Central Perk: Seth's Blog : Gala economics

sâmbătă, 15 octombrie 2011

The email feels like a welcome one. "I'd like to invite you to…"

And then you find out it's a charity gala. 500 people at an expensive hotel, eating a not very good meal and paying a great deal for the privilege. Sure, some of the money goes to charity (but too much goes for the chicken in white sauce). Sure, it's entirely possible you will have ten interesting minutes of conversation, and yes, it may be that you'll hear a speech that will move you.

But I think we can agree that this is a ridiculous way to efficiently raise money for a good cause.

Galas and charity auctions and other events designed to raise money from the inner circle of a community suffer because they're conflating several benefits at once.

First, being invited to a gala feels like a gift. It's nice to be asked, to be noticed, to be included. The socially appropriate response is to accept the gift and say yes.

Notice that the invitation isn't being accepted because it's a good cause, it's being accepted because it's a social obligation.

Second, there's a set of benefits to both the invited and the inviter. The gala is held in a reasonably enjoyable venue, with lots of money spent on wine and food and such, all to benefit the attendees, not the charity. The inviter gets the social gratification of hosting, plus the added benefit of feeling charitable. The guest gets the social benefit of being included in this stratum of society, of having an excuse for a night out, and possibly the commercial benefit (lawyers, brokers, etc.) of being part of a trusted circle.

Again, none of this benefits the charity. [And having a big donor pay for the whole thing changes nothing.]

For this reason, the gala is actually corrupting. Attendees are usually driven by social and selfish motivations to attend, and thus the philanthropic element of giving--just to give--is removed.

Attending an event that's dramatically overpriced for what's delivered to the recipient is a signaling mechanism as well. It says to the other attendees, "I can afford to overpay and so can you, we must be similar, and our hearts are in the right place as well."

Do elements of our community need gala-like events to lubricate their social interactions? Quite probably. It's a tradition, particularly in certain cities and tribes. But is it a scalable alternative to selling generosity for its own sake?