People Fund People Not Organizations, So Maybe Do That Even More?

Last month Marginal Revolution blog posted an excerpt of a piece by Adam Mastroianni about how grant funding is broken.  I immediately hopped over to see what he had to say. While his post was mostly focused on grants funding science and the Rhodes scholarship process, there were a lot of common elements that are likely to be familiar to all who apply.

One of the first observations Mastroianni makes is that it is very easy to hack the grant process thanks to relationships you have. This both confirms that people give to people and organizations and that groups that may really need the funding but lack access to guidance, resources and insiders often get locked out.

For instance, most Rhodes selection committees include a cocktail party as part of their interview process. This is a pretty bad way of judging whether someone is a good person, but it’s a pretty good way of judging whether they are pleasant to talk to at a cocktail party, and so Rhodes Scholars are often charming conversationalists and sometimes bad people (see: Bill Clinton, Bobby Jindal, noted anti-vaxxer Naomi Wolf).

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For example, the Rhodes Trust probably hopes that by picking the most accomplished college seniors and giving them a super prestigious prize, they will encourage the youngsters to do lots of brave and risky things. Instead, the most popular destinations for my Rhodes cohort were top-tier medical schools, law schools, and PhD programs (guilty), as well as a handful of consulting companies––exactly where we would have gone if we hadn’t gotten the scholarship.

Generally, Mastroianni’s criticism is that most grant programs reward people who are already successful to the detriment of those they say they wish to help.

Mastroianni’s suggested solution is to take advantage of the flaws in the system to force it to reach into the underserved cracks and crevices. His system, which he refers to as “Trust Windfalls,” essentially allows one to provide a benefit to friends–but only once.

But isn’t it unfair that a bunch of money should go to my friends? Also yes. That’s why, if I was an Agent, I should only get one turn at awarding Windfalls. Then I’d have to pass on the responsibility to someone very different from me who I trusted to give out the second round. If I did it right, Trust Windfalls would eventually find their ways into corners of the world that conventional grants could never reach. Just a few trusted links away from me might be a Botswanan ichthyologist or a trucker smuggling medical supplies into Kiev––people who may not speak English or know the right things to say on an application or even realize there are grants they could apply for in the first place. Making Agents temporary also prevents the Trust Windfalls from being hacked: once people know you’re an Agent, every interaction with you becomes a grant application.

If people hate conventional grant funding so much, why haven’t they tried something like this? Honestly, I think it’s because trusting people seems a lot scarier than it really is. Funders have to trust Agents. Agents have to trust their grant recipients, and they have to trust the person they nominate as the next Agent. (We should maybe call the organization that oversees all this the Trust Trust.) Anybody could betray the trust put in them, which would be a huge shame and very embarrassing.

While this is an interesting idea in theory, I think it is overly idealistic in terms of thinking that people will pass the baton on to people outside their own peer group in any great numbers. Funds may be sent to a biologist studying the ecology of a Latin American country or an aid worker in Ukraine, but is the money going to a life long resident of that country or the sister of a person the Trust Agent went to college with who is working for a university program or an NGO with roots in the US? Certainly Mastroianni alludes to the fact something like this could happen.

I think the structure he suggests has a better chance at providing an equitable distribution of funds than the current system. I like the idea of leveraging the problems of current practice into a solution. But the funding source would probably need to be plugging detailed data into relationship mapping software to ensure that the 4th or 5th recipient in the chain not have multiple common ties with the 1st and 2nd people in the chain.

I guess the fact I can identify a flaw and potential solution so easily indicates it is possible to refine his proposal into something workable.  Take a read of his proposal and see what you think.