18 years ago I was a young man in San Francisco just starting out in life. I had a new job, a new apartment and a 6 month old puppy I took to the park every day. One weekend morning, a dog park friend asked me what I was up to that day, and I said, “I’m going to go look at some sofa beds for my new apartment.”
This dog park friend of mine was a little older than me, a little wiser and, if I remember correctly, an interior decorator. She said, “Don’t get a sofa bed. It’s not a good sofa. It’s not a good bed. Do you need a sofa, or do you need a bed? Get that.” And I instantly knew she was right. The scales fell from my eyes and I started to see sofa beds in all aspects of life, by which I mean, things which are supposed to solve two problems at once but in reality don’t do a good job solving either.
There is a lot of sofa bed thinking in philanthropy. It’s not entirely our fault. Most philanthropic decisions - by families, foundations or companies - are made by boards, not by individuals. Different board members care about different things. A smart program officer who has one board member who cares about underprivileged children and another board member who cares about water access can’t believe his luck when he finds a group that is building play equipment that also pumps water. A group that has been working on job creation in inner cities for decades finds they can fundraise a lot easier if those jobs involve installing solar panels. Based on the way most philanthropic (and government) entities make decisions by board consensus, there is a natural bias toward projects and organizations that can present themselves as solving two (or three or four) different problems at once. Because we know we have a structural bias toward these sofa bed solutions, I think we should be extremely skeptical when we see them.
I’m not saying you don’t come across projects that create benefits beyond one primary purpose, but if you ask anyone who has ever accomplished something really hard, they will almost always tell you it was because they had maniacal focus on one thing - one definition of success - and made all their decisions in service of maximizing their odds of achieving that goal. Put a different way for my nerd friends: trying to optimize an algorithm simultaneously for two uncorrelated outputs is a fool’s errand.
If I look at some of the confusion and recent frustration around microfinance among US funders, I see people who see it as a tool for economic development, for women’s empowerment, for dissemination of public health, for a million other things AND potentially as a way to make a return on their investment. I’ve met more than one program officer whose foundation is in microfinance not because it is the best way to accomplish any single goal, but because it allowed them to have a different positive story to tell each of their board members about what ever issue they are most interested in.
This is a terrible way to allocate capital, and I think it is important for all of us in philanthropy to be extra critical when we encounter these kinds of opportunities.
One other reason this is on my mind lately: I look across the impact investing landscape today, and I see a lot of sofa beds.