Thursday, October 05, 2006

Supply side economics?

Well, the title of this post is, I admit, a bit misleading. I'm not about to start pontificating about how trickle-down theory works in a global marketplace for philanthropy.

But it's a question I have as we embark on a new initiative called the GlobalGiving Olympics for project leaders at GlobalGiving. There's a bounty prize for the project leader that raises the most money during the next 3 weeks of $50,000. There's also a $25,000 prize for the country "team" that raises the most money (to be distributed across the team), and we've already seen project leaders mobilizing their networks to have a shot at the prize. In GlobalGiving internal jargon, that's "supply" mobilizing "demand" because we believe that every project leader and organization on the site has their own networks, and the marketplace is greater than the sum of the networks. We're trying to mobilize two potentially disparate forces: the competition that every project leader is in with every other project leader on the site for every dollar given; and the fact that networks can and do add up to more than the sum of its parts.

In one model of the world, businesses agglomerate because as Willie Sutton said, "That's where the money is." Translated into the GlobalGiving context, project leaders come together on GlobalGiving because we create a place for donors to come to, and thereby create opportunities for project leaders. But in this world, it's every bank robber and project leader for herself.

In another model of the world, businesses agglomerate because they are in businesses that require specialized inputs (whether materials or labor) and either of those factors are concentrated there. Obvious examples are oil industries in the Middle East, or the financial industry in cities like London or New York (aspiring investment bankers know that's where they should go after graduation ...). We're working on creating some of those dynamics here at GlobalGiving, by bringing services and knowledge here, but I doubt we're there yet.

In yet one more model, businesses agglomerate because when they come together they are greater than the sum of their parts. This happens, for instance, when Persian rug stores locate in a certain area of town. On the one hand they are competing fiercely with each other for customers, but by locating together, they can catch customers who might not have found what they wanted in one store, and are happy to walk out and walk into the next store becuase they really want to find that one carpet that fits their living room decor. That's when one store's "pull" and their network of customers can benefit the other.

Of course, none of these models exist to the exclusion of all others. All of these factors apply at one time or another. But the results of the GlobalGiving Olympics might give us a clue as to whether the last model has any meaning in a global philanthopic marketplace.

Stay tuned.

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