Why Weak Charity Rules?
In April I posted on “trailer for David Alvarado’s slick-looking new [3D] film on longevity.” There’s now a new trailer:
The Methuselah Generation; The Science of Living Forever from David Anthony Alvarado on Vimeo.
They are using Kickstarter to solicit funds from folks like you to help them finish the film. The film looks nice, and I’m thrilled to be part of it. But alas I can’t in good conscience say that this is my best guess for the charity that, per dollar contributed, does the most good for the world.
It is interesting that they use an innovative way to solicit donations. Why is there so much more innovation in charity funding than in business funding? Here’s a related question: why do Alvarado and company ask for donors, but not investors, for their film? The film might make money, and if it does, why not offer to give some of that back?
The explanation in both cases is probably that regulatory hurdles are far larger for investors. Regulations set far higher standards for people who can ask for your money, if there is a suggestion that you might get some of it money back later. But why? Shouldn’t it be even more important that your money be spend well, if you won’t ever get any of it back?
This regulatory asymmetry seems to me to be an implicit recognition that we mainly donate to charity to signal our good intentions and loyalties, and that we don’t actually care much what happens to the money we donate.
If you invest money hoping to get it back and more, then you are furious if it is badly managed, perhaps stolen, and want stronger regulations to stop that from ever happening again. But if you donate money and the funds are mismanaged, perhaps stolen, so that your good intentions aren’t realized, well you aren’t actually so mad about that. You don’t as furiously demand stronger regulations. Because you already got most of what you wanted: a chance to show everyone how much you care.
Added 20Nov: David asks folks to vote for his project here.
Charities rely on donors more than businesses rely on investors. Once a business has gotten through the initial build-up, it should be able to sustain itself on re-invested profits or go out of business. Charities, on the other hand generally need to keep raising money.
Since fund-raising is more important to charities than to businesses, it makes sense to see charities innovating more in that area.
I added to this post.