The Time of the Intermediary is Past; Long Live the [new] Intermediary

[This posting was written, but not posted, a few weeks ago; with the recent announcement of Jumo, it is particularly timely.]

Welcome to Jumo: The time of the intermediary is past; long live the [new] intermediary
by Richard Marker

There are few luddites who still argue for the centrality of the classic intermediary funding organizations such as United Way, Jewish Federations, Catholic Charities and many others. Most, though, acknowledge the data of funding patterns and the demographics of funders that show consistently and indisputably that these were yesterday’s – read 20th Century – funding app.

Now let us be clear: these umbrella charities continue to play an important niche role. They are large enough, even if proportionately much reduced, to be able to provide infrastructure support to significant strata of the nfp/ngo sector. When well run, they can balance faddish trends with stability, monitor emerging population and demographic patterns and provide a useful convening role. Tales of their demise are premature, even if it is inconceivable that they will ever again become THE central players that they were.

The reasons for the diminution of their role are evident and much told: funders have little patience for the consensus process when they can respond more quickly and directly to causes they believe in. The inevitable bureaucracy of umbrella charities, invaluable in vetting long-term performance, inevitably appears to add a level of inefficiency to the funding process – at a time when funders are advised to question every penny of overhead. Even the underlying vision for intermediaries has lost sway – that those who have a noblesse oblige to “give back.” [Where it went mattered less than the responsibility to give] has been replaced by a mantra of “making a difference” – requiring accountability for every dollar spent and being able to identify the returns on a philanthropic investment.

None of these, however, are sufficient to explain why umbrella/intermediary charities were so central. After all, challenges to bureaucracy are not new; frustrations with consensus have a long history. The ability to give directly has always been there, and always been done. So, the question, then, is not why they are diminished in their role but why were they so central?

The real reason that they worked, and the real reason they seem so yesterday is that they had access to knowledge not readily available to the average funder. How many funders wanted to review proposals, check audited financials, verify the claimed results as presented in self promoting annual reports, weigh the relative effectiveness of one or another apparently deserving group, measure populations, evaluate staff and boards, and so on? The professionals at United Way and their fellow intermediaries did exactly that. The committee consensus process may be unwieldy, but it guaranteed that there was a distillation of a lot of information which could inform decisions. [Whether or not it leads to better funding is an entirely different question.]

But today, who needs to do that? We all can look at Guidestar, log onto GiveWell, be attracted to specific projects at Donors Choose or Kiva, accept the shorthand of the BBB ratings, Data, an overwhelming amount of data, is available at a moment’s notice to anyone who wishes. Intermediary and umbrella charities no longer control knowledge or even smooth access to knowledge so, for many, there is no longer the need to have patience for the unsatisfactory and time-consuming committee process. Why not simply go on line to give directly and avoid the questions of obligation, loyalty, and solicitations?

There is an immediacy that is gratifying and a sense that ones own values and priorities can be addressed directly to causes and organizations that are single purpose.

But actually what we are seeing is the rise of a new type of intermediary – one that exists only for the purpose of giving information – raw or distilled, depending. If one looks at the very small token list above, one sees that they are indeed on line intermediaries which have done so much of the work which the big umbrella charities used to do. Funders use them not because they are sexy or new [at least not for long] but because they give information in an efficient way. Kiva is by definition a programmatic intermediary. Donors Choose is as well. Guidestar is a knowledge intermediary – giving primary data in an easy to find and accessible format. Funders may be pulling back from the umbrellas of yesteryear, but they are active users of todays. They may choose to give on line, but sophisticated ones check out available rating information first.

What these new intermediaries allow is immediacy, directness, and a democratization of the process. Now a donor of $25 has essentially the same information that a $25m donor can acquire, and can make a private decision more quickly and in a focused way.

Now, let us be clear: there are costs to this new system and for those of us in the field there are responsibilities: there is a need for more effective education about what is real and what is hype. There is a need to educate what the data really means. There is a need to not allow the rating systems to be simplistic. There is a responsibility to find way to counter fads and popularity as the sole basis for philanthropic decisions. And w have to do this in the most decentralized system that one could ever conceive where few even know that folks like us exist.

We are not likely to ever go back to the United Way ways of the past, but their lesson is ours. Knowledge matters. These new intermediaries able to get information and distilled knowledge out most effectively and persuasively are defining the philanthropic landscape and informing the charitable behavior of this and, and most assuredly, the next era.

Richard Marker serves as an advisor to foundations, independent funders, and not-for-profit organizations; he is a Senior Fellow in Philanthropy at NYU’s George Heyman Jr. Center for Philanthropy. Richard specializes in strategic philanthropy and planning and blogs at Wise Philanthropy.