TCS Daily

The Altruism Boom

By Max Borders - November 23, 2005 12:00 AM

"Just as trade between countries is the best recipe for friendship between them, so exchange between enfranchised and empowered individuals is the best recipe for cooperation. We must encourage social and material exchange between equals for that is the raw material of trust, and trust is the foundation of virtue."
-Matt Ridley, The Origins of Virtue

What if you could take the dynamism and prosperity of the market and inject it into social services, environmental protection, and the welfare state? What would a market for altruism be like? Enter: social entrepreneurship (what I like to call "charity on steroids").

Many of us are tired of trying to use political channels to bring about social change. We're dissatisfied with the way government handles such projects, we're fed up with the bureaucracy, and we resent having our money taxed from us every paycheck to be managed by those who only claim to know better.

Since the New Deal, we have voted away so much of our sense of responsibility for our fellow citizens to bureaucrats who may not have the proper incentives to effect positive social change. By sending our altruism to Washington, we have effectively killed many budding philanthropic industries, and probably prevented some ever from coming into existence. Don't believe me? What ever happened to:

  • Mutual Aid Associations?
  • Fraternal Benefit Societies?
  • British Friendly Societies?

These were volunteer organizations that were abundant around the turn of the 20th Century. These organizations were devoted to benevolent action and community assistance. According to the National Fraternal Congress of America:

"Members of these fraternal organizations came together seeking mutual aid. They helped each other and, in doing so, helped themselves. Depending on a fraternal's "common bond", or background, these organizations focused on social opportunities, preservation of the values of an ethnic homeland, cultural assimilation into the new world and assistance for everything from tuberculosis treatments to finding a job."

So what happened to them? FDR's centralized welfare state (or Britain's Labour government). When people started having to pay more taxes for social services, they no longer felt the need to support such organizations. Government had crowded out the altruism industry.

Seventy years after the New Deal, more and more people (and not just ardent free-traders) are starting to figure out that civil society works better than government at bringing about civic improvement, opportunity, and positive change. The altruism boom is underway. And if the government doesn't smother it, social capitalism can amount to a revolution for tremendous good.

Take this wonderful list of award-winning social entrepreneurs (compiled by Fast Company and the Monitor Group). You will find both non-profit and for-profit ventures on this list. After all, why shouldn't we create incentives for people to bring their talents to bear in a renewed altruism industry?

Top Social Entrepreneurs

Here are five of my favorites (I chose them based on their commitment to "bottom-up" (grassroots) strategies of social change, as opposed to "top-down" (political)):

  1. Omidyar Network - Because we believe issues are best addressed by the people who face them, we fund citizen-driven models that enable individuals to pursue what matters most to them. Therefore, our approach is to focus on the how, rather than the what.

The Omidyar Network is an organization founded by eBay founder Pierre Omidyar. This social venture capitalist's mission is to support grassroots organizations, emphasizing: "equal access to information, tools and opportunities; rich connections around shared interests;" and "a sense of ownership for participants." Here are some of the social entrepreneurs the Omidyar Network supports:

    • Ashoka
    • Electronic Frontiers Foundation
    • Global Giving
    • Institute for Justice
    • Project on Government Oversight

We should be drawn to the idea of social change starting locally, because individuals working together in cooperative arrangements make up the very stuff of Friedrich Hayek's spontaneous order. The folks at the Omidyar Network seem to understand this.

  1. Grameen Foundation USA - Microfinance is often considered one of the most effective and flexible strategies in the fight against global poverty. It is sustainable and can be implemented on the massive scale necessary to respond to the urgent needs of those living on less than $1 a day, the World's poorest.

    Perhaps the most famous of the social entrepreneurship ventures, the Grameen bank gives very tiny loans to poor people (mostly women) -- who, in turn, rely on community encouragement, ingenuity, and hard work to succeed. The social structures requisite for loans help women prevent default and create successful small businesses. While microfinance may never do the work of real institutional change, it is helping bring millions out of penury. (People keep mentioning rock-star Bono as the next candidate for the Nobel Peace Prize. Tosh. Mohammed Yunus, founder of the Grammen Bank, is long overdue.)
  2. Witness - WITNESS uses the power of video to open the eyes of the world to human rights abuses. By partnering with local organizations around the globe, WITNESS empowers human rights defenders to use video to shine a light on those most affected by human rights violations, and to transform personal stories of abuse into powerful tools of justice.

    Transparency can be a tremendous force for positive social change. As David Brin says "Accountability and privacy are both relatively new inventions; villagers three centuries ago knew little of either. But of the two, accountability is much more precious, and it is hard to enforce when a large swath of public life is shrouded in secrecy." The idea behind this venture is that people empowered with video cameras can make the world much more transparent simply by recording human rights abuses. The hope is that violators will be called out for such abuses at a later time. (Predatory slime working in the sex-slave trade should take note... you're on candid camera.)

  1. Echoing Green - Echoing Green's mission is to spark social change by identifying, investing and supporting the world's most exceptional emerging leaders and the organizations they launch.

    Just like any Silicon Valley startup, social entrepreneurs need investors that provide not only guidance, but resources. Echoing Green are (financial) angels of altruism. Their theory of social change includes the proposition that motivated this article, i.e. that "the entrepreneurial sprit that has long driven the economic growth in the US and around the world needs to be brought to the social sector." Examples of their work include funding and fellowships such as the one awarded to Aaron Bartley of PUSH Buffalo, whose work in urban renewal emphasizes "innovative reuse of abandoned property."
  2. Institute for Liberty & Democracy - Four billion people in developing and post-Soviet nations -- two thirds of the world's population -- have been locked out of the global economy: forced to operate outside the rule of law, they have no legal identity, no credit, no capital, and thus no way to prosper. The Institute for Liberty and Democracy (ILD), based in Lima, Peru, has created a key that can open the system to everyone -- a time-tested strategy for legal reform that offers the majority of the world's people a stake in the market economy.

    The ILD doesn't make most lists. But its founder Hernando de Soto is a social entrepreneur because he's figured out that no considerable amount of economic and social improvement can occur without basic institutions such as property rights. It is this single idea that is likely to do more for positive social change than any other, as it has for centuries in the nations of the West.

Organizations with early promise

What about some of the organizations that have not yet made the radar screen? Allow me to give sketches of a couple:

  1. Croquet Project - Could this be most socially transformative technology ever created? Still in its early stages, this immersive 3D environment/operating system/user interface is poised to supplant just about all of the computer technology we're currently using. Hyperbole? Here are just some of the benefits:
    • Since it's totally platform independent, it will drive down the cost of computing technology to make it accessible to poor people.
    • The technology is so radically collaborative that children from all over the world will be able meet in virtual classrooms -- revolutionizing education.
    • Individual users can build their own environments, create their own simulations, and collaborate with others in doing so.
    • People from all sectors of society can interact and form communities centered around their interests and concerns.

According to Thomas Friedman, the world is flat. But it is also becoming more immersive and boundless. I can't possibly say enough about the implications of the open Croquet Project here. See for yourself. (Note: Alan Kay, inventor of the ubiquitous windowing Graphical User Interface (GUI), is one of the minds behind this project among other very talented techies like David P. Reed, Julian Lombardi, and Andreas Raab.)

  1. Openworld - This venture aspires to be the technological complement to microfinance approaches. Openworld provides technical assistance and out-of-the-box commercial technology solutions to developing-world entrepreneurs. Part of the idea is that, using technology, these entrepreneurs might be able to bypass the corrupt regimes in which they have to live and function. Openworld specializes in "strategies and tools for grassroots initiatives and global good causes to become self-funding. Our aim is to advance free institutions and environments -- in both actual and virtual settings -- that enable entrepreneurs to thrive while generating resources for civil society initiatives." Here are a couple of the current Openworld projects:

    • eLearning innovations in Sri Lanka.
    • eCenter and land grant development in Kyrgyzstan.
    • eCenters and business parks in Bulgaria.

The most interesting aspect of Openworld's approach is their emphasis on property rights approaches like those elucidated in de Soto's book Mystery of Capital. Founder Mark Frazier's experience with the development of free trade zones feeds into this approach by mingling the power of the virtual with the power of property -- all under the presumption that institutions and incentives matter.

  1. FLOW - A four word mantra: peace, prosperity, happiness and sustainability. How do you do it? Return to idealism. FLOW thinks that if people are left free to pursue their own concepts of the good and the virtuous, they actually will. This libertarian-flavored organization is committed to conferences, networking, student development, and activism based on an idea of a free people working together voluntarily for a better tomorrow.

I would say FLOW founder Michael Strong is like the Guy Kawasaki of social entrepreneurship -- which is another way of saying that when it comes to radical volunteerism, FLOW wants to preach the gospel, form solid peer networks around the ideas, and market them to a increasingly larger audience. (Note: Idealism is great, but it also helps to have idealistic philanthropists like Whole Foods CEO John Mackey behind you.)

Will the government crowd out these burgeoning social entrepreneurs?

The problem with government-based entitlements and politically-based altruism is that it crowds out whole industries of entrepreneurs who are likely to do a much, much better job of fulfilling people's needs, protecting the environment, and bringing about social good. Fifty plus years of sclerosis in our entitlement systems are a testament to that fact. More money won't save them (quite the contrary). And nips and tucks around the edges of any massive bureaucracy aren't likely to do much good either. Instead, we should refocus our energy (and our personal resources) on social entrepreneurship -- a burgeoning sector of good ideas, philanthropy, and properly aligned incentives that are likely to result in an explosion of change. But that can only happen if we trust one another to make it happen, that is, without the coercive apparatus of government.

Max Borders recently joined TCS as Managing Editor. He has also launched his own social entrepreneurship venture, The Wingbeat Project.


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