Social capital markets vs civil society?

Michael Edwards has long been a critic of social capital markets and philanthrocapitalism. Some of his criticism may well be fair, when these concepts are swallowed whole without an understanding of the history and values of charities (or nonprofits, depending which local flavour you prefer). But his recent post on the dangers of social capital markets, at the excellent Philanthropy Central is, I’m afraid, an example of the kind of simplistic and dangerously reductivist polemic that he claims to want to move beyond.

His argument boils down to social capital markets vs civil society – impact measurement vs social justice, data vs values, competition vs solidarity. And in this binary view of the world, he threatens to undermine the very real progress that’s being made towards a much more balanced and realistic perspective.

Michael and I already touched on this debate around my recent post on the dangers of measurement, and the need for a balanced approach. My argument is that great charities are indeed founded on their values and driven by a desire for social justice, but they also need data, evidence, knowledge and learning to check their vision against reality, and work out whether they’re helping to change the world in the right direction.

Pretty simple really. Charities are passionate, driven and committed to positive change because they care about inequality and understand the issues they’re trying to tackle through their relationships with their stakeholders. But to avoid those good intentions creating unexpected or negative consequences, they need a feedback loop to compare their vision with what seems to be happening.

When we talk about data, evidence, and knowledge at NPC we mean a spectrum of types of information that’s quantitative, qualitative, objective, subjective and instinctive. We don’t mean reducing a charity’s impact to a few numbers or key ratios. We mean a full and nuanced understanding of its effect in the world. We work hard to make sure that our analysis of a charity is based on this balanced, and comprehensive, view, and that we always strive for better and richer analysis.

Michael Edwards claims to be eager for progress beyond the social capital markets vs civil society debate. But his reductivist arguments undermine that chance of progress. He claims that Guidestar, GiveWell, Charity Navigator, GreatNonprofits and New Philanthropy Capital are too narrow in their analysis of charities and too concerned with ranking who is best to be able to help us move forward.

So why did this group of organisations, and Philanthropedia, come together to lobby for donors to think more deeply about their giving and stop obsessing on simplistic and meaningless metrics like what proportion of a charity’s costs are spent on administration rather than front-line services?

Of course, I’m biased, I work for New Philanthropy Capital. But what has upset me most in my relatively brief career researching and analysing charities is that the argument that Edwards presents is dangerous, because while it’s based on some sound principles, it’s also often used as an excuse to cover up charities not achieving real change for the people they claim to represent.

There are hosts of amazing charities out there, changing the world every day, speaking up for those whose voice is rarely heard, protecting the most vulnerable and forgotten members of society, making people and communities happier and stronger. There are also charities, and foundations, that have lost their way, have started to put their organisations before those they supposedly represent, have not kept up with changing needs in the world, and most fundamentally do not have a clear strategy that connects what they want to achieve and what they do.

Measurement is dangerous, there’s no doubt about it. It can be used for good and for evil, as can any ‘technology’. Values are just as dangerous, if they’re not related back to the world and become pure faith. We urgently need to combine these two perspectives to move forward. And we all need to honestly, critically assess whether we are comfortable with our own values and our own impact.

Otherwise, we should all pack up and go home, shouldn’t we?