A Nobel Prize For The Voluntary Sector

Sunday, November 15, 2009

By Charles H. Hamilton
Senior Fellow, Philanthropy New York

A few words about a recent Nobel Prize and its relevance to philanthropy. No, this isn’t about the Peace Prize to President Obama, which I think was a timely reminder of the value of hope. The United States’ international image is changing and that is all for the good; whether that hopeful image becomes reality remains to be seen.

By contrast, the Nobel Prize in Economic Science was awarded to Dr. Elinor Ostrom for her decades of real and important research on “economic governance.” It is good to note that many quite different foundations have funded her research. Two elements of her work bear mention here for their relevance to philanthropic practice.

First, much of her work elucidates the Tocquevillian insight about the value and efficacy of voluntary associations. Her many grassroots empirical studies have focused on how people can organize themselves to manage “the commons”: common property and resources. The conventional wisdom is that common property will be poorly managed, so it must either be regulated by central authorities or privatized. In her groundbreaking 1990 book Governing the Commons, and in her ongoing work, Dr. Ostrom has shown us that there is a third way. What does this mean?

It turns out that in many different contexts common resources can be managed successfully through robust institutions and often sophisticated rules devised by those very individuals who use and have a stake in preserving the resource. Cases come from around the world, such as fisheries, forests, pastures, lakes, lobster grounds, and water resources. For instance, private property is the norm for farmlands in a Swiss village, and the pastureland has been managed as common property for hundreds of years. There are lands in Japan held by thousands in common. Successful examples also include ancient communal irrigation systems, modern water systems, and community property forests. This is not merely a small-scale possibility for environmental issues. Common resource or property situations are—pardon the pun—common, and this third way can have much wider applicability.

Not all commons issues can be managed successfully in this way, of course. There are real tragedies where managing common resources leads to overuse and degradation. But there are very successful alternatives to the usual solutions for these problems that are proffered by foundations of all stripes. Towards the end ofGoverning the Commons, Dr. Ostrom writes: “if this study does nothing more than shatter the convictions of many policy analysts that the only way to solve common pool resource problems is for external authorities to impose full private property or centralized regulation, it will have accomplished one major purpose.” Her work demonstrates that it would be extremely valuable for us to consider ways to work more closely with communities to help them develop this third approach to govern the many types of resources they use in common.

A second, more general theme is how to nurture this broader perspective about the possibilities for voluntary associations. In her 2002 article on “Policy Analysis in the Future of Good Societies”, Dr. Ostrom is eloquent about the need to “overcome our addiction to overly simple solutions to complex problems.” As she and a co-author wrote recently in The Encyclopedia of Earth:

It is difficult to craft successful, sustainable and robust local institutional arrangements by imposing of rules from external authorities or through the influx of funds from external agencies. Unfortunately, many policy analysts have not recognized this problem. All too often, analysts enthusiastically propose blueprint, cookie-cutter approaches to community conservation. These approaches are based on relatively simple, even somewhat simplistic models, of what they consider to be “community” management applied across multiple contexts.

This search for simple panaceas is a danger that lurks as much in the halls of foundations as it does in academia. Indeed, to borrow a phrase used by Tony Proscio in another context, the constant presentation of panaceas seems to have no natural predator in philanthropy.

While we all “know” better, we are still too quick to impose a particular remedy on many problems. I am sure we can all think of examples and this column is too short for a litany of cases. Simply consider the perennial solution suggested for nonprofit sector problems through merger mania, or the many holy grails in education funding: school consolidation, then small classes, then small schools, then directed learning, etc. This is not to say that there haven’t been inspiring and effective foundation initiatives. But as a field, we need to do a better job of developing and testing a richer set of policy ideas and encouraging a more robust discussion. Interestingly, “diversity” is a term one often finds in Dr. Ostrom’s work: the diversity of perspectives that need to be considered and the study and celebration of “the diversity of institutional arrangements that humans have crafted to cope effectively with different settings and problems.”

Dr. Elinor Ostrom’s well-deserved Nobel Prize is a welcome reminder of what we should value in the philanthropic endeavor, how we may fall short, and the ways we can get closer to what we can accomplish. Dr. Ostrom’s research on a third way to resolve common resource issues and her desire for more diversity in the opinions about and solutions to society’s challenges reinforce each other. They have allowed her to “see” differently. We need to see differently as well.

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