Soros’ Gift to Human Rights Watch

No doubt many readers have seen the press articles announcing George Soros’ gift of $100 million to Human Rights Watch.  Most interesting to me was that the gift is aimed, in part, at diversifying the organization, staff, and board away from its current US-centric arrangement.  As the AP puts it:

But the money also is meant to make its donor base as international as its outlook. Plans call for Human Rights Watch to draw at least half its income and most of its board members from outside the U.S. within five years. Now, about 70 percent of the money and 80 percent of the board members are U.S.-based.

Soros considers that a liability — one he blamed on a frequent target of his, former President George W. Bush.

“They’re basically an American organization advocating human rights all over the world. But the United States has lost the moral high ground, during the Bush administration, and, therefore, it runs into opposition because there’s resentment of American interference,” Soros said in an interview in his sleek office in a midtown Manhattan high-rise. ” … It’s a drawback, to be American in this context.”

HRW agrees, although it already believes it is seen as independent of the US government.

“But it is helpful for our organization to personify the global values we promote,” Executive Director Kenneth Roth said.

I wonder if it is quite so easy to personify global values in that way, however.  Multinational corporations, for example, often talk about how global they are, in outlook, in values, in all those ways.  Query whether it actually works that way in MNEs.  The Daimler-Benz model, for example, in which it was supposed to be a merger of equals between the American car company and the German one.  Under a surface veneer of the “global” company, in fact the true owners of the enterprise, Daimler, quickly asserted itself, and for a simple reason – the post-merger was turning into a disaster, and the immediate response was for management to seek to reduce its internal transaction and agency costs by asserting a command and control decisionmaking model that relied upon one side of the enterprise.  That is, a “mixed” culture inside an enterprise is a costly one in terms of many decisionmaking factors, because it invites much more negotiation inside.  

An alternative model but with the same problem is something like Citicorp, in the glory days as it tried to become the global consumer banking firm; my wife worked for it in NY, and I had many friends who worked for its various units in Europe, Asia, and Latin America.  Anecdotally, they all told the same general story from different places over the past fifteen years – a “global” corporation that was in fact balkanized, sometimes viciously so, in its local business units around the world along ethnic, national, and similar lines.  Management in NY would sing the praises of the “universal” company and its “universal” values – but there was only one matter in which there was general agreement about universals, and that was finance.  Finance – quoting the extremely business-credentialed financial engineer spouse of a close friend – was the only truly common language among the various business units.  Human resources, in her view, had the worst job of all, because the legal department believed (I assume correctly but it’s not my field) that a single global company would be held accountable in US courts for a single standard on such things as sexual harassment or discrimination law – the US standard – but the global corporation had a nearly impossible task trying to make that real given the vast cultural divides.

The argument for the globalized company – a company that takes globalization internal, so to speak, rather than simply engaging with the global market – is that incorporating whatever exactly that is into a company, by diversifying and, in Ken Roth’s term, personifying globalized values, they are incorporated into production and make for a more attractive product.  As Coase pointed out a long time ago in theorizing the reason why firms, rather than mere markets, exist to organize production, however, simply replicating the market inside the firm produces sizable transaction costs.  Maybe the transaction costs are justified by what it produces – or maybe it just makes it really, really hard to get anything done.  My sense of the MNE world is that the only truly global firms, in an internal governance sense, are ones that deal in financial markets and are more like collections of professionals engaged in a mutual activity, almost like an internal market, rather than integrated and organized production.  Finance provides a common measure of rationalization of the production process inside.  The point of finance, seen in a certain way, after all, is to find the truly common denominators of the human experience, the ability to reduce things down to comparable present values so to be able to compare comparable cash flows.  It is superficial with respect to the human experience, yes, but superficiality is what makes it possible to be global and universal.

In my experience of the global NGO world, like firms typically, they are rarely truly global in the sense that Soros seems to mean.  They achieve effectiveness through cultural cohesion inside the firm in a way that allows the organization to be relentlessly and effectively focused on a external mission that it, and perhaps others, regard as universal and global, even if the organization is not.  Because that seems somewhat parochial, organizations make moves to “diversify” and “globalize” (which are far from equivalent terms, but opposites in important ways), but smart organizations and smart leaders understand that this risks the internal culture of effectiveness.  This is perhaps not obvious to Soros, because his formation is in finance and financial firms in which, as I suggested, there is a common denominator along with an objective that in many ways makes the internal financial firm closer to an internalized market than is ordinarily true of firms.

The intriguing question is whether human rights is, as a kind of parallel claim to universality, akin to finance as a common denominator.  I have long thought that HRW was the Goldman Sachs of the NGO world – super-elite, highly rationalized, effective to the point that it appears to be able to make no mistakes, disciplined internally around a strictly rational objective shared by one and all in the firm.  That’s so despite the recent public relations mis-steps of both organizations.  Universal human rights as the common denominator in the sense that GS takes finance as its common denominator.  And yet … how to square that form of hyper-rationality as the basis for internal discipline and effectiveness with the equally strong sense that, in another way, both HRW and Goldman achieve their success in no small part because their internal culture, the non-rational part, is a shared and highly specific, indeed parochial, one of several generations of elite New York City Jews?  A shared American Jewish culture of high achievement, a respect for education as simultaneously a means of culture and enlightenment and goodness but also worldly success, and all the many cultural things that make for the admirable success story of American Jewry?

And that combined with a particular culture of Jewish philanthropy across the generations in New York City, specifically.  HRW has broadened its donor base, its base of support, its offices worldwide, all that stuff, over years and years, but one has to wonder whether, if Soros’s gift has the intended effect, it has an unintended effect which can be described in two different ways.  One is to say, in Coasean terms, that internal transaction and agency costs go up as the advantages of a uniform and shared internal business culture are diminished.  The other way to put it – I’m quoting a former HRW executive board member from many years ago – what is lost when the organization, in support of its universal external mission, is no longer a “bunch of New York Jewish philanthropists and we all instinctively understand each other”?

This “shared cultural phenomenon,” of course, is not simply a question for HRW and New York Jewish philanthropy.  It comes up in many settings in the NGO world.  A version of the same question, for example, is at the heart of the cultural identity of the International Committee of the Red Cross.  It struggles with the same kinds of questions; universality in virtue of being a specific nationality that is itself characterized by its neutrality. And in the case of the ICRC, one can push the question back to “within” the Swiss identity, and the specifically Protestant and Genevan and haut bourgeois origins of the original committee (see Caroline Moorehead’s excellent account of the origins of the ICRC, Dunant’s Dream).  The internal culture and the external mission; the specific interplay with ethnicity, nationality, and religion, and how these particularities and parochialisms influence the formation of the cultures of public service and philanthropy on which these organizations, with their universal missions, are so frequently founded and thrive – all of this plays out in many places and ways.

But in the case of the human rights movement, and HRW’s hegemonic role within it … we gasp at Soros’ generous $100 million gift; we should gasp, rather, at Ken Roth’s ability to raise a $44 million annual budget year in and year out. The question of whether Soros’ aim to transform HRW’s internal culture will make the organization more effective or less in the long run is an important one.  That leaves aside a whole different series of questions invoking many important controversies as to whether it properly conceives of its mission, what exactly it is today, and lots of other things, and focuses on one specific question, internal effectiveness to an external mission.  I have many grounds of criticism of HRW which are left aside here.  This narrow question of philanthropic effectiveness is important in its own right.