How do we prevent chronic over-fundraising leading to a tragedy of the commons in donor recruitment? Ian MacQuillin believes the solution has bee around for the past 15 years.
Last year at a charity awards ceremony, I found myself engaged in conversation with an academic from one of the London universities. This conversation came about the way so many of my conversations with people outside the charity sector start: she wanted to tell me exactly why she disliked ‘chuggers’.
At some point in the discussion she told me that what was happening was a ‘tragedy of the commons’ situation and charities didn’t realise this or the damage that it was doing.
Well, many in the sector are completely au fait with what a tragedy of the commons is and have already expressed exactly the concerns she had (I was more than a little peeved at the slightly patronizing attitude that assumes that if it’s an intellectual idea from a domain outside of philanthropy, then no-one inside philanthropy will have the first idea what it’s about).
What is a tragedy of the commons?
The tragedy of the commons describes what happens when users of a common resource – such as grazing land, a forest or a fishery – can’t resist or stop themselves from overusing that resource with the result that it is irreparably depleted.
It was proposed by ecologist Garrett Hardin in a paper in the renowned journal Science in 1968. The example Hardin used to develop his idea was that of a group of herdsmen grazing sheep on common land. It makes sense for each herdsman to add another sheep because he benefits at the expense of the other herders. But being rational, all the other herdsmen have the same idea and soon you can’t move for sheep and the common grazing land is destroyed forever. It’s very closely related to the game theory concept of the ‘prisoner’s dilemma’. (For a quick explanation of the tragedy of the commons, check out this video, and this video for the prisoner’s dilemma.)
(Hardin’s is strange paper to read at best part of 50 years remove. Even though he used an environmental resource to develop his idea – and that’s how it is most regularly applied – it’s actually an argument in favour of enforced population control and contains a section sub-headlined ‘Freedom to breed is intolerable’.)
So the argument as applied to fundraising is that donors are just such a common resource and that fundraisers are depleting this resource by continually overusing it. Although he didn’t use the term, it was precisely the concept of the tragedy of the commons that Sir Stuart Etherington was invoking when he said that fundraisers were “overfishing the waters”, right down to the environmental resource analogy.
Is it true, as the London academic thought, that charities are totally unfamiliar with the concept of the tragedy of the commons?
Mark Philips of creative agency and Rogare associate member Bluefrog wrote on his Queer Ideas blog in 2011 about a tragedy of the fundraising commons and reiterated those ideas in a session at the IoF National Convention this year called ‘What’s wrong with fundraising?’. Philips’s use of the tragedy of the commons was referenced by NCVO this year in a blog following the suicide of Olive Cooke. Charity web designer and copywriter Ben Blankey employed the concept in a blog about two-step SMS fundraising last year.
Nor is it that case that fundraisers have only recently realised that the tragedy of the commons has an application to fundraising.
In an article in Professional Fundraising in 2001 (‘The Ethical Dimension’, October 2001 – one of the very first articles that I commissioned as the magazine’s new editor), Joe Saxton used the concept to describe how the fundraising profession is good at “over-exploiting and burning out new fundraising techniques, so that they no longer work or more usually they just get a rather negative image in the eyes of the public”.
Invoking classic tragedy of the commons reasoning, Saxton pointed out:
“It is always worth any individual charity taking up a new technique because it will probably work for them…however, the net effect of a plethora of charities taking up the technique is that it becomes over-used and loses its impact much more quickly…The ethical dilemma for any charity is that while it may realise that a technique is being over-exploited, it gains nothing by not using it, and everything by doing so.”
Saxton argued in 2001 that the solution lay with sector bodies and a “broader regulatory environment”.
And it was, indeed, a determination to prevent a tragedy of the commons arising in street fundraising that led to the formation of the Public Fundraising Regulatory Association (PFRA) in 2000, as is made clear in an article in Professional Fundraising written by then PFRA-board members Matt Sherrington and Anne Bolitho – e.g. “we were overgrazing our pastures, particularly in London” (‘The Common Good’, March 2002, not archived online).
How do we avert a tragedy of the commons?
Traditional economic responses to a tragedy of the commons situation have been to either privatize the resource or to impose top-down regulation (i.e. government regulation).
However, there is a third solution. In 2009, American political economist Elinor Ostrom was awarded the Nobel prize in economics in recognition of her work in demonstrating that what she termed ‘common pool resources’ (CPR) could be successfully managed by the people who had access to the resource – a rebuttal of the tragedy of the commons idea. In other words – self-regulation. Ostrom outlined her ideas in a book in 1990 – Governing the Commons: The Evolution of Institutions for Collective Action; and it’s worth also checking out this more recent paper.
Ostrom showed that groups that successfully managed their own resources were characterized by eight ‘design principles’. These were:
Clear boundaries – between what is and is not the shared resource and clear boundaries also between legitimate and non-legitimate users of the resource.
Proportional equivalence between benefits and costs – so that members of the group have to negotiate for their benefits and higher levels of benefits must be earned.
Collective choice arrangements – shared users of the resource make their own rules about who can use it and how and when they can use it.
Monitoring – members of the group regularly monitor the condition of the resource and how other members are using it.
Graduated sanctions – there is a system of sanctions in place for transgressions of the group’s rules, but they start low and become stronger for repeated breaches.
Conflict resolution mechanisms – there are “arenas” and mechanisms for resolving conflict quickly and at low cost.
Minimal recognition of rights – the rights of users of the resource to make their own rules are recognised by government.
‘Nested enterprise’ – when groups and the resources they use are part of larger systems, there must be appropriate co-ordination and governance between them – this is called polycentric governance and it means that one single organisation does not need to maintain total authority, but governance can be distributed throughout the various groups in appropriate “nested organisational layers”.
PFRA – a model of an institution for ‘collective action’
Since 2000 fundraising has possessed such an ‘institution for collective action’, which has employed many of these design principles in its ongoing efforts to avert a tragedy of the commons in one particular domain of fundraising. The domain is street fundraising and the institution is the PFRA:
- The PFRA identifies legitimate (members) and non-legitimate users of the resource.
- Costs and benefits are proportionate: the more a charity successfully uses the resource, the more it has to pay for having done so.
- It has collective choice agreements in that members establish and administer the allocations systems that decide which members can fundraisers where and when.
- PFRA monitors the activities of its members…
- …and imposes graduated sanctions (financial penalties are not imposed until rule breaches reach a specified threshold).
- There are conflict resolution systems for resolving diary clashes.
- And it’s also part of a polycentric governance system with responsibilities and duties outlined in agreements with the Institute of Fundraising and Fundraising Standards Board.
Perhaps the recognition of PFRA’s right to make rules exists only be default because there is no legislation covering street fundraising. But recognised it certainly is, for instance by the likes of the Local Government Association.
By and large the PFRA appears to exemplify the eight design principles that Ostrom identified as characteristic of successful self-regulation of a common pool resource. And it is the only institution involved in charity fundraising in the UK that has ever come close to doing so.
‘The PFRA experience shows that charities can work together to avert a tragedy of the commons. Instead of imposing top down regulation, the solution is to let charities and agencies get together to manage the resource for themselves and set their own rules.’
It’s ironic then, isn’t it, that it’s the PFRA that appears to be most vulnerable in proposed reforms of charity self-regulation, with calls for it to be subsumed within either the IoF or the FRSB because having tripartite regulation of fundraising is ‘confusing’?
Also ironically, halfway through writing this blog, the PFRA announced that what it did was no longer regulating and dropped the word ‘regulatory’ from its name, to be known henceforth as the Public Fundraising Association, though still with the initials PFRA.
That notwithstanding, from its formation in 2000 until 31 August 2015, PFRA provided the kind of self-regulation that ought to now be held up as a beacon for current consultations on reforming the system.
The PFRA experience shows that charities can work together to avert a tragedy of the commons. The learning here is that instead of imposing top down regulation by setting, say, an upper limit on the number of times charities may contact donors, or how many times a donor may be asked on the telephone, the solution is to let charities and agencies get together to manage the resource for themselves and set their own rules.
The PFRA experience also demonstrates that polycentric governance works in fundraising. Many professions have separate bodies to set the code of conduct and enforce the code of conduct. This is how it works in advertising for instance with the Committee of Advertising Practice setting the codes and the Advertising Standards Authority enforcing them. No one thinks that’s ‘confusing’.
We have a similar arrangement in fundraising with the IoF setting the code and the FRSB enforcing it. That’s a direct analogue of what happens in the advertising industry so presumably anyone who understands that won’t find the fundraising analogue confusing either. But throw the PFRA into the mix of polycentric governance and fundraising self-reg becomes as complicated as – to quote Basil Fawlty – a proposition from Wittgentstein.
However it’s really quite simple: IoF writes the code; FRSB enforces the code; PFRA averts a tragedy of the commons by successfully managing the common pool resource of potential donors on the street.
In this polycentric system, you could plug in any new institution to do similar. If challenge eventers are running riot over the national parks, then bring charities together and let them sort out among themselves how to manage that common pool resource of access to the countryside by establishing a group that adheres to Ostrom’s eight design principles (something like this does exist for the Three Peaks). If people think telephone fundraising is too intrusive, bring charities together to do likewise to manage the common pool resource of donors who are accessible via the telephone.
We’ve had a potential solution to the current regulatory questions for the past 15 years. In the reforms that are coming, let’s make sure we don’t throw the baby out with the bathwater.
- Ian MacQuillin is director of Rogare, the fundraising think tank at Plymouth University’s Centre for Sustainable Philanthropy.