Tuesday 25 February 2014

Maslow's Market Intelligence

We share an idea for how charities might become smarter in a networked world by using business intelligence concepts and a transparency index based on Maslow's Hierarchy of Needs.

There is no shortage of challenges facing charities. As humanity grapples with complex issues, it is through the power of networks that the not-for-profit sector can best address human needs. To make a greater impact, donors and charities should take a closer look at their organisation as one option in a marketplace of alternatives.

Entrenched poverty, food security and failing education systems are large-scale challenges that also present massive opportunities. Through open data, these opportunities can become more apparent as a form of market intelligence. In this blog post we hone in on how open data may be structured for the benefit of all.

Trusting in an open market 

Are you familiar with the open data agenda? It is heavily focused on releasing data about government spending, but charities are also joining in. Increased transparency was discussed in our last blog post, as a means to help fight fraud and failure. Corruption can certainly be cut down with open data, but for charities, the true cause is deploying innovation to better serve the disadvantaged.

Donors want to see actual results and would likely approve of charities that embrace open philanthropy, offering a higher level of accountability concerning their efficiency and expenses. In our Anticipate Change community, Peter Feltham commented that it can be difficult, however, to uncover a charity's most revealing metric, "the percentage of their receipts [that] make it out of the door to the benefit of those they are trying to help."

The "overhead myth"

Many are critical of how charities spend, especially on compensation. Yet without competitive compensation, business-savvy talent will choose higher salaries in the private sector. Dan Pallotta compels us in his TED Talk to see philanthropy as a "market for love", one that requires fair rewards and necessary overhead. His thought-provoking talk encourages us to challenge why "we confuse morality with frugality", forcing us to look at a charity's spending more like that of a business.

Overhead has become a stigmatising term for the not-for-profit sector. In an open letter to donors, three leading charitable players in the USA joined together to denounce "the overhead myth". If charities are to embrace openness, donors should assess them more fairly, as businesses involved in a market that requires money to make an impact.

Maslow's Index

What if we could put so-called overhead into perspective by measuring the effectiveness and impact of charities, grouping them by how well each meets particular needs? What if these needs were categorised with the overarching schema of Maslow's Hierarchy of Needs? Martin Brookes, who recently became the Director for the Paul Hamlyn Foundation, said it's both possible and morally responsible.
"Where we give and how we give matter, morally. Some charitable causes are just ‘better’, and more deserving, than others."
Maslow's pyramid model describes a general pattern of motivations. Food and water is at the base of the pyramid; then safety and stability; family and belonging; self-esteem; and finally "self-actualisation" at the top of the pyramid.  In 2010, Brookes urged an audience in a speech at the RSA to consider food and water as a first priority, but it is worth noting that all needs interconnect.

There is a multitude of problems that require an intelligently networked market of charities to tackle. Consider a child who struggles at school, is malnourished, and is receiving insufficient support from his unemployed father and disabled mother. To say that the priority should be given to one need may overlook other aspects of a problem that is far more complicated, including the child's family, the education system, and economic realities. All of these variables are too complicated for anyone charity to handle.

Market Intelligence for Charities

How could the concept of market intelligence inform Maslow's Index so that it assists the not-for-profit sector in addressing such complicated problems? Rather than simply ranking needs, charities might recognise the potential of cooperation based on the problems each is equipped to tackle. Donors could also participate by providing some of their own criteria and data.

It is worth noting that charities are largely opposed to being ranked. Rather than forcing them into ranks based on Maslow's hierarchy, a network model would be preferable. Pamela Rutledge believes that Maslow's model should be "rewired" to reflect the reality of social networks, What Maslow Misses (featured in Forbes by Steve Denning). In her essay, she shows that social connection is essential to meeting all needs.
"Without collaboration, there is no survival. [...] Our reliance on each other grows as societies became more complex, interconnected, and specialized. Connection is a prerequisite for survival, physically and emotionally.”
Maslow's Index could signal a higher level of transparency, as well as a willingness to strike up relationships in a networked pursuit to move people up the pyramid. Participating organisations could make more strategic decisions that produce more systemic impacts.

Networked Philanthropy

Philanthropists could also participate and put their money behind charities that know how to collaborate. The philanthropic preferences of social investors could be categorised, encouraging donors to be less insular, as a report from the Monitor Institute that warns us that philanthropists will be "doomed to repeat the same mistakes again and again" if they continue to fail at coordinating their efforts. The report quotes innovation theorist Bhaskar Chakrovorti:
"The players in various networked markets appear to be prisoners of their own individualism. The problem is that the decisions that make sense at the individual or institutional level are not necessarily the best choices when viewed in the aggregate."
Philanthropists could participate in Maslow's Index by sharing their expertise. In an article for The Guardian, Jonathan Breckon from the Alliance for Useful Evidence says that charity donors in the UK, "are sitting on a treasure-trove of data that could benefit the entire social policy sector."  He tells donors to share their knowledge with each other, as well as grantees, practitioners and policymakers. He encourages the use of data visualisation, such as those presented by the UN Global Pulse.

Combined forces 

Charities and funders could be more effective if they addressed needs together, using Maslow's Index to combine their strengths to make a positive local impact. The philanthropic network could be built around the indexed participants, facilitating connections between needs and offers of support. The principles of open philanthropy would be perused by its members, along with the overall vision of making it possible for more people to reach the top of Maslow's pyramid.

Participants in the network could learn from each other's strategies by benchmarking and sharing knowledge. We can see examples of this with issue-based networks like The Association of Charitable Foundations which is said to be an 'excellent' place for non-profits to share ways of becoming more effective.

There is also New Philanthropy Capital (NPC), a charity think tank that has been called "the equivalent of an equity-research firm for the philanthropic marketplace."

The Social Impact Analysts Association is an international body of social impact professionals who create and share knowledge about social impact analysis.

Then there is Keystone Accountability which helps NGOs, social investors, networks & grantmakers develop new ways of planning, measuring and reporting on their results by using benchmarking surveys.

Business Intelligence counts for charities

At Cause Analytics, we envisage that this idea can help facilitate more positive local impact. Our specialty, however, is business intelligence, which we know has helped charities like the Claire House Children's Hospice. The Hospice provides free respite and care to children and young people with life-limiting medical conditions has improved its analysis of donor data using the data visualisation software we deliver to our customers. Janet Abraham, the Hospice's donor development manager explains how mapping out their transaction data has helped improve engagement with donors and improved the impact they had on their communities.

Business intelligence can aid the not-for-profit sector in achieving greater impact, in fact, it needs to. According to a study by software and services firm Blackbaud, as many as 57% UK non-profits have been struggling with turning their data into marketing and fundraising insight. While 30% of respondents felt they utilising data well, 24% said they were struggling to manage the sheer volume of data generated. The overall efficiency of the sector could be drastically improved if data were more usable.

The experience of both donors and charities may be simplified using personalised dashboards with rich data visualisations. With the transparency offered by Maslow's Index, charities could network and bolster market intelligence with their open data. This intelligence could be plotted onto maps, enabling participating donors and charities to see their impact by geographical location.

Seeing this idea in action would really be something impressive, don't you think? More needs would be met. More struggles would end. More charities and donors would win. Smarter charity is possible in this networked world of ours. Let's make it happen. Maslow would approve.

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