The debate about measurement and efficiency in the third sector is once again coming to the fore, as the government talks up the ‘Big Society‘ while at the same time announcing widespread cuts. It’s an opportunity to demonstrate how our thinking about giving influences the way we conceive of the relationship between the government and the voluntary sector. In recent years, the government has moved away from a gift model, towards an exchange model in it’s approach to investing in public services and community development. For example, in semantic terms this means no more talk of grants, aid and funding awards, instead it’s all about commissioning, contracts and loans.

This growing move to make government funding of the voluntary sector more like a transaction, is changing the relationship between the two. [Commodity] exchange logic demands that the government, as a commissioner of services from the voluntary sector, makes payment contingent on results. Whereas in the past, the government’s approach was closer to gift logic: grants that were more like donations. Government funding in the past was often given on the basis of a long standing relationship or as more impersonal giver, as with giving to strangers, acting as a financial proxy between citizens and civil society.

I’ve been exploring what the difference is between giving and exchange systems on this blog over the last few months, but here cited in Peter Kollock “The Economies of Online Cooperation: Gifts and Public Goods in Cyberspace“, Duran Bell in Modes of Exchange: Gift and Commodity [PDF] sums up some of the differences:

“[A] distinction between gifts and commodities is made by Bell (1991), who focuses on how individuals can increase the benefits of their exchanges. In a gift economy, benefits come from improving the “technology of social relations” by, for example, increasing the range and diversity of one’s social network. In commodity economies, the benefits come from making improvements in the technology of production. Thus, gift economies are driven by social relations while commodity economies are driven by price. It is also important to note that gift exchange and commodity transactions are ideal types, and any economy will be a mix of these two types of exchange as well as many intermediate cases between them.”

In this post, I’d like to discuss some the arguments that this issue of the relationship between the government and the voluntary sector provokes.

Rethinking public services

The way the social web in particular has led to the development of new communities has energised the rethinking of public services. Much of this is based on the power of the web to connect people and foster collaboration.

Dan Mcquillan was the final speaker at the myPublicServices event in London on November 26 2009 that discussed how the social web could help transform public services. This video was filmed by David Wilcox, Social Reporter. In this piece, Dan Mcquillan talks about how the transformation of services involves shifts of power. He mentions the idea of recuperation where ideas that are perceived as radical, are commodified and incorporated within mainstream society.

He also mentions the example of transition towns as a social movement that demonstrates the energy we have within. Transition towns are a response to the twin pressures of Peak Oil and Climate Change, where some pioneering communities in the UK, Ireland and beyond are taking an integrated and inclusive approach to reduce their carbon footprint and increase their ability to withstand the fundamental shift that will accompany Peak Oil.

I mention Dan Mcquillan’s talk and myPublicServices event (put together by Patient Opinion) because it’s a great example of this contrast between the culture of giving and collaboration on the social web, and the culture embedded now in most public services that in delivering services, these institutions and bodies are involved in some kind of commodity exchange. As an aside, it’s worth noting how recent this view of public services is. For much of the 20th Century, the predominant controversy was the clash between whether ‘command and control’ or free market mechanisms were the best way of delivering public services.

First point then, is that this discussion about transforming public services is a political discussion, not just an economic question of efficiency. It’s important not to lose sight of this, as many present the issues at stake in terms how to get the biggest bang for the taxpayers’ buck.

This is a more nuanced argument than it first appears. Arguments for focussing on economic efficiency are not just because the most efficient delivery of services costs less, but because it provides society with a clear mechanism for coming to collective decisions. As Oliver Kamm puts it:

“Moral values are incommensurable. They are not necessarily judged on the same scale. Arguments about efficiency are easier to come by and, thus, easier to come to a social consensus about.”

As moral values tend to be incommensurable, in other words, there is no straightforward way to compare one against another. For exchange to work, by definition, you need to be able to compare one service against another. Otherwise how would you know how to make the decision to exchange. Exchange logic craves comparative information. In fact, it’s driven by comparison. Gift logic on the other hand, is driven by the connection or relationship between the giver and the receiver.

Money measures, giving connects

One of the functions of money is as a measure that facilitates exchange. As modern giving activities have become increasingly dependent on wider monetary system, so money holds out the possibility to some as a way of measuring impact. It’s important to note that most measures of social impact come down to money as a measure. However, just because giving is supported monetarily (for example through monetary donations) is don’t mean that it makes any sense to measure social impact in terms of money. Giving is the different paradigm based on making personal connections and relationships. Money has developed in a way that allows transactions between people without creating personal connections and relationships.

Inputs and outcomes

When the government began to favour the policy of compulsory competitive tendering (CCT) [later became Best Value] in the 1980s, the emphasis decisively changed. CCT meant that central forced local authorities to put various services out to competition. However, it promoted competition between tenders that could cut the input costs of the equation. Recently the focus has changed to measuring outcomes.

The 2020 Public Services Trust produced a report called ‘Better Outcomes‘ (PDF) which explores outcome commissioning that seeks to incentivise the achievement of specific outcomes, whether the delivery agency is from the voluntary sector or not. Both CCT and outcome commissioning are moves towards an exchange-based system whether that is through setting up tendering processes on the basis of cost, or through incentivising the achievement of specific outcomes.

A question of motivation

What’s ironic is that it’s an example of thinking in public policy and private sector spheres moving in very different directions. The problem with introducing hard outcomes at the social level, is that they crowd out the factors that motivate individuals to achieve those outcomes on the personal level.

That’s to say, policies that privilege hard factors like cost inputs or quantitative outcomes undermine the very thing the voluntary sector does better than the public or private sector: how it taps into what really motivates people to effect social change whether that paid staff, volunteers and service users themselves. To use the terminology of motivation theory: it’s moving the voluntary sector away from the intrinsic motivators towards the extrinsic motivators of competition on price and financial rewards for hitting key performance indicators.

This is just at a time where more and more research is urging companies in the private sector to look beyond crude extrinsic aspects of motivation and focus rather on intrinsic points like energy, enthusiasm and a desire to continually get better. Behavioural economists, educational psychologists, social psychologists among many others (Dan Pink, Dan Ariely, Bruno Frey, to name a few) have produced a growing mountain of literature on this. These are not new ideas and go back all the way to Abraham Maslow, Frederick Herzberg and Clayton Alderfer amongst many others. It seems desperate that policy with regards to managing the voluntary sector is going in exactly the opposite direction.

Giving is all about intrinsic motivators such as doing what you feel is important and what gives you a sense of satisfaction. On the other hand, exchange logic is driven by extrinsic motivators like the price of a commodity, the cost of a service or the penalties of not making a particular choice.

Exchange thinking crowds out the reason to give

So what’s driving the voluntary sector away from what it does best?

Just last week I was talking with a worker from big UK charity that supports young people who are beyond the reach of mainstream routes into work or learning. What he told me encapsulates this phenomenon described above. Now his organisation is paid for every person who achieves employment at the end of the period of contact with the charity. The twist is that this is dependent on each young person remaining in that employment for six months. Once that’s achieved the charity is paid. It’s a nice clear hard outcome.

The result, though, is perverse. It incentivises the organisation to involve those who are more likely to achieve the target of being in work for six months at the end of the contact with the charity. In other words, it’s an extrinsic motivator (an externally agreed target) that crowds out the intrinsic motivating factors such as the satisfaction or challenge of building connections with the hardest to reach in our society. We give and respond to gifts from others for reasons personal to each of us, not because of impersonal and inflexible factors beyond our control.

Equivalence (league tables and all that stuff)

And so many have identified the challenge here as being about a separation between different levels. What if we could translate between the micro, individual or personal level on the one hand, and the macro, social and impersonal level at the other. There have been a proliferation of techniques that attempts to solve this ‘problem’ of translation.

An interesting one from the world of education has been to suggest that part of the problem of not being able to compare schools in this case, has been to factor in the starting points of each. If only we have a baseline, we can compare the value added of each school that allows for those whose kids are more affected by different social disadvantage.

Another translating technique is to establish equivalence. Examples of this approach is the VIVA audit in volunteering or the Social Return on Investment. VIVA seeks to translate volunteering from giving to exchanging, by drawing an equivalence between a particular volunteering role and a similar role that is remunerated. The method of Social Return on Investment (SROI) focusses more on outcomes than inputs (such as volunteering time). It allows charities to compare the total value of their outcomes against the value of the inputs needed to achieve those outcomes.

In other words, SROI enables charities to be able to explain the value of their work in the following way: ‘for every pound spent, we create ‘x’ pounds of social value’. Again SROI functions by being able to find equivalent activities in other sectors with established costs. For example, the cost of keeping someone in prison for six months or the cost of treating someone with a particular illness. New Philanthropy Capital have just written a position paper of SROI which goes into lots more depth. YouthNet has taken part in a project to explore the practical applications of SROI.

Equivalence leads to confusion

There are many concerns with these techniques in translation that explain giving against exchanged equivalents. One pointed out by Jayne Cravens on her post ‘dollar value of volunteers‘, is that people start to take the idea of equivalence too literally and overlook the very real distinctions between giving and exchange. In Jayne’s example, equivalence can lead to substitution with employers cutting paid staff because involving volunteers is such great value it saves money by substituting paid staff with volunteers. The equivalence that translation gives us between the world views of giving and exchanging should not be confused with the two being equal. They are fundamentally different.

Equivalence promises the unrealistic

Another concern raised on the blog Concrete Solutions by Liam Barrington Bush (found via i-Volunteer) is that searching for any equivalence between giving and exchanging is like ‘measuring water with a ruler‘. Liam Barrington Bush makes the point that (citing Glouberman and Zimmerman) it’s the complexity of social problems that makes equivalence impossible. Instead, the issue of trust between the funder and the charity receiving the funding is the key, rather than where a charity comes in a performance league table. The role of the state in fostering public trust is an interesting broader philosophical question. Onora O’Neil amongst others has looked at how we can develop a more practical approach to trust.

Martin Brookes from New Philanthropy Capital argues in The Guardian that need to provide ‘evidence of their impact’.

“If charities want to be the answer to helping build “big society” they need to get serious about demonstrating their impact. The best should be supported and scaled up. The less good might be earmarked for cuts. If ministers choose this path, meeting the twin goals of cutting the deficit and fixing social problems is a possibility.”

It’s surely the case that charities need to be able to explain their work in terms of how they are achieving the mission. However, it is not at all clear that a charity needs to be able to compare its impact against other charities or public services. Instead charities need to explain their work in terms of the relationship they have with all their stakeholders (service users, funders, volunteers, paid staff, etc). When you give to a charity (e.g. making a donation or volunteering) you’re not purchasing a social impact, you’re connecting with others to help bring about that social impact.

In the end, giving is all about personal relationships

The issue of trust, I think, brings us back to the importance of the connection and relationship between the giver and the receiver. In terms of giving, the relationship is everything whoever the givers and receivers are: government, business, citizens, state, civil society organisations, etc. For a system based on commodity exchange within a free market, comparison is everything, especially where your relationship with the prospective providers is weak or non-existent. However, for a system based on giving, the relationship you have with those you give to or receive from is everything.

In the end, the efficiency of volunteering and of the voluntary sector, can only make sense in the context of the personal relationships and connections that the giving and receiving between the stakeholders involved makes possible. What we are looking for are new ways to understand the significance and meaning of these relationships and make decisions collectively and individually about them. How the state supports the voluntary sector and volunteering is a very live issue which has to do with how we value the role of giving in our society and the common good. It’s not an issue that can be decided by resorting to arbitrary and confusing measures that institutionalise assumptions about the nature of social impact and economic efficiency.

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paddaniels has content marketing with Arkayne Socialize.

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