Lets start with some possible institutional failures in
mainstream philanthropy. Many foundations have large staffs,
and so a proposal must go through several layers of approval before
it can receive support or even reach the desk of the final
decision-maker. Too many vetoes are possible, which means
relatively conservative, consensus-oriented proposals emerge at the
end of the process. Furthermore, each layer of approval is
enmeshed in an agency game, further cementing the
conservatism. It is not usually career-enhancing to advance a
risky or controversial proposal to ones superiors.
There is yet another bias: the high fixed costs of processing
any request discriminate against very small proposals, which either
are not worthwhile to approve or they are never submitted in the
Finally, foundations often become captured by their
staffs. The leaders become fond of their staffs, try to keep
them in the jobs, regard the staff members as a big part of their
audience, and adopt the perspectives of their staffs, more so as
time passes. That encourages conservatism all the more,
because the foundation leaders do not want their staffs to go away,
and so they act to preserve financial and reputational capital.
To restate those biases:
- Too much conservatism
- Too few very small grants
- Too much influence for staff
So how might those biases be remedied?
Why not experiment with only a single layer of no?
Have a single individual say yes or no on each proposal final
word, voila! Of course that individual can use referees and
conferees as he or she sees fit.
The single judge could be an expert in some of the relevant
subject areas of the proposals (that is sometimes the case in
foundations, but even then the expertise of the foundation
evaluators can decay).
This arrangement also can promise donors 100% transmission of
their money to recipients, or close to that. If someone gives
$1 million to the fund, the award winners receive the full $1
million. This is rare in non-profits. (In the case of
Emergent Ventures there are unbudgeted time costs for me and my
assistant, who prints out the proposals, and the paper costs of the
printing get charged to general operating expenses at
Mercatus. Still, a $1 million grant at the margin leads to $1
million in actual awards. I am not paid to do this.)
The solo evaluator if he or she has the right skills of
temperament and judgment can take risks with the proposals,
unencumbered by the need to cover fixed costs and keep the
foundation up and running. Think of it as a pop-up
foundation, akin to a pop-up restaurant, and you know who is the
chef in the kitchen. It is analogous to a Singaporean food
stall, namely with low fixed costs, small staff, and the chefs
ability to impose his or her own vision...