photo by Angelina :)

Recently, JP Morgan Chase & Company gave away $5 million to two hundred charities, including some arts organizations, through its Summer 2010 Chase Community Giving campaign. Pepsi has been sending $1.3 million to nonprofit organizations each month this year as part of its Pepsi Refresh campaign, money that would have otherwise gone to Super Bowl ads. American Express is donating $200,000 to each of five organizations every three months. And in all three cases, regular people like you and me are helping to decide the recipients. You’d think we’d be happy about this, right?

Wrong. After largely avoiding controversy in the arts community (though not in the broader nonprofit sphere) when these projects made their first appearance 6-8 months ago, recently philanthropy by popular vote has started to see a strong backlash in these parts. It started with a post from 2am Theatre’s David J. Loehr pointing out the huge marketing gift nonprofits were making to Chase by participating in its program. A week later, Chicago Tribune‘s Chris Jones complained that the spectacle was demeaning to the arts and “yet a further example of the rampant cult of the amateur, masquerading as [a] grass-roots movement.” Then a Twitter controversy (Twitterversy?) erupted last month when no less than Lincoln Center for the Performing Arts got into it with fellow Members Project contestant StoryCorps, prompting the San Francisco Arts Commission’s Luis Cancel to lament in the comments that “marketing and the most venal ethics of pop culture have combined in this misguided effort…to link sponsorship in the arts with [corporations’] need to reach a mass audience.”

From there, the floodgates opened. The Nonprofiteer declared that she doesn’t believe in “crowd-source philanthropy,” calling it a “lazy and manipulative approach to corporate giving.” Technology in the Arts’s Joe Frandoni weighed in, pointing out that “this model has no way of insuring the best organizations reap the rewards or that the most efficient and effective programs receive funding.” And on ArtsBlog, Alison Wade wondered aloud, “the idea of democratizing this process sounds nice, but will the money really be used effectively?” Virtually all the authors complained or mentioned complaints of the deafening volume of solicitations for votes received from nonprofits participating in the sweepstakes.

Earlier this year, I spent quite a bit of time crafting, with co-author Daniel Reid, an article for Edward P. Clapp’s forthcoming 20UNDER40 anthology entitled “Audiences at the Gate: Re-Inventing Arts Philanthropy Through Guided Crowdsourcing.” So you might be surprised to learn that I agree wholeheartedly with the criticisms mentioned above. Indeed, the American Idol model of choosing donation recipients is, in the arts at least, little more than a mild twist on survival of the fittest in the commercial market. Those with the most pre-existing visibility (update: okay, not really) and inherently broad-based appeal will be at a natural advantage to do well, meaning that worthy grassroots, new, and obscure-yet-influential organizations are likely to be shut out. If widely adopted, this approach could actually do more harm than good by undermining one of the core justifications for subsidization of the arts: the notion that there are some forms and instances of human creation that deserve to exist even if the market won’t support them. Democracy is a wonderful thing, but grand leaps of imagination are not often achieved by group consensus.

Yet one would be hard-pressed to argue that our dominant system of institutional giving is all that much better. The decisions of our corporate and foundation funders have an enormous impact in shaping the field, yet in most cases less than a half-dozen people have meaningful input into those decisions. Sometimes, a single individual might drive essentially the entire agenda for a portfolio of hundreds of thousands, even millions of dollars. That’s an incredible amount of influence accruing to an incredibly small number of people. And individuals, no matter how dedicated or qualified, are increasingly not up to the task of responsibly evaluating the full range of artistic activity within their jurisdictions. There simply are not enough hours in the day or days in the year for a human being to give ongoing, fair, and substantive consideration to the work of the millions of artists and tens of thousands of arts nonprofits in the United States today. For all of Chris Jones’s lauding of the “noble tradition of the corporate giving officer,” what percentage of the participants in Chase Community Giving or Pepsi Refresh have had corporate giving officers regularly (or ever!) attend their performances or exhibits?

So in my opinion, we need to be careful about throwing the baby of crowdsourced philanthropy out with the bathwater of popularity contest philanthropy. The latter is not synonymous with the former; it is merely a poorly executed version of it. What we need, instead, is a way of broadening out the selection and adjudication process to a greater number of people without sacrificing the qualities and expertise that make professional program officers special. To do this, we’ll still want to access the crowd, but rather than treat everyone the same, we’ll need to differentiate between good members of the crowd – the ones who are generous with their time, consider differing viewpoints thoughtfully, and demonstrate personal integrity – and bad members of the crowd – “one-issue” voters, poorly informed fly-by commenters, and vendetta-carriers. Put another way, we want to give anybody the opportunity to participate meaningfully without having to give that opportunity to everybody.

The system that Daniel and I designed addresses this challenge by establishing a new class of “star” voter: the Curator. Instead of having our regular users vote directly on arts projects submitted through our (hypothetical) giving platform, we have them vote on the reviews and commentary devoted to those projects instead. Users who build and then maintain a consistently positive reputation among their peers get elevated to Curator status — and it’s the Curators who then exert direct influence on how philanthropic dollars are distributed. We called this tiered approach “guided crowdsourcing,” in that it fuses open, flexible opportunity at the lower levels with structure and influence at the top. This concept is new to arts philanthropy, but it has found success in other fields. Recently, the Philadelphia Inquirer reported on the sense of community engendered among Yelp’s “Elite Squad” and Amazon’s super-reviewers, who derive considerable intrinsic satisfaction from performing the volunteer labor involved in sharing their experiences with dozens or hundreds of products and local establishments with the broader world. Indeed, as cultural consumers arguably look for deeper engagement with the art that’s important to them, curation represents a way to “do” without dropping everything and becoming a professional artist themselves.

So by all means, rail against the American Idol-ization of giving all you want. Just don’t give up on crowdsourced philanthropy just because we all know Jennifer Hudson should have won in season 3.

  • So your hypothesis is: “Those with the most pre-existing visibility and inherently broad-based appeal will be at a natural advantage to do well, meaning that worthy grassroots, new, and obscure-yet-influential organizations are likely to be shut out.” That seems to be relatively easily verified by looking at the winners (and theoretically losers, though that one’s harder to gather data on) of one or more of these contests. I don’t necessarily believe it to be true.

    In fact, I would guess that theatres with more time than money (in other words, smaller, more obscure organizations) have an advantage here.

    • Devon,
      The American Express Members Project contains only relatively high-profile arts organizations among its potential recipients, though it’s unclear what the process for inclusion is. Chase Community Giving, to its credit, restricts the eligible nonprofits to organizations with budgets of less than $1 million. So the very largest and most famous nonprofits are not going to be among the winners, but $1 million by nonprofit arts organization standards is still very large. Your point about organizations with more time than money is well-taken though. I decided to investigate some of the recent arts-oriented winners as per your suggestion. To my surprise, the grand prize winner, HP Alliance, is a tiny organization that apparently had no paid staff in 2009, which certainly supports your point. However, some of the others, like Heather on Earth Music Foundation, seem fairly well established. On Pepsi Refresh, it’s harder to tell since some of the winners are not nonprofits, but some of the recipients are clearly, uh, less than firmly established (e.g., http://www.refresheverything.com/3d).

      So, I think on balance you’re right – size and national profile are not the advantages that I’d thought in these contests. However, it doesn’t really matter in terms of my larger point, which is that a straight-up voting mechanism (especially one, like Pepsi, that’s designed to reward persistence on the part of voters as well as the contestants) isn’t necessarily going to result in the optimal distribution of resources.

  • You mentioned the Inquirer article, there’s also the Gawker’s commenting star system and Foursquare Super Users, both of which help moderate and guide large distributed communities. The problem is, the people most likely to become these “star votes” are exactly the folks who would be most likely to be somehow affiliated with an organization that was competing. It would be nearly impossible to restrict the benefits of winning from these folks, or I suppose more specifically, ensure they’re not biased towards a particular organization or set of organizations. At least in theory, when the ‘game’ is open to anyone & everyone, the biases should cancel each other out.

    We’ve become inured to the ‘shouting’ that goes on via direct mail & email lists and find tuning it out relatively easy. Social media is still so new that it seems all the more frustrating when our stream is interrupted by desperate pleas to vote. So we have a tragedy of the commons–if even one person starts begging for votes, then everyone thinks they have to do it. Soon enough, before we’ve even figured out how to measure ROI, all this begging is going to drive it to 0.

    But if your larger point is an “optimal distribution of resources,” that’s the definition of a free and open market right? And us imposing restrictions (like a tier of voters) will introduce inefficiencies into the market, no?

  • A real, and disturbing challenge to systems like these, relying upon popular voting online, is the possibility of cheating, or inappropriately influencing the results, such as has been happening with Digg. See http://bit.ly/cES8Yd

  • The trouble I see with these contests is that they encourage competition, and I think (warning: sweeping generalization here) competition shouldn’t be part of the arts.

    Competition assumes there’s one best way to do it (or cheapest, or most effective), and so the resources should flow through to that option. But with arts, the more voices/pieces/creativity out there, the better. The “long tail” of expressions should be infinite.

    So anything that encourages competition (including philanthropy 2.0, imho) shouldn’t be applied to the arts.

    btw, this sentence is brilliant: Democracy is a wonderful thing, but grand leaps of imagination are not often achieved by group consensus.

  • @Devon:

    There seem to be two issues here, so I’ll address them separately: the first is about gaming the system and the second is about optimal allocation of resources. Unquestionably, gaming the system is a very serious potential issue whenever there’s a strong incentive to do so, and it’s one that Daniel and I thought a lot about in writing the article. I think there are two fundamental differences between our platform and something like Digg or Chase Community Giving that each help a lot with conflict of interest. First, we were envisioning the platform as managed by a mission-driven private foundation, rather than a corporation’s marketing department or a profit-driven private company. The reason you see gaming the system behavior run amock in contests like Chase’s and Pepsi’s is because at the end of the day, that behavior serves those companies’ marketing goals. They want people to be finding ways to vote as often as possible, to get the contest’s name in front of as many people as possible, to get so involved in the outcome of the competition that they organize their lives and business practices around it, because that means their brands are just getting more and more deeply embedded in the world of the contestants and their constituencies. So actually, the companies themselves have a conflict of interest between their own goals and the integrity of the very system they created. In the case of Gawker or Foursquare or Digg, that conflict is more muted, but as private companies they still don’t necessarily have a strong interest in maintaining the integrity of their system until and unless it threatens the long-term viability of their service. Until it reaches that point, the much more compelling incentive is for them to control costs as much as possible, which means taking a relatively hands-off role toward managing the community. (It seems like Yelp is an exception to this based on outside observation, but who knows.)

    A foundation, by contrast, has as its primary interest its own charitable mission, meaning that there need not be any such conflict between its goals and the optimal functioning of the system. The other key difference is that a focus on the arts is much narrower than Chase’s (which focuses on all nonprofits) or Digg’s (all content on the web), meaning that enforcement of conflict of interest policies is more realistic. Our article goes into some detail about the measures we suggest to prevent gaming the system by Curators, but some of them include: forcing Curators to identify themselves to the world by real name; a zero-tolerance policy for reviewing proposals with which one has a professional connection with expulsion from the site the penalty; a system by which reviews can be “flagged” by the community for possible violations, to be investigated by a staff member; including breadth of reviews across multiple disciplines, geographies, etc. as one of the criteria for the reputation score that defines who gets to be a Curator in the first place; and leaving ultimate discretion for elevation to Curator status up to foundation staff. These restrictions will likely reduce the number of interested Curator candidates, it’s true, but that’s arguably a good thing: it narrows the focus to the individuals we want (open-minded fans, critics, and practitioners rather than partisans for a specific organization, individual, or scene), and makes enforcement of violations much easier.

    (While we’re on the subject, where did this idea come from that biases and conflicts of interest should cancel each other out when the “game” is open to everyone? Is that true in, say, election voting? The only way in which I can see that being the case is if every contestant has the exact same circle of influence as every other contestant, which describes no actual situation I can think of.)

    Re: resource allocation, I’m having trouble making sense of your position on this. On the one hand, if you seriously think that “imposing restrictions (like a tier of voters) will introduce inefficiencies into the market” and this is a bad thing because “a free and open market” is the “definition” of optimal resource allocation, I can only imagine what you think of our philanthropic status quo. I mean, professional program officers are the greatest distorting influence on a free and open market for the arts that I can think of, far bigger than anything described in this blog post. They introduce massive inefficiencies in the form of grant application and reporting requirements, erect significant barriers to entry via directing capital to a very limited percentage of mostly already existing organizations, and often take a long time to make their decisions. But really, if you think a free and open market is the panacea for optimal resource allocation, I must assume you don’t believe in the nonprofit arts or having a nonprofit sector at all. Why would we promote inefficiency by selectively privileging certain art forms and artists over what the market thinks is best?

    I don’t mean to minimize this issue – it’s an important one, and many people really do believe that the arts deserve no special subsidization. But I disagree, because I don’t buy for a second this core assumption that free markets and optimal resource allocation have anything to do with each other. (For more on this, see my rant against Pindyck and Rubinfeld inspired by my experience in Keith Chen’s Basics of Economics class if you haven’t already.) You yourself mention the “tragedy of commons” that results when the market for attention and vote begging in these contests is allowed to run amok. It is only through a careful and wise combination of regulation, enforcement, and feedback that a sustainable, functional system can be created that best serves everybody’s needs.

  • Brigid, I agree with this part of your comment:

    with arts, the more voices/pieces/creativity out there, the better. The “long tail” of expressions should be infinite.

    But not this:

    Competition assumes there’s one best way to do it (or cheapest, or most effective), and so the resources should flow through to that option.

    Seems to me that’s what a lack of competition assumes. Competition and diversity are not mutually exclusive in the least. When you have an art fair, for example, all of those artists are “competing” with each other for visitors’ attention and money, but the result for the visitor is a panoply of art to experience and choose from. I think what you’re talking about is really more related to profit maximization than competition. The mandate to maximize profits is what drives diversity-killing measures such as pursuing economies of scale, cost-cutting, and pandering to the lowest common denominator. And once profit-maximizing companies get powerful enough, they can get the rules changed (see: copyright law) to give themselves even more power. But that’s not about competition, that’s about fiduciary duty to shareholders. Within a market of profit-“satisfizers” or utility-maximizers, competition and diversity are not enemies.

    Ah, three SOM alums talking econ and the arts. Sharon would be so proud!

  • Daniel Reid

    Great stuff, Ian. I agree with just about all of your points.

    I’d expand a bit on your response to Devon’s sensible point about market inefficiencies. It’s true that the system we propose introduces inefficiencies vis-a-vis an open voting system (which is, of course, not the usual way of distributing grants). But I would argue that these are necessary to ensure long-run efficiency. Even if you believe that an egalitarian measure of artistic merit (which is the standard implied by democratic funding) is correct, a straight-up voting system would be flawed because artists need time to develop before they are ready to face the market. As we discuss in the 20under40 article, grants are crucial to the incubation of artistic talent; they ensure that the most gifted, rather than the most connected, artists are allowed to create. And at this early stage, experts are better placed than the average consumer to determine which artists are best poised to become great (by whatever standard). I think the guided crowdsourcing model we propose strikes this balance well, incorporating egalitarianism and meritocracy into both the selection of artists and the selection of selectors. In a sense, it uses a market-inspired system to establish necessary market inefficiencies, which in turn allow more fully informed market choices among mature artists. Given the constraints, I think it’s the best a capitalist art lover can do.

  • The thing that didn’t get enough discussion in the whole debate around Chase Community Giving, in my opinion, is that the grants could not be guided to the organizations best able to make decisions on what to do with them. And some of the Chicago theater winners have budgets so small that a $20,000 grant is a huge windfall, and windfalls frequently distort financial decision making. I wrote about his on 2amtheatre.com: http://www.2amtheatre.com/2010/06/25/chase-community-giving-what-if-you-win/

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