There is a pattern, I think. Business School types look at the nonprofit sector. "Market feedback" seems to be missing. Nonprofits can be effective and efficie

There is a pattern, I think. Business School types look at the nonprofit sector. "Market feedback" seems to be missing. Nonprofits can be effective and efficient on the ground, but unpopular with donors. They can be popular with donors, while being ineffective on the ground. In some reductio-ad-absurdum cases, the majority of an NGO's budget is allocated to donor relations and fundraising. IEIn other words, they are trying to solve capital allocation inefficiencies. There have been several efforts at solving this, often attracting interest/support from high profile business "gurus," writers and such. For example.. GiveWell does "Cost-Effectiveness" analysis, so that willing donors can make choices on this basis. Earlier iterations "analysed" cost structure, highlighting admin/budget ratios. The Acumen Fund had/has an approach whereby many recipients are (at least partially) for profit, so that market mechanisms can come into play. Much of the "micro-credit" excitement was around this issue. Donors/Lenders would experience feedback. If a loan successfully bootstraps a business, it will be repaid. This idea seems particularly financier-oriented. It implies a lot of confidence in financial instruments' (innovative types of securities) ability to capture and deconstruct things like risk, upside, downside, volatility expected value and such. The average banker is more likely to believe it than the average person, I suspect. I'm both sympathetic and skeptical of this idea overall. I agree there is a lack of natural feedback loop, correcting and optimising capital allocation. I agree capital allocation and (moreso) incentives is a serious problem. OTOH, I'm skeptical of "financial engineering." There are always side effects to securitisation. This donor-bondholder model (being bond-based) would be risk avoiding, for example. I think that was/is a problem with micro-lending too. The "best" borrower is one who doesn't really need it, or has other options. They have the lowest default risk, but the loan probably makes a smaller difference to them. Maybe the best idea is to simply donate money to people, instead of NGOs. I think free market systems and thinking has a lot going for it, but the financial markets side of it is not really one of those things. I'm more curious about ideas that involve market feedback mechanisms which makes aid recipients consumers, rather than making donors more like investors. There is room for both, but my chips are on the consumer side, personally.