THE BLOG
04/11/2007 03:59 pm ET Updated May 25, 2011

Central Planning vs. Markets for Aid

"But doesn't that mean...?"

Yes, it does.

I was talking to a new donor recently about GlobalGiving, and after a casual back and forth about some of the features on the site, he asked me: "But doesn't that mean that marketplace mechanisms like GlobalGiving should replace the current top-down systems?"

Over the past few years, during the infancy and early adolescence of GlobalGiving, I have often hedged my answer to this question. This was partly because I did not want to pick a fight with big aid agencies and partly because I felt that until we proved the concept I would not have much credibility.

But recently, more and more people have urged me to be more explicit about our mission, and to stop beating around the bush. And now that we have proven the concept by facilitating $5 million in funding to over 800 projects aound the world, I guess it is time to take the gloves off.

So here is my unequivocal answer: Yes it does.

Over the coming weeks in this space, I will be spelling out as clearly and explicitly as possible what we are up to here at GlobalGiving, and what we hope to achieve.

The bottom line is this: Our goal is to revolutionize the international aid and philanthropy field. The current system has spent about $2 trillion over the past fifty years with little to show for it. That is because the current system resembles central planning in the former Soviet Union. Most decisions are made and most resources allocated by a relatively few people we call "experts." Programs are designed in capital cities, with little information about what people actually need and want. During and after program implementation, there is little feedback from the field about whether things are working or not. There is no competitive pressure among agencies to deliver the most effective solutions. As a result, massive amounts of funds have been wasted (and sometimes even used to harmful effect).

The current system is terrible. Criminally bad. It is an abomination if you think about what it is supposed to achieve.

Our mission is to overturn the current system by creating a real marketplace - an open marketplace of ideas, of funding, and of talent. We will spearhead a new paradigm where programs are designed by the people themselves, where anyone can contribute an idea and help fund promising initiatives, and where performance matters.

Does that mean the world will be better off?

Yes it does.