In the latest addition to the brilliant New York Times column “Fixes,” Tina Rosenberg talks about a new form of aid delivery: voucher programs. In order to reduce logistical costs and smooth the obstacles that usually plague the delivery of in-kind aid, different agencies are moving toward:
(1) New technological platforms, such as cellphones, to transfer cash.
(2) New financial mechanisms, such as vouchers, to stimulate local economic demand rather than simply provide goods for disaster relief.
(3) New forms of “relief,” such as creating jobs and employment opportunities for displaced populations.
Rosenberg highlights the political and business interests among industry (shipping, food, etc.) and even humanitarian organizations that serve to perpetuate the delivery of food aid in-kind, even though alternative delivery mechanisms are infinitely more efficient and often more sustainable and effective.
Most importantly, Rosenberg’s column highlights the perverse incentives that exist even in the social, not-for-profit sector—often the last place one looks. Humanitarian organizations support in-kind food aid not because it is the most effective mechanism, but because it allows them to sell the surplus in the open market and generate revenue to fund their operations. On the surface, this is an excellent way for an organization to use segmented pricing to make itself self-sustainined. However, when it interferes with their primary mission—to deliver relief in a way that is effective and impacting—it becomes a hindrance rather than a support.
These organizations should seek to optimize their social mission first and work within that constraint to identify the best methods to generate profits. This goal could be achieved through organizational design (keeping departments and functions somewhat siloed or at least on the same level of authority) or through external governance (i.e., charging the board of directors with ensuring that organizational priorities are correctly ranked). Only when these organizations are able to keep their social priorities front and center can they truly claim the labels “non-profit” and “humanitarian.”