Charitable giving: could it work more like a proper free market?
It was mentioned to me the other day or maybe I read it (old age is a terrible thing) that a certain charity with a media savvy CEO knew they could boost flagging donations simply by concocting a press release that got said CEO onto the news programmes. This got me thinking about how poorly the benefits of a free market apply in the world of small donation philanthropy.
The great advantage of an efficient free market is, of course, that consumers can withdraw their custom if a firm provides a poor service or product. The problem in the charity sector is that the millions who make small donations every year are not actually purchasing the service – that goes instead to the so-called ‘client group’ who have to rely on charity precisely because they do not have the resources to purchase the service themselves.
The result is that the charity with the greatest success in acquiring small donations is not necessarily the one providing the best service to its ‘client group’ but the one with the most persuasive advertising, the most persistent chuggers or the most high profile CEO.
One way round this, in the old days, would have been to establish an inspection regime with associated league table or kite mark to better inform donors of the charity with the best service. But in today’s world of ubiquitous social media, I wonder if there is some way of linking up client groups more directly with donors without the need for a bureaucratic intermediary.
Of course, you’d want to avoid the curse of Tripadvisor where one or two disgruntled people damage a decent organisation’s reputation. Some form of aggregation of response may be the answer there.
Maybe such a thing already exists.