Thanks very much for writing this, I think it is a great post presenting a case I have made to many people in person.
I think you actually understate your case, because I think this exception you mention is quite weak in practice.
The cost-effectiveness of the service is evaluated (e.g. by funders) in order to keep it running
If grantmakers don’t think a service is valuable enough, they probably won’t fund it. So I’m less worried about services that rely on grants (e.g. larger-scale projects).
When grantmakers evaluate projects, they often do so from a considerable distance. They lack all the facts on the ground that the service users have, and (at least for LTFF/SFF/Lightspeed) are trying to evaluate a large number of applications in a relatively small amount of time. Perhaps they get feedback from some service users; probably most of their information comes from the service provider. It is much harder for them to evaluate the service than it is for the users, because of the classic Hayek problems with centrally planned economies.
Additionally, by applying to grantmakers, you are increasing the amount of work they have to do. Your service users still have to evaluate your service—they need to decide whether to use it or not—but now in addition some very overworked grant evaluators have to struggle through it.
As a result of this, when I’m doing grant evaluation my reaction to many applications is ‘this should be a for-profit. Either they haven’t thought of this, in which case I should tell them, or people wouldn’t pay, in which case they should close down.’
Relatedly, I think many people over-estimate how strong a badge of endorsement getting funding is. People should not treat getting a grant as strong evidence that a service is good; actual happy paying customers is a much stronger sign, even if those customers are much less prestigious than the grantmakers.
Thanks very much for writing this, I think it is a great post presenting a case I have made to many people in person.
I think you actually understate your case, because I think this exception you mention is quite weak in practice.
When grantmakers evaluate projects, they often do so from a considerable distance. They lack all the facts on the ground that the service users have, and (at least for LTFF/SFF/Lightspeed) are trying to evaluate a large number of applications in a relatively small amount of time. Perhaps they get feedback from some service users; probably most of their information comes from the service provider. It is much harder for them to evaluate the service than it is for the users, because of the classic Hayek problems with centrally planned economies.
Additionally, by applying to grantmakers, you are increasing the amount of work they have to do. Your service users still have to evaluate your service—they need to decide whether to use it or not—but now in addition some very overworked grant evaluators have to struggle through it.
As a result of this, when I’m doing grant evaluation my reaction to many applications is ‘this should be a for-profit. Either they haven’t thought of this, in which case I should tell them, or people wouldn’t pay, in which case they should close down.’
Relatedly, I think many people over-estimate how strong a badge of endorsement getting funding is. People should not treat getting a grant as strong evidence that a service is good; actual happy paying customers is a much stronger sign, even if those customers are much less prestigious than the grantmakers.