The Future of Impact and Impact Middlemen
Reflections from a two-day conference with the elites from the impact sector, marking the inception of "Alliance to Push Harder"
What is your association with the word elite?
Be honest.
Today, our collective ecology of imagination has been salinated to such an extent that we are wired to conflate elite with villains conniving in private boardroom meetings, hobnobbing with fellow elites in Page 3 events while making the right noises with performative acts of philanthropy that perpetuates the status quo instead of changing it.
And yet this was not always this way.
Once upon a time, the word ‘elite’ referred to those ‘chosen persons’ (from the Latin word "eligere," which means "choose") who went beyond their immediate work and the institutions they represented -whether it was the State or the Market or the Society- and worked for the ultimate wellbeing of the collective.
Few weeks ago, I felt honored and privileged to be invited to participate in an elite congregation of exemplary leaders working in the Impact sector who came together to introspect over the fundamental bottlenecks that inhibit the sector and explore the possibility of co-creating an ecosystem that could have a set of common principles to address the challenges bedeviling this sector.
Why is this introspection necessary?
The ‘Impact’ Sector (or the non-profit NGO/Development sector, whichever way you want to call it), working on the edges of the Market, Society, and State has been an illegible beast by its very nature of being. When it situates itself at the liminal edges of government, civil society, and markets, the odds are heavily stacked against hazy definitions of Impact, depending on which locus of control the organization is operating from.
Take the case of doubling farmers’ income.
Would doubling farmer income count as ‘Impact’ when it exploits the groundwater table in water-stressed regions thereby depleting the long-term asset of the farmer?
With no shared approaches to measure and scale impact, this meant that this sector has no institutional memory of its own, except when it resides in the minds of veterans who’ve seen seasons of the sun, and therefore doomed to repeat mistakes without sharing metis that could foster collaboration and knowledge sharing based on a deeper understanding of interconnected systems and situated solutions at a local level.
When a sector of such kind remains an illegible beast, with no institutional memory of its own and hazy definitions of impact, it starts to suffer from what behavioral psychologists call “functional fixedness” — a cognitive bias that demands them to view objects in terms of their most apparent functions. HR teams cannot but do HR; Marketing teams cannot but do Marketing. Technologists.
Impact Sector cannot but do projects and programs.
Why is the Impact sector conditioned to think in program modes of operation, with deterministic project timelines that perpetuate comforting illusions of certainty inside templatized reports designed to sing the tunes of pied piper funders?
Is this ‘illegible complexity’ the reason why NGO bashing has become a favorite sport in this part of the world, despite having a commendable report card of what it could achieve in ‘shifting the needle of society toward positive directions’ over the last seventy-five years?
This NGO-bashing mindset is best exemplified by Nassim Nicholas Taleb’s reductive tweet urging people to start a business if they want to save the world.
I challenged this view many moons ago and poked holes to dent the inflated balloon of techno-optimism.
In case you were wondering, this fractious relationship between the world of business and civil society is mutual.
The civil society reciprocates this overt hostility with a jaundiced view towards market, agribusiness, and agritech, often playing by classic Bollywood tropes of “evil” baniya (trader) and propagating old, viral ideas of, in the eloquent words of Arvind Subramanian, “2A variant of stigmatized capitalism”.
As someone who has been working on the ground, striving to bridge the Latin of Development with the Greek of Agritech, I’ve realized that the subterranean layers of the problems lie in how the Impact sector organizes itself and gets its work done.
In the technology consulting world, if you are advising change, there is an invisible Chinese ethical wall that ought to prohibit you from selling technology.
If there is one thing that the 2008 financial crisis taught us, it was the importance of these Chinese Walls to prevent buy-side analysts from talking with the sell-side analysts without a lawyer.
As Nassim Nicholas Taleb once famously put it,
“You can't be serious about advising change when you have a technology to sell. You either give advice, or you sell technology. It's unethical to think you can do both.”
If this is the case, how can one single player from the Impact sector advise change AND implement solutions in the community?
How can one single player fund and implement change on the ground with the help of partners, evaluate their performance on the ground, and tell the world what it is doing to receive further funding?
Why is nobody seeing a conflict of interest in providing epistemic power to the players of the Impact sector in shaping how we think about impact at multiple levels?
Problems of this kind have already been codified and are called agency problems.
This problem is so prevalent that it has now become a law.
Pournelle’s Iron Law of Bureaucracy: In a bureaucratic organization, agent goals trump principal goals.
Aren’t we seeing agent [nonprofit] goals trumping principal goals [funder] when we see development projects stuck in an endless treadmill of programs and projects, designing further programs to address the findings of previous development projects?
If we are serious about disrupting the program mindset of the Impact Sector, isn’t it imperative that we build a Chinese wall to separate the functions of advising, funding, and implementation?
The trouble with advising change is that when it is useful, it benefits both the advice giver and the recipient, while, when it isn't useful, it harms only the recipient community, leaving the advice giver unscathed.
Over the past few years, to allay the anxiety of this illegible complexity and to deal with the challenges that emerge from agency problems, a newer set of players have entered this sector.
I call them Impact Middlemen.
Much like middlemen who make double coincidences of wants unnecessary for farmers to sell their produce, Impact middlemen make double coincidences of wants unnecessary for philanthropists and nonprofits. Impact middlemen advise nonprofits and philanthropies, set targets, implement programs, partner with foundations and corporations, and measure and monitor their progress.
Although collaborative philanthropy and Digital Public Infrastructure have the potential to address some of these fundamental roadblocks, these are early days as we shape the contours of the future of the Impact sector with enough checks and balances in place to address the nested layers of conflict of interest endemic in such complex ways of organizing.
Can Impact Middlemen with the help of collaborative philanthropy models and Digital Public Infrastructure address the agency problems inherent in the Impact Sector?
Or can the Impact Sector evolve to build sufficient ecosystemic support infrastructure to create a Chinese wall between those who represent the community with adequate social capital on the ground and those who represent the tested solutions that have scalable potential?
I don’t know. What I am discovering is this.
The future of Impact cannot thrive in an asymmetric relationship between the funder and the nonprofit and the giver and the recipient. We need a new collaborative approach that is capable of solving wicked problems we face at the liminal edges of Food Systems, Climate Change, and Agriculture.
How would the next generation of plug-and-play models that can seamlessly foster collaboration between agritech startups, Impact nonprofits and philanthropists, and large corporations look like?
What would it take to create ecosystems of learning for the Impact sector that could tap into shared resources, data platforms, and networks?
We will soon find out:)
So, what do you think?
How happy are you with today’s edition? I would love to get your candid feedback. Your feedback will be anonymous. Two questions. 1 Minute. Thanks.🙏
💗 If you like “Agribusiness Matters”, please click on Like at the bottom and share it with your friend.
This is excellent Venky ! I do have some perspectives from my experiences with the impact sector and in trying to manage a collaborative platform of Grassroot organisation. There have been collaborative learning ecosystems for long and an institutional memory also exists beyond just in the hearts and minds. and there are a set of wicked problems within the impact sector also. I haven’t interacted much with funding agencies but for now have mixed opinions about their own capacities to understand the impact sector.
And I am a bit worried about these impact middlemen ! ( where are the middlewomen ? 😊)