doing a buy-out of the World Bank. I wrote it with a bit of tongue in cheek back then. But with the recent upheaval at the Bank, several people have written to say this is not such a crazy idea after all.

[GlobalGiving]

After Paul Wolfowitz

Over the last couple of months, many people have asked me what I thought about the saga involving Paul Wolfowitz at the World Bank. Wolfowitz resigned yesterday after a short, stormy tenure.

Because I left the Bank over six years ago, I have resisted the temptation to pontificate. But I can recommend two articles in the papers today - one by Karen DeYoung in the Washington Post and the other by Steven Weisman in the NY Times. Based on what I know from former friends and colleagues at the Bank, these two articles capture the real issues and dynamics of the situation. [Addendum: Let me also recommend this article by Fred Kaplan in Slate.]

As with all messy situations, there are lots of conflicting points of view. But there is one matter on which no one disagrees: the importance of strong managerial, leadership and diplomatic skills. No matter how smart - or how right - you are, you cannot effectively lead an institution by intellect alone. To be a good leader, you need to have decent (if not superb) management skills, know how to handle people, and surround yourself with good people whose own skills complement your own.

In this context, it is disheartening to hear some of the names of candidates being proposed to replace Paul Wolfowitz. Most of them are smart and well respected, but some of them are known to be terrible leaders and managers. It would be hugely counter-productive to appoint someone who does not have what it takes to lead the Bank through the changes it so urgently needs.

[GlobalGiving]

GlobalGiving Meets Sundance

In a short period, over 150 people have registered as Film Producers in the GlobalGiving Filmfest. Please help us spread the word to make this a new Global Sundance Festival!

Here is how it works. We ask project leaders in the field to provide raw video footage, photos, and anything else they want to send in. Then we allow people to take that footage to create a video. Producers can add their own music, text, and any other content they think is useful to produce a finished product designed to vividly convey the impact of the project in question. In June, once all the films are submitted, we will launch public voting for the best videos.

Here is a little video that Meredith Landis in our office made to explain how the GlobalGiving Filmfest works.



To make this video, Meredith used clips sent in by project leaders from countries such as Haiti, Gambia, Brazil, and India. Note that this film took her only an hour to create. She used free editing tools (I personally like OneTrueMedia best), and she has almost no film-making experience.

You can find out more here. And if you want to become a film producer yourself, go for it; it's easier than you think.


[GlobalGiving]

SocialEdge beats out the White House

Kudos to Victor D'Allant and Jason Clark at SocialEdge.org, a website run by the Skoll Foundation. Victor has recently launched a series of Global X videocasts that have rocketed to the top of the podcast ratings on iTunes, at one point edging out the White House podcast and more recently crashing Skoll's servers. Check the videocasts out at iTunes under the Podcast/Government section or watch them on SocialEdge.

Victor and Jason have been at the forefront of experimenting with new features and approaches on their newly revamped website. Last year, Victor convinced us to create the GlobalGiving Index, a weekly index of what's hot and what's not in international giving though our marketplace. This helped spur us to think more about syndicating information from GlobalGiving out to other websites.

Now Victor and Jason are both experimenting with new media (video) and syndicating out their own content to other sites such as iTunes. By carrying out such experiments and showing the way, SocialEdge is providing a major service to the sector as a whole.

Thanks, Victor and Jason.

[GlobalGiving]

How to stay small?

I like the Stanford Social Innovation Review, and so I eagerly picked up a recent issue to read about "How Non-Profits Get Really Big."

But this paper could also have been titled "Why Do So Few Non-Profits Get Really Big?"

The paper notes that, since 1970, about 144 non-profits in the US have grown to exceed $50 million in revenue, with the largest now having about $650 million in revenue.

This sounded impressive to me at first glance. Then I happened to pick up the latest issue of Fortune Magazine, which listed the top one thousand US companies. All of these companies are bigger than $50 million- MUCH bigger. Even the smallest company among the top one thousand posted $1.5 billion in revenue in 2006. The biggest company among the top thousand posted $350 billion in revenue.

The non-profit sector faces a number of challenges that both inhibit growth and impede allocation of resources to their best use. Consider the following. Of the Fortune 500 companies that started among the top ten in 1990, only three remained in the top ten by the end of the decade. Open competition meant that successful newcomers displaced the rest.

But in the non-profit sector, the picture was reversed. Seven out of the top ten non-profits not only stayed in the top ten but increased their share of the market during the decade. So much for competition! And according to Jed Emerson and Paul Carrtar, only 6% of non-profits accounted for four fifths of all revenues in the sector.

GlobalGiving exists to create a marketplace for good. The objective of our marketplace is to create a level and transparent playing field, where the activities with the highest impact will get the most resources.

As we develop this market over the coming years, there will be lots of competition among newcomers and established organizations alike. And that competition is a good thing. It will drive innovation and efficiency in the sector at a far faster pace - something that is critical if we are to successfully tackle the challenges facing the world today.


[GlobalGiving]

Experts: Pro vs. Con

[O]ne study found that on average when doctors were 88% confident that their patient had pneumonia, in fact only 20% of such patients had pneumonia. And overconfidence is fatal in primary care.

This is from a blog post by Robin Hanson, who also describes a study showing that highly paid primary care doctors are no better at treating patients than nurse practitioners.

GlobalGiving is based to a significant degree on the "wisdom of the crowds." This is the idea that regular people, if their judgements are pooled, can often make decisions that are equal to or better than experts. For this to hold true, people have to make decisions somewhat independently, and they have to bring a diversity of perspectives and viewpoints.

If you think about it, regular economic markets are in essence a reflection of the wisdom of crowds. For all their shortcomings (and occasional need for regulation), markets still work a heck of a lot better than systems such as central planning where a few experts decide what gets produced and to whom it gets distributed.

But to be fair, the wisdom of crowds does not exclude experts. Experts are part of the crowd, too - often an important part.

Here is a nice (long) post by Larry Sanger on Edge.org that tries to bridge this issue. Larry is a co-founder of Wikipedia who has left to found Citizendium, or the Citizens' Compendium. Larry argues that delegating special authority to experts in creating and cataloguing knowledge makes sense WHEN it is accompanied by open-source peer review and input by regular people in the crowd. Wikipedia fails, he argues, by not according experts special status. Encyclopedia Brittanica fails, he says, by not allowing regular people to comment on or contribute to articles written by experts.

Over the coming months, we will be phasing in a number of new community features on GlobalGiving, including blogs and reputation mechanisms. We are currently grappling with the question of how experts will be allowed to emerge on the system and what special rights and privileges they might have. One thing you can be sure of, though: we won't recognize experts solely by their academic degrees or by where they have worked. Experts will have to demonstrate their value in the community rather than rely on paper credentials.

[GlobalGiving]

Normally the women are very quiet but when I did this activity I had a woman get very excited and tell us all sorts of interesting stuff about a plant I had never even heard of. It was fantastic.

Taco van Ieperen and Lara Arnott, two of our roving GlobalGiving Ambassadors, have an excellent blog called Shatter the Fog. Their most recent post describes their visit to a project facilitated by Agros in Chiapas, Mexico.

We take our education for granted, yet here anything past grade 6 requires a minor miracle.

In their blog, Taco and Lara describe the heartbreaking conditions they see - but also inspiring progress that makes them optimistic. Under this project, a mere $60 donation provides a small business loan for animal husbandry, agriculture, or textiles.

Their whole post is worth reading, but let me just quote their closing paragraph:

The problem of poverty isn´t going to be solved easily. The billions of dollars we've wasted in the last 50 years show that we can't just pay people's way out of poverty. Leaving poverty behind means leaving behind old ways of thinking. It means educating children, building infrastructure, changing diets, and learning how to work together. It also requires extraordinary sensitivity to local cultures. It won´t be easy, but organizations like Agros are stepping up to the challenge.

Support Sustainability for Mexican Farmers Enable one family in a new Agros village in Mexico to increase its income through various economic and agricultural projects and to fulfill individual and communal goals. Theme: Economic Development | Location: Mexico | Need: $7,535

Doing Good by Drinking Well

In association with Thanksgiving Coffee company, I am pleased to announce that GlobalGiving Coffee is now available from Indonesia, Uganda, and Nicaragua.

In each case, $2 from the purchase of each bag goes to a GlobalGiving project in the country where the beans are picked. Naturally, the coffee is free trade and organic.

Here is the blurb for the Indonesia coffee:

The coffee is grown in the mountains just above Banda Aceh. "Gayo Mountain" has earthy and musty notes with overlays of oak and burnt sugars. $2.00 from the sale of each package will be donated directly to the "Home for 100 Banda Aceh Orphans" project which is providing food, education, and permanent shelter for 100 orphans in tsunami-ravaged Banda Aceh, Indonesia.

You can order your coffee here. Let me know what you think.

[GlobalGiving]

Don't bug me, I have more important things to do...

In my last posting, I said it was time to take off the gloves and - mixing my metaphors - to proclaim out loud that the emperor has no clothes. The current aid system does not work. For anyone interested in a detailed examination of that question, I suggest The Elusive Quest for Growth by Bill Easterly. Like me, Bill spent over 14 years at the World Bank, so his book is a blend of inside experience and academic rigor.

But I want to make one thing clear. It is not the people or the resources of the World Bank and other agencies that are bad. To the contrary, the people are for the most part incredible, and the resources unequalled. The problem is the system, which turns the whole into much less than the sum of its parts.

In the 1930s, Ronald Coase developed the theory of the firm. The theory argues that firms exist because they are able to produce more value than employees could produce if they worked independently. In other words, the whole is greater than the sum of its parts.

In the months before I left the World Bank in late 2000, I systematically asked my colleagues what percentage of their potential value they felt they were delivering. The answers were uncannily clustered around 25%. My colleagues were telling me that their potential was about 3/4 wasted.

I know of no scientific way to determine whether this percentage is correct. But let me tell you a story that may help illustrate.

When we did the first Development Marketplace in February 2000, over 300 teams from around the world showed up to set up booths in the towering atrium of the World Bank to pitch their ideas and compete for $5 million in funding. There was an incredible spectrum of groups, ranging from Ugandan women who had never been outside their home province; to supreme court justices from Latin America; to scientists from NASA. For once, it did not matter who you were - all that mattered was the quality of your ideas.

As I walked through the atrium, I came across one booth manned by these young scrappy guys who looked totally out of place. It turns out they were from Mexico and had an idea related to agriculture and rural development. One of my jobs that day was to help groups prepare their pitches before the judges came by for the formal presentations. As I listened to these young guys, I realized that the technical aspects of their idea were excellent and innovative, but they were missing a whole policy-related dimension that could affect the results dramatically.

I immediately pulled my colleague Mike aside and said "Who is the Bank's best expert on Mexican agriculture?" "Jim X," he replied. I said: "Go to Jim's office right now and tell him we need him down here."

A few minutes later, Mike called me on my cell. "Jim says forget it; he is too busy."

"Too busy?" I replied, "That's crazy - put him on." I got Jim on the line and told him we needed him.

"Forget it," Jim replied. "I have much more important things to do. I have to get this report to the board by next Friday and I am way behind. Oh, and by the way, that Development Marketplace you are running down there is a waste of time. It looks like a circus."

I got Mike back on the phone and told him to get Jim down here by any means, including physically bringing him down if necessary. I looked at my watch. The judges were due to come by in one hour.

A few minutes later, Mike showed up with Jim in tow. Jim was looking very unhappy.

"You are really upsetting me, Dennis," he said.

"I only need 30 minutes of your time," I told him, explaining the situation and introducing him to the Mexican guys.

Jim was in a very, very bad mood as he turned to them.

I stood back and watched as Jim starting talking to them in Spanish. At first he was looking down his nose. But as the conversation progressed, Jim realized that these guys had a good idea - and it showed in his face. He got down off his high horse and huddled with the guys and starting drawing diagrams on a sheet of paper. I went away to visit some other teams, and after a while I came back, and they were still in the thick of it.

"The jurors will be here in ten minutes," I said.

"Hold them off! Hold them off - we need more time," Jim pleaded.

"I can't hold them back - they are coming - they have only one more interview before they get here," I said, pointing at my watch.

Jim returned to the huddle, and they were all talking excitedly.

Fifteen minutes later, the jury panel showed up. Jim stepped back and off to the side and pushed the guys forward toward the jurors. I could not hear what happened, but I could see it. The jurors starting asking questions, and the Mexican guys were answering, hesitantly at first, but their confidence was building steadily. The questions and answers came fast and furious, and toward the end of the twenty minute interview, the Mexican guys even seemed to be anticipating some of the questions. The judges were nodding and talking among themselves as they left.

Jim leapt out of the shadows with a big smile on his face and shook the hands of all the guys. "Excellent, excellent," I heard him telling them. I left them all debriefing excitedly and walked away.

Later that day, Jim tracked me down. "Dennis," he said, "I want to thank you for dragging me down here. That was probably the most enjoyable and productive hour I have spent in my entire career at the World Bank. Those guys were awesome. I felt like the coach of an underdog college basketball team in the national championships. I am going to help them develop that idea further, regardless of whether they win an award here. We have already agreed I will go visit them next time I am in Mexico."

Sure beats writing reports for the board, doesn't it?

[GlobalGiving]

Doesn't That Mean...?

"But doesn't that mean...?"

Yes, it does.

I was talking to a new donor recently about GlobalGiving, and after a casual back and forth about some of the features on the site, he asked me: "But doesn't that mean that marketplace mechanisms like GlobalGiving should replace the current top-down systems?"

Over the past few years, during the infancy and early adolescence of GlobalGiving, I have often hedged my answer to this question. This was partly because I did not want to pick a fight with big aid agencies and partly because I felt that until we proved the concept I would not have much credibility.

But recently, more and more people have urged me to be more explicit about our mission, and to stop beating around the bush. And now that we have proven the concept by facilitating $5 million in funding to over 800 projects aound the world, I guess it is time to take the gloves off.

So here is my unequivocal answer: Yes it does.

Over the coming weeks in this space, I will be spelling out as clearly and explicitly as possible what we are up to here at GlobalGiving, and what we hope to achieve.

The bottom line is this: Our goal is to revolutionize the international aid and philanthropy field. The current system has spent about $2 trillion over the past fifty years with little to show for it. That is because the current system resembles central planning in the former Soviet Union. Most decisions are made and most resources allocated by a relatively few people we call "experts." Programs are designed in capital cities, with little information about what people actually need and want. During and after program implementation, there is little feedback from the field about whether things are working or not. There is no competitive pressure among agencies to deliver the most effective solutions. As a result, massive amounts of funds have been wasted (and sometimes even used to harmful effect).

The current system is terrible. Criminally bad. It is an abomination if you think about what it is supposed to achieve.

Our mission is to overturn the current system by creating a real marketplace - an open marketplace of ideas, of funding, and of talent. We will spearhead a new paradigm where programs are designed by the people themselves, where anyone can contribute an idea and help fund promising initiatives, and where performance matters.

Does that mean the world will be better off?

Yes it does.


[GlobalGiving]