We leave behind the normal preface to Markets For Good content, the rich discussion below speaking for itself. Follow the comments from Brian Walsh of Liquidnet and David Bonbright of Keystone Accountability, then join us with your own opinions in the comments section at the end. Many thanks! Eric J. Henderson, Conversation Curator

Markets for Good aims to foster a robust conversation about how people in the social sector can better generate, share, and use information to make better decisions and improve lives.

In a critique posted to Alliance magazine’s website last week, our friend and Markets for Good contributor David Bonbright shared his concerns that our efforts may go wrong, arguing that “beneficiaries are not part of the enterprise in a direct or meaningful sense.” In fact, the challenges and benefits regarding information from people in communities – beneficiaries, constituents, citizens—have been a constant theme on Markets for Good since we launched in October.

David urges Markets for Good to incorporate a “deliberative element” into the work, writing: “to realize ‘greatest impact’, the social change information infrastructure would need to begin and end with the primary constituents of social change – those who are meant to benefit.” I completely agree with this goal, which is indeed a key element to the vision, described on the site and in the white paper released in fall, 2014. [See page 2, first paragraph.] But David goes on to write that it “seems that Markets For Good is settling on a neutered understanding of beneficiaries as consumers of information about service availability and eligibility requirements. For the beneficiaries, the information flow is one-way, top-down.”

Nothing could be further from the truth. In fact, we’ve always imagined beneficiaries – as well as funders and social enterprises – as both contributing information about needs and resources and using similar information contributed by others. Just as with the web itself, users in this complex system are connected and networked and play different roles at different times.

It would be instructive, at this point, to review this compilation of the rich and diverse content we’ve published on the topic.

In the spirit of openness and deliberative intent which guides the Markets for Good efforts, we are pleased to host further conversation about this important issue. To that end, we’re re-posting (with permission) David’s full critique below, as well as a response in the comments by Jacob Harold of GuideStar.

You can add to this dialogue in the comments below. We are always looking for new perspectives as well as great resources and initiatives to highlight on Markets for Good; so if you have suggestions, just send them to info [at] marketsforgood.org.

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FULL TEXT: Original Article in Alliance Magazine

Why Markets For Good may go wrong

Back in June 2010 I was one of 46 self-described ‘top visionaries and practitioners’ in the broadly defined ‘markets for giving space’ who came together to explore how to create greater social impact through the philanthropic ecosystem. The debates were intense, but to my surprise and delight at the end of three days, we emerged with a tantalizingly transformative vision for our social change information infrastructure.

This propitious beginning of Markets For Good placed the ‘beneficiaries’ at the heart of the vision [1]. We left the meeting with a shared understanding that the central challenge was not technical, but political [2]. We wanted an information marketplace that rendered the most marginal voices in the ecosystem the most important ones. The beneficiaries’ thought bubble in the diagram we produced read: ‘OMG! We are leading change, seeing change, and we ourselves are changing.’

Three years on, a few drafts of a concept paper, and nine months of an ‘online campaign’ later, Markets For Good seems to have re-conceptualized the core problem in more technical and strategic terms [3]. We have drifted from a transformative vision that put those who are meant to benefit from social change at the centre to one in which these primary constituents have become just another cog in the machine rather than the flywheel that determines the way the whole system works.

The reason for this, I believe, is that the beneficiaries are not part of the enterprise in a direct or meaningful sense. This article will explore this inconvenient truth about Markets For Good, while making the case that it would be a far more exciting and impactful enterprise were it to open its doors to them.

Before going further with a critique, I would like to indicate that the problem does not lie in the stewardship of the enterprise. The core leadership – GlobalGiving, Liquidnet, Hewlett Foundation and more recently the Gates Foundation – have managed a process that has been open, inclusive, careful, and in every way embracing of diverse points of view. Website curator Eric Henderson has been intellectually supple and proactive in soliciting participation. No, the problem does not lie here.

To the contrary, a plurality of the invited blog contributions to the site, including my own, are cautionary in nature. There has been a whole season of pieces on the beneficiary feedback. One piece in particular – that of Mauricio Lim Miller of the Family Independence Initiative – tackles the central challenges head on. Maurice’s work models what it means to build a people-centred information infrastructure for social change: what information is most important; who collects the information; how the information is used; and who ultimately declares success. In some ways, Markets For Good needs to do little more than follow the path already charted by Mauricio and his colleagues at FII.

When does a good process tend to a sub-optimal outcome?

But instead of holding to the original vision of the beneficiaries as the core agents of change, its seems that Markets For Good is settling on a neutered understanding of beneficiaries as consumers of information about service availability and eligibility requirements. For the beneficiaries, the information flow is one-way, top-down.

This prompts the troubling question, why is an exemplary process tending towards the wrong result? If Markets For Good is in every visible way a well-intentioned enquiry seeking a clear result – better lives for those who most need it and solutions to our big societal problems – why is it tending towards technocratic investments in information collaboration, like taxonomies and coding and data interoperability, rather than honouring the more politically seasoned theory of change that occasioned its birth?

I think that the answer lies in the politics of the initiative, which are bounded by four constituent groups, and the inconvenient truth that the beneficiaries are not ‘on the bus’.

These four groups are:

• The funders
• The information intermediaries
• The non-profit service delivery and advocacy groups who have identified information as a critical factor in their work
• Finally, the rest of the non-profit sector [4]

Funders
The funders are the keystone species in this ecosystem – take them out and the system would immediately collapse. One of the dominant characteristics of this ecosystem is that there are very few funders that want to be part of it in any programmatic way. Those prepared to finance the information infrastructure ecosystem are pummelled with applications from far and wide and get a great view of the fragmentation and duplication out there. Their natural response is to push for better collaboration and coordination – which is enshrined in the original framing question for the whole enterprise.

Information intermediaries
The most prolific species in the ecosystem is the information intermediaries. Their rate of growth is limited by the available grant resource for which they compete. There are various sub-species of intermediary, including online giving markets, technology and software, those doing evaluation of some kind, those setting performance standards, constituency mobilizers, and other new philanthropy intermediaries who define their comparative advantage in some way by their take on information. Across all these groups are two major fault lines. One is technology-driven vs politically driven theories of change; the other is non-profit sector insider vs outsider status. Both these fault lines are epitomized in the yin and yang of two big players, GuideStar and Charity Navigator.

Non-profit service delivery and advocacy groups who have identified information as a critical factor in their work
The third and most transformative species in the ecosystem is made up of a relatively small number of non-profits who do direct service or advocacy but whose approach to system-changing has led them to incorporate an ‘information as power’ element in their strategies. The Family Independence Initiative referred to earlier is one example. LIFT is another.

The rest of the non-profit sector
A few members of the fourth species – the bulk of US non-profits – are lurking with intent on the edges of the website discussions. They keep a wary eye on Markets For Good in case it comes up with new, irrelevant and burdensome measurement and reporting imperatives. They flash their approval when one of the information intermediaries expresses their worries about Markets For Good, as in Laura Quinn’s excellent post identifying a long list of challenges and inconsistencies in the funder-driven demands for better information. Laura’s post concludes: ‘These organizations rely on funders to help them meet their missions, but sometimes the burdens put on them by the reporting requirements that come with that funding can make it more difficult for them to carry out their work.’ We don’t see the Markets For Good web analytics (note to Markets For Good leadership: this is something that could be shared), but one can see that this post prompted a record number of comments from non-profits, all praising it. The vast majority of non-profits are going to need both clear guidelines and explicit support to become generators of the kind of enhanced information world envisioned by the Markets For Good enterprise.

The inconvenient truth about Markets For Good

This brings us to the inconvenient truth about Markets For Good. With this polity, Markets For Good’s tendency will be – as seems to be working out – to settle for efficiency gains to the present system. Since the beneficiaries are not part of the Markets For Good ecosystem, except in name, it is unlikely that their centrality will be realized. What happened at the meeting in June 2010 was an aberration, not a harbinger.

The Markets For Good enterprise that was envisioned in June 2010 had two primary hypotheses coming in and three coming out. Some three years on, it has defaulted back to the two original ones.

The two original hypotheses were that information technology offers large, sometimes disruptive, opportunities to improve the collection and publication of information relevant to achieving social impact. The second was that an explosion of philanthropy information intermediaries could be wrangled into some kind of collaboration that would lead to a greater-than-the-sum-of-the-parts result [5].

The third hypothesis, forged in the heat of the June 2010 meeting, was that to realize ‘greatest impact’ the social change information infrastructure would need to begin and end with the primary constituents of social change – those who are meant to benefit. It recognized that the collection and signification of information needs to be grounded in the circumstances and experiences of primary constituents if the resulting uses of information are to be transformative. There is a growing set of innovators – like the Family Independence Initiative and LIFT, and the whole civic engagement movement – that are living out this hypothesis. They don’t have all the answers, of course, but they are asking the right questions and making real strides forward. More work like this is needed to figure this out.

Nor are we the first set or organizations to find that we need to discover that we are not cultivating the voices of our primary constituents. Fifty years after the birth of the consumer rights movement, we tend to take it for granted that consumer-facing businesses must listen to their customers. In many ways, we in social change stand where business stood in 1963, before the emergence of a new branch of market research called customer satisfaction. I believe that there is a great deal that we can learn from the experience and craft of customer satisfaction.

How to bring beneficiaries back to the foreground

I have been pondering what it would take to bring the beneficiaries back to the foreground at Markets For Good. The obvious way would be to make sure that the beneficiaries are directly represented. In the anti-apartheid struggle organizations of the 1980s, where I grew up professionally, this was how we did it. The commitment to democratic principles in the way organizations operated meant that meetings – endless meetings it often felt like – and taking decisions took longer. But we learned that there were many unintended benefits to principled inclusiveness, including the time spent learning about each other across the divides of race, gender, class and nationality. The African proverb was often quoted, sometimes tongue in cheek: ‘If you want to go fast, go alone. If you want to go far, go together.’ The national trade union federation, COSATU, spent over a year planning for the first mass national worker stay aways. Their success is often seen as the point of no return in the liberation struggle.

It would be complicated and inconvenient – but not impossible – to figure out ways to represent beneficiaries directly in the Markets For Good enterprise. Maybe now is the time to give this some thought, before it is too late.

Another complementary step that Markets For Good could take occurred to me when I read the paper by GuideStar founder Buzz Schmidt published in February in the online edition of Alliance magazine. Just as the Markets For Good enterprise lacks direct representation from beneficiaries, so does the very understanding of information lack a social dimension. Markets For Good’s working understanding of information seems to be missing the deliberative element that is essential to moving from information to shared meaning, and therefore to greatest impact. Perhaps, I thought, if Markets For Good were to embrace this deliberative element then its priorities and emerging investment strategy would become more people-centred.

Introducing a deliberative element

What does this deliberative element look like? Applied to public reporting, for example, it yields what I have called the Feedback Principle of Public Reporting. This principle holds that when reporting its results an organization should also publish what those who are meant to enjoy those reported results have to say about them [6].

The deliberative element provides a definition of ‘beneficiary voice’ that includes but goes beyond ‘better information services’ to beneficiaries, though I want to acknowledge their utility, both in themselves and as a stepping stone to furthering social change. The deliberative element recognizes that voice is present when constituents find it worth their while to engage with an organization to try to make it better for themselves, their families, and their communities [7]. I have voice when I use my voice and an organization responds to my voice.

We have found that if you ask people a simple question about this you get a clear and accurate answer that tells you a great deal about the relationship between an organization and the people it claims to serve. Applied to the agricultural extension system of the Government of Ethiopia and asked of smallholder farmers, the question is: ‘On a scale of 0 to 10, how likely is it that the Development Agent will listen to what farmers need and try to improve his/her services to you and other farmers?’ Applied to Markets For Good, the constituents are more organizations than individuals, so the question might be: ‘On a scale of 0 to 10, to what extent is it worth your while to engage with Markets For Good to try to make it better for your organization?’ It would be very revealing, I suspect, to see the results of this poll.

When used as a guideline for giving decisions, the deliberative element yields the Constituent Voice element in the new Charity Navigator rating model. That new rating model suggests that donors should ask:

1. Does the charity publish feedback data from its primary constituents?
2. Does the published feedback data include an explanation of how likely it is to be representative of all primary constituents?
3. Does the data include an explanation of why the organization believes the feedback is frank and honest?
4. Is that data presented in a way that shows changes over time going back at least one year?
5. Does the data include questions that speak to the organization’s effectiveness?
6. Does the organization report back to its primary constituents what it heard from them?

Question six directly raises the all-important deliberative dimension. In the customer satisfaction industry they call this ‘closing the loop’ with customers. At least when it comes to information that relates to effectiveness, performance and outcomes, the meaning of information in an ecosystem is best found through deliberation across different constituents of the issue being addressed.
If Markets For Good really envisions a world in which ‘beneficiaries have a voice’, this must mean that funders are presented with high-quality evidence of beneficiary views. Since the beneficiaries are not the payers, their voice counts for more when donors hear it directly. When donors pay attention to their views, then charities will pay attention to them. By requiring charities to answer these six questions, Charity Navigator has taken the largest step ever taken by any development agency that I am aware of to cultivate beneficiary voices [8].

Finally, to come to the vision for the infrastructure contemplated by Markets For Good offered by Buzz Schmidt, the missing deliberative element suggests the following amendments:

The non-profit sector will play an increasingly and recognizably effective role in our social economy and civil society. Its initiatives will continue to capture and offer institutional expression to the hopes, ideas and energies of citizens. But in the near future, supported by strategically coordinated information and transactional (mostly online) services, it will do so in ways that are at once more purposeful, coordinated, deliberative and accountable. Individual donors will seek out and support organizations that are doing work that they value. Institutional donors will be deliberative, accountable, consistent, transparent, intentional and demanding in their philanthropy. Communities will articulate common objectives and track collective progress. Non-profits will report consistently about their own objectives and institutional progress – and what their primary constituents say about those reported objectives and progress. Resources will be directed to organizations that best meet society’s evolving needs. Superior social and environmental progress will result and our liberal democracy be strengthened.

Perhaps by adding this deliberative dimension to the working understanding of information at Markets For Good, the enterprise will find its way to restoring the third hypothesis that was added at the June 2010 meeting: that to realize ‘greatest impact’, the social change information infrastructure would need to begin and end with the primary constituents of social change – those who are meant to benefit. In so doing, it will be far more likely to generate the kind of investments in information infrastructure needed to break out of the prevailing echo chamber of the philanthropy ecosystem. It might also help it grapple with the inconvenient truth that beneficiaries are not currently part of the Markets For Good enterprise, and come to see the exciting opportunity to open the doors to them.

David Bonbright is chief executive of Keystone Accountability. Email david@keystoneaccountability.org

1]  We also noted the irony in referring to the people who must be the primary agents of change as ‘beneficiaries’. The search for a better label goes on. My suggestion is ‘primary constituents’, for we are all constituents of societal problems/solutions, with varying degrees of stake in the outcomes.

2]  The theoretical underpinnings for this are found in the work of Amartya Sen and other contemporary political philosophers; see eg Amartya Sen’s Development as Freedom (Oxford University Press, 1999).

3]  www.marketsforgood.org/about

4]  This parallels a good debate now ongoing in the international development domain about ‘the politics of evidence’ about impact. See eg The Big Push Forward.

5]  ‘As many of you know, the campaign’s goal is to host a conversation about how the social sector uses and shares information, spark new ideas about how to make data sharing and use easier, and highlight and connect efforts already underway.’ www.marketsforgood.org/note-from-the-curator-reflecting-on-2012-looking-ahead-in-2013

6]   For a discussion of the Feedback Principle of Public Reporting in the US non-profit sector context, see Bonbright et al, The 21st Century Potential of Constituency Voice: Opportunities for Reform in the United States Human Services Sector  (Alliance for Children and Families, 2009).

7]  This understanding of voice derives from the work of Albert O Hirschman on decision-making where choices are limited in ways that often pertain for the ultimate beneficiaries of philanthropy. See, especially, Exit, Voice and Loyalty (Harvard University Press, 1970).

8]  It may soon be eclipsed by the World Bank, however, which is looking at how to build Constituent Voice into its government lending for health and human services.