The culture of multi donors funds in Myanmar: fear or ‘rational ignorance’?

Matt Desmond takes up the question of what drives multi donor funds in Myanmar such as 3MDG and LIFT, and whether it is fear or simply the problems of knowing too much.

Following from last week’s post about the lack of learning culture in multi donor funds, I think the cause of the multi donor funds’ learning challenge is not fear, but what Anthony Downs called ‘rational ignorance’. “Ignorance is rational when the costs of gaining knowledge outweigh the benefits”. It’s about incentives rather than sanctions.

I see a strong incentive system that rewards the multi donor fund teams (from the drivers to the Board-members) for learning how to minimize the financial and political (reputational) risks to donors. There are few incentives for other learning.

The multi donor funds like 3MDG and LIFT were designed as risk-management mechanisms. At the time donors were concerned that none of their funding would be seen as supporting the military government, and that as little as possible would disappear within a system that we didn’t understand.

Recently the reputational risk has shifted and donors are now concerned that not enough of their funding will be seen as supporting the new civilian government. The constant is the single-minded focus on donor risk and I believe this is the root of the learning disability. When donors pool their funds they also pool the expectations of their individual systems. It’s almost inevitable that a “lowest common denominator” emerges. In real life there are many examples of MDF activity which contradict the policies of individual donors, but the MDFs have created enough common ground that these contradictions are usually over-looked. When they do surface this creates risk, so they are managed in the privacy of the Board room.

At the next layer there is the role of the fund-manager chosen by the donor pool. For most mutli donor funds in Myanmar this is a UN agency (UNICEF, UNOPS etc.). Anthony Banbury who resigned as a UN Asst. Secretary-General last month wrote: “If you locked a team of evil geniuses in a laboratory, they could not design a bureaucracy so maddeningly complex, requiring so much effort but in the end incapable of delivering the intended result”. Yet if the intended result is to protect donors from risk, then a maddeningly complex bureaucracy might be a rather effective and rational mechanism. Learning can be a risky business and it is not surprising that learning cultures do not develop within risk-management mechanisms. In Myanmar the mutli donor funds do a good job disseminating the various studies and evaluations they commission. A LIFT or 3MDG web-site is 10 times more likely to show recent project evaluations than almost any NGO web-site. However this is “learning at arm’s length” and not the type of learning that could improve organisational culture or functioning. The same mutli donor fund web-sites will not tell you who the Board members are, nor when they meet or what they discuss and decide. One of the ways the mutli donor funds manage donor-risk is by providing anonymity to donors. This would be compromised if Board agendae and minutes were published, or the many governance, strategy and “learning” reviews of the MDFs themselves appeared on the web-sites. Ironically the multi donor fund systems do provide strong incentives for one type of learning. Staff and partners learn quickly that paralysis will set in if they truly follow the compliance culture. They are also taught that changing the systems is unthinkable within their own life-times; the global templates and the Legal Departments are the houses of the Gods. So the mutli donor fund teams and partners learn how to keep the system breathing by learning ways through and around the rules. The most valued people are the “rationally ignorant” - those who can keep things moving, a few inches at a time, despite the inertia in the systems. The least valued are those who challenge the mechanisms that consume so much of the MDF’s time and resources. These people must be “irrationally knowledgeable”. pic asiasociety