Daniela Papi

Executive Director, PEPY

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People buy the WHY.... and this is a problem when it comes to investing in development work. Are we just fueling "good intentions"?

Simon Sinek brilliantly drew out a visual of the way people make decisions about purchases. They often don't focus on the WHAT, but the WHY when it comes to selecting a product, and this is true for donating as well. People buy the WHY of social impact organizations, but this means they are buying the GOOD INTENTIONS, and not the HOW, the WHAT, or the IMPACT. How can we create a cycle of change where potential donors are asking more HOW questions and where NGOs are incentivized for FOCUS ON HOW? Here is a little animated video highlighting more thoughts on this: http://lessonsilearned.org/2012/03/focus-on-how/

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    Mar 19 2012: Hi Richard - I think we are going in circles here... but that is the point I guess... this stuff is confusing! You keep starting off by saying that my video is telling NGOs to "sell the HOW".... but actually, that is not the point of the video (which I guess isn't that clear).

    I DO NOT think NGOs will sell the HOW. Why should they? Their goal is to raise the most money so that they can do the work they need to do. You are suggesting that they should show what they managed to do with the money the received. I too wish NGOs would do that, but from having worked with NGOs for the last six years, I can tell you that that is not what raises money. What raises money is pulling at people's heart strings - hence selling the WHY (like Simon Sinek pointed out).

    You and I want the same thing: NGOs to be showing what their impact is so that there can be competition and higher success rates of NGO work. BUT, my point is that just telling NGOs to "show their results" is not going to work? Why? Because donors currently DON'T CARE ENOUGH. I think that is in part because they don't realize yet just HOW MUCH money is being wasted. Like you said, donors don't want to think. They just want to check a box.

    BUT - if they keep doing that - we will continue to fuel FAILING programs. Even if NGOs were indeed selling their HOWS or being open and honest about their impact, if donors don't care about that, aren't asking about that, and can't bother to look at that information, then this system will not change.

    Donors need to realize just how waste and sometimes harm their money is causing. Maybe then they wont just click the box without thinking. Yes, having to think before we donate will indeed probably mean less money goes into the system, but from my perspective so much of it is being wasted or used poorly, that is ok! Let there be less money going in, but let that money be going to BETTER places, and we'll still have an overall better impact.
    • Mar 20 2012: Well I'm fine with NGO's changing their HOW's. I just don't see why the donors should be bothered with anything else than the why and 'taking home the what'.
      Apple is making huge profits because people in China will make iPads all day for 8$ per iPad which then sells for around 500$? That's how they do it. Consumers don't want to know that.

      Educating the donors in order to be more knowledgeable is still the wrong structure.

      And you're right about what I understood from your video. I did get the impression that you want to make NGO's sell the How to people. Perhaps most because of the lines "People buy why you do it and that's a shame when it comes to development work it is the how that matters" and "When we're just selling the why we're only fueling good intentions".

      Basicly I can draw 2 conclusions from those lines.
      1) Consumers (donors) should start buying the how rather than the why.
      2) NGO's are completely incompetent when it comes to realizing their intentions. Or perhaps there are things which makes it seem that way.

      I assumed 1.
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    Mar 19 2012: I guess it wasn't clear enough in the video, but I am not suggesting that the first move is that NGOs sell the HOW. Like you pointed out, this goes against free market economics. NGOs are just selling what the world is demanding.

    I am suggesting, like you are saying, that NGOs should be rated for and competing about the impact they are having. In many ways, they already are. The problem is, what are they competing for? Just like apple, they are competing for money. And who holds the money? In Apples case, the consumer holds the money. In an NGOs case, a DONOR holds the money and the consumer is the beneficiary of whatever projects they are doing, and those are often different people.

    So, rather than suggesting NGOs should change their marketing to reflect HOW, I am suggesting that donors, like you and I, need to start only donating to projects where we think there is an impact. If we can't tell if there is an impact, we should ask more questions or withhold our donations. THEN, NGOs will really be competing on impact, like you are suggesting.

    We are both suggesting the same end result, I am just trying to point out that, unless you and I and other donors start donating based on impact and STOP donating to NGOs where we know nothing about their impact, then we will continue to fuel wasteful and sometimes harmful projects. Does that resonate with what you were thinking as well?
    • Mar 19 2012: well we're not that far apart but I think that the structure between the 2 solutions (yours and mine) is very different.

      You're saying that NGO's should sell the "how" because, you argue, that it makes more sense (which might be correct). However that people don't want to buy the "how" they want to buy the "why".
      Meanwhile you're also saying that it's part of the responsibility of the donor to estimate if the charity is any good (where again the point you make might be valid). But (by far) most people don't want to be bothered by having to think. It's like the "check the box to become an organ donor" (just 20% or so) versus "uncheck the box to become an organ donor" (which yielded around 90%) as soon as people have to actively think about something they will often just go with the preselected option. For charities the preselected option is (as far as I know) always equivalent to "check the box".

      What I'm saying is that people buy the "why" but get the "what". If the "what" is cheaper somewhere else while the "why" stays the same everyone will switch over (free market economy). It's the NGOs responsibility to show what they managed to do with the recieved $.
      Probably not everyone will actively check these results. But it will create a gradual shift making sure that each year or so the most efficient charity gets more $.
      The people that willl check the results are
      1) philanthropists
      2) competing NGO's
      3) people that really care (officialy they are part of group 1 but the name of 1 is reserved for the really rich apparently).

      When a philanthropist switches this is already quite a large deal (which might attract media to reach the masses)
      Now if NGO's see that building a house is cheaper if they let the competitor do it... they will start to wonder what they are doing wrong.
      And people that really care also care enough to spread the word around in mouth to mouth advertisement.

      I think this is a lot better system to achieve the same thing.
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    Mar 16 2012: The ideas of a free market economy work when the feedback loop is closed. You buy a car because the advertisement says you will look cool if you do, you feel relatively cool and the car works well, so you buy another from them and tell your friends. Or, the car breaks down, you feel un-cool standing at the side of the road, and you tweet about it. Great!

    I agree with you, Richard, that part of this failing is that NGOs are not explaining or monitoring their impact well. BUT, some of them are indeed, and if donors are giving to anyone who says "We are supporting education in Africa" but they don't ask HOW, or don't ask about the impact, then the competition becomes around who can pull at more heart strings. The best marketing does not mean the best impact, and unless donors look under the covers a bit, they might be wasting their money.

    Additionally, there are indeed the NGOs who are just failing to do things well, let's call them the "I tried hard, but just didn't make it" group. Then there are the groups who are corrupt, using their NGOs status as a guise to profiteer, and are often causing harm. If both of these orgs, plus one with great impacts, are selling the same WHY and donors aren't asking HOW or what impact, then we are fueling harm. I spent 6 years living in Cambodia and watching a LOT of people fuel negative impacts, and I'd love to see that money going to good places. So, it's the NGOs AND us donors who need to make changes. If we vote with our money on HOW, then NGOs will be forced to advertise their HOW. If they can't show us an impact and how they are working towards it that we can believe in, then we don't vote for them with our money. I agree, there will still always continue to be waste in this system, but there is so much room for improvement, I'd love to figure out ways to fuel some upward motion!
    • Mar 16 2012: A lot of people actually give money on a regular basis to the same few charities. Charities which they trust to use their money wisely in order to get things done.
      Also it's not a case that everyone must follow the loop I'm talking about... As long as a few people do the loop will become a reality.

      The reason why the free market economy doesn't work with charities is simple: They are not obliged to tell you where money goes and or monitor how succesfull their own projects are.
      A very good example of this is in a ted talk about water pomps... (I forgot which it was but I think it was the one about "NGO's admitting failure" or "what happens when an NGO admits failure" or similar words). Where the project was: Let's install water pomps in Africa... which they did... and then 6 month later they gave out due to different reasons and nobody knew how to fix it or the parts to fix it just weren't there.
      The charity will say: "Hey we build 500 water pomps in that area" while almost 80% of them stops working within 6 months.

      We just need to have a way to keep track of how efficient they are... and let them merge if their goals are the same but the efficiency is different.
      Aka get a free market kind of prestige driven rewards...
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        Mar 18 2012: I don't think we are saying very different things, Richard. I feel like you are saying "NGOs need to properly track and tell us what their impact is so we can invest in positive work" and I am saying "We as donors need to only invest in organizations who are able to tell us what their impact is and how they are achieving these good intentions they sell to us." This is a cycle which can only be achieved from both sides: if donors continue to give to organizations without asking ANYTHING about their impact or the HOW, NGOs will continue a race to sell the emotions and WHYs. Both NGOs and donors need to change how they give, and like in free market economics, the idea that you go bankrupt if the world does not want your product because they are not buying it, should indeed still apply. But the people buying the "products" in the NGO world, the donors, are not the consumers of this, so they have to be asking questions if they want to fuel the best work.

        The TEDx talk you are referring to is one by my friend (and current classmate) David Damberger: http://www.ted.com/talks/david_damberger_what_happens_when_an_ngo_admits_failure.html and I too think it is a great talk. I gave a related TEDx talk here http://www.youtube.com/watch?v=IvOSiM6UKGk&list=UUCJ1VQQQiDF07XuXAqgqB6g&index=19&feature=plcp which relates to our discussion as well.

        I think we both agree - NGO work is often failing to do what it claims to do. My point is that if donors continue to fuel this same work, we are then committing to continue to fail. The cycle needs to break and people need to start demanding higher results for their money - and until donors know how to do that, what questions to ask, and what sorts of things to focus on, they'll continue to buy into the WHYs.
        • Mar 19 2012: The thing we're saying different is that you say that charities should express another signal towards the people who fund them. Being that they shouldn't convey the WHY but rather the HOW.
          While I'm saying that if they would "compete amongst eachother" and bring out results. This will result in a 'natural process' (free market economy process) where the companies which figured out the HOW will be able to get increasingly more funding (which then probably would get reduced from other charities and thus they will have to merge to combine strengths etc.).

          To speak in terms of Apple... if their products would've been really bad it wouldn't be succesfull even though they try to sell you the WHY better than any other company.
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        Mar 19 2012: Hi Richard - I replied to your thread, but somehow it ended up at the top, so just check "view full conversation" or something like that and you should be able to see it! Thanks!
  • Mar 16 2012: The idea of free market economy is that whoever does what they want to do best -> wins the most.

    So if you social impact organisation can show "using your *a number*$'s we have been able to help *a number* of people to get *something*". It should be the case that the organisation who does this best gives the people to most "I feel good" fibe and thus will gain more income next time around and it will start spiraling upwards.

    The problem however is that often the results are difficult to interpret and even more often not accurate.

    Also I would like to ask you... what is bad about fueling "good intentions"?
    In my eyes it is the failing ability of the charities to honestly convey what they did with the donations.
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      Mar 16 2012: Thanks. Your last statement helps make my point. The fact is that Charities need money and they will go any length to get it from the public. Recently, a charity organization in the UK went as far as creating and selling nude calender to generate money.

      The feedback that Daniela Papi talked about is a fine idea . . who can disagree? but it will only serve to reduce the money they can extract from the public.
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    Mar 16 2012: Indeed. The feedback loop is not closed, so they often never know if they are fueling just good intentions or real impact. If they voted with their money because of the HOW the organization was selling rather than the WHY though, this might at least slightly increase our chances of voting for the right initiatives..... eh?
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      Mar 16 2012: Correct. NGO then have to educate donors to ask questions - or come to them with set of visible project so they can donate to specific projects as opposed to loosed donation. This could however reduce the level of donation if not done properly . . . and you know NGO is all about the money.
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    Mar 16 2012: When people buy products like apple, they buy into the WHY and then they buy the product. The product is tangible so the transaction continues after the point of sale. I.e the function of the product and if the product fails the person wont buy from that company again. When people buy into what you called "development work" they buy into good intention, as you rightfully said, in exchange for better feeling. The better feeling point is attained at the point of sales so the transaction completes at the point of sale . . this is the difference.