Are you a foundation looking for nonprofits to fund? Consider this.

Are you looking for a nonprofit with a good 5 year plan, and programs based on research?

Are you looking for a predictable (yet innovative) model of human behavior that other nonprofits can follow for “reproducible” or “Replicable” results?

Are you trying to make rational predictions of which human services programs will work, based on equations?

(Lately I’ve been reading The Black Swan by Nassim Nicholas Taleb. If you work at a foundation or sit on the board for a foundation, I highly encourage you to pick this up. Even if you have lots of experts on your staff. Below, I share some of his ideas, and how these might be relevant to the funding model that many foundations seem to use.)

Here’s why this approach of yours is not going to work.

Let’s say you’re a program officer bent on researching which proposal deserves to be funded more. Which method has more research behind it? Is it also supported by evidence-based practices? How can you learn all you need to learn to figure out whether to fund this proposal?

Since your time is limited, do you tunnel into data, focus on crisp categories, and miss sources of uncertainty?

Of course you do.

We cling to what is called narrative fallacy. We want to believe that life is more simple than it actually is, and we write our version of history to make it seem much simpler than it was. Why do we do this? Three reasons.

1. Because information is costly to obtain.

2. Because information is costly to store.

3. And information is costly to manipulate and retrieve.

Therefore, we go with a narrative. This will save our brains some time in processing and help us get on to the next task.  We are hungry for rules because we need to reduce the dimension of matters so they can get into our heads. The more random information, the greater the dimensionality and the more difficult to summarize. We want to make sense of our environment and believe it is more predictable and more rational than it actually is.

Sir Francis Bacon commented that the most important advances are the least predictable ones.

Galileo, Copernicus, Darwin and Wallace all had ideas that took over 75 years to be accepted.

Alexander Fleming who discovered penicillin was simply cleaning up his lab.

Thomas Watson, founder of IBM, predicted that there would be no need for more than a handful of computers.

Forecasters fail to predict what innovations and discoveries will be significant, and which ones won’t.

Newton said that when you have two bodies in orbit, you can solve where they will be mathematically and analytically at any point in time, but once you have three bodies, there is no purely formulaic solution for where they will go.

Henri Poincare, an oft-overlooked philosopher of science,  had a Three Object theory (arising from Newton), which stated that after you introduce a third object into a universe of two objects, it will be impossible to predict the movement of these objects. These objects do not even have free will. And our universe of people we try to help has way more than 3 objects in it.

Poincare proposed that we can only work with qualitative matters-some property of systems can be discussed, but not computed.

Friedrich Hayek says that a true forecast is done organically by a system, not by fiat, like a foundation (or social entrepreneur) would do.

Why?

One single institution, say the central planner, cannot aggregate knowledge; many important pieces of information will be missing. But society as a whole will be able to integrate these multiple pieces of information. This disease is severely ingrained in our institutions, government, corporations, and I would add, foundations too.

The methods of physics cannot apply to social science, and so we cannot and should not quantify behavior as predictable.

If you’ve got lots of experts on your team trying to predict human behavior, it may be a better idea to go to the community and ask them what they think needs to be done. Don’t ask the barber if you need a haircut, and don’t ask the academic if his work is relevant. Maybe it isn’t.

We are being driven by history, and we think we’re doing the driving. We have epistemic arrogance and future blindness. We are fooled by reductions, especially if we have an academic degree in an expert-free discipline, and we have flawed tools of inference because we cannot take into account all actors in a given social problem, and why something will work one day and fail the next.

Hey Foundations!

Stop being top-down, formulaic, close-minded, self-serving and commoditized.

Try being bottom-up, open-minded, skeptical, and empirical.

Are you trying to ‘maximize” your “resources” and “optimize” your “funding dollars”?

People aren’t robots. You have to learn to live without a general theory.

Do you really want to help nonprofits?

Encourage nonprofits to collaborate, share ideas, and make mistakes together.

Help them love to lose.

Help them take risks and make small bets.

Help them stop being ashamed of losses. Help them do more trial and error with their services and their particular populations.

Don’t look for the precise and the local, but instead allow things to unfold, and observe the results.

What do you think? Have you ever tried to do funding this way?

What was the result, if so?