Conversations On Philanthropy
Emerging Questions on Liberality and Social Thought

Here Comes Everybody: The Power of Organizing Without Organizations

Ronald Coase's seminal 1937 work The Nature of the Firm  poses an important question: why do folks organize into firms? Why isn't there a totally "free" market in labor? Or more prosaically, why do organizations take on scales that result in relatively costly, hierarchical forms of order? Coase's answer is "transaction costs." The firm reduces the costs that would be incurred to continually coordinate actions among scattered people with disparate skill sets—all of whom would have to contract with one another and hammer out details of said contracts and then get themselves together somehow to divide labor and accomplish something profitable. So, up to a certain point, firms (or organizations) arranged like hierarchies have been less costly to organize because it is usually cheaper for some people to give orders and some to take them (the former pay the latter for the privilege). But that is changing—and fast.

Enter technology. Social media are lowering the costs of organizing and giving. Firms are still around, but these industrial forms certainly don't look the same as they did in 1937. Some people are starting to organize for certain things without organizations—from political activism to charitable giving. Clay Shirky does a great job describing the phenomenon in his book Here Comes Everybody. The book is an example-rich account of social transformation in progress. Shirky hits squarely upon the implications of these media: "Groups like ex-Jehovah's Witnesses and the Pro-Ana [anorexic] girls no longer need social support to gather; they all operate under the Coasean floor, where lowered transaction costs have made gathering together so simple that anyone can do it" (Shirky 2008, 207).

We are already so accustomed to the minutiae of social media—whether sharing a video on Facebook or emailing a blog post—that most of us fail to take the 30,000-foot view. That's largely what Shirky offers with Here Comes Everybody. Though he swoops down from conceptual heights to provide interesting examples, such as vampire groups and an epic search for a stolen Manhattan cellphone, the examples crystallize his abstract points. To Shirky, the implications of these media lag their mass utilitarian uptake, which has your teen Tweeting and grandma Facebooking without realizing the enormous social transformation of which they are a part.

What does all this mean for philanthropy?  Decentralization due to social technology fundamentally alters the means of pursuing social change through giving. How? By lowering costs in three primary areas: a) acquiring information (about social change initiative), b) coordinating action, and c) funding initiatives. Often, we give based on an organization's reputation and perhaps some anecdotal evidence of the good they do. What if we had greater access to information about specific projects and the results of organizational activity? We'd be much smarter givers. Also, what if it was easier just to get people to get together and to get them active—say, as community volunteers? Organizations or determined individuals would have greater access to human capital. Finally, what if it was simpler and more convenient to give even a small amount—$20, $5, even $1—all of which could add up for some worthy group (as long as said group has an army of givers)? These three factors alone will continue to transform the philanthropic sector in ways we cannot entirely predict.

Of course, the most important potential of distributed philanthropy—to rekindle meaningful civility and social responsibility—could be unleashed if the state got out of the social change business. Right now, that doesn't seem likely. As we suggested above, popular understanding about the power of distributed philanthropy has not caught up with popular application of the technology. Consider, for example, that a lot of online giving and organization is wasted on the titanic tug-o-war of electoral politics—i.e. who gets to run the show. Political tribalism drives our thinking, which results in a kind of dead-weight philanthropic activism that strengthens and reinforces the status quo. According to the Center for Responsive Politics, the 2008 presidential race cost an estimated $2.4 billion, about double that of 2004. The entire election cycle cost $5.3 billion1. What if every dime of that was allocated by people to making social change?

Consider also what everyone is fighting for control over: entitlement spending alone accounts for about ten percent of US GDP2. One-tenth of our economy is going to bureaucratic means of "helping" people in various ways, from healthcare to welfare. What if just a quarter of those resources went to distributed philanthropy; that is to a new, high-performance market of social values with its attendant experimentation and feedback loops? Social entrepreneurship could not only be a powerful new sector, but it could unleash some of the value currently being pressed down by the monoliths of state bureaucracy. Social problems could be solved via the wisdom of crowds, rather than the whims of legislators. We might disagree about the extent to which there is room for both public entitlements and private charity, but perhaps we can agree that there is considerable crowding out of charity by the public sector. And government simply doesn't do "distributed" in, well, much of anything. 

Nonetheless, despite the fact that government consumes most of what could reasonably go to distributed philanthropy, giving is alive and well. In 2008, people gave in excess of $307 million3, despite a major recession. That is a staggering amount. It may seem modest next to recent stimulus bills, bank bailouts and industry nationalizations we were all compelled to pay for, but Americans are still generous by any measure. If this level of giving continues—and these resources become positively transformed by technology—we are likely to see unprecedented social change occur as transaction costs for information sharing, coordination and funding continue to fall. Indeed, even if people give less in the future, we can do much more with much less due to the kinds of efficiencies distributed philanthropy enables. We can look forward to Tocqueville’s America on steroids, Coase's firm becoming less hierarchical, and Smith's invisible hand extending to help like never before., “U.S. Election Will Cost $5.3 Billion, Center for Responsive Politics Predicts,”October 22, 2008.

2Congressional Budget Office, “A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075,” June 4, 2002.

3Paula Wasley, “Charitable Donations Fell by Nearly 6% in 2008, the Sharpest Drop in 53 Years,” The Chronicle of Philanthropy, June 10, 2009.

Max Borders is a thinker and writer who recently moved to Austin, TX.

Read more reviews