This post is the second in a series by Dennis Whittle. Dennis is the CEO of GlobalGiving, an international marketplace for philanthropy. In my last post, I argued that the "operating system" used by the current international aid agencies is stuck using IBM punch cards while the rest of the world has moved on to cell phones, laptops, and iPhones.

In the old system, you had to type programs into a stack of hundreds of punch cards, walk them down to the computer center, hand them to an operator, and wait in line for them to be processed. The lower you were in seniority, the longer you had to wait.

Contrast that with today, when hundreds of millions of people have their own computers, and several billion people have access to cell phones. iPhone and Android platforms now provide a way for hundreds of thousands of individuals to create and distribute new software. That software may or may not succeed in the marketplace, but it can be downloaded and used, and the most popular new apps get flagged to other users.

What would an analogous distributed operating system look like for the aid business? The design of any such operating system has to address five questions:

Who decides which problems aid should address?
Who comes up with the solutions?
Who gives the funding?
Who competes to implement the solutions?
Who gives feedback on how well the solutions work?

The existing system is closed. It assumes these questions will be answered by experts within one of the "mainframe" organizations like the World Bank, the UNDP, USAID, or one of the big NGOs.

Unlike 60 years ago, the expertise, resources and technology now exist to make a new decentralized and distributed aid system possible. Many more people—and not just experts—have relevant developing country experience (for example, the Peace Corps alone has over 250,000 alumni). Regular Americans give over $25 billion each year to charitable causes abroad—about the same amount as the US official aid budget. And PCs, internet, cell phones and related technologies now make it possible to connect all of these people and resources directly to the people who need help.

Marketplaces that directly connect funders to projects include GlobalGiving, DonorsChoose, MissionFish, GiveIndia, HelpArgentina, Conexion Columbia, Betterplace (Germany), GreaterGood South Africa, Net4Kids (Netherlands). Markets need quality information, and groups such as Guidestar, New Philanthropy Capital, GiveWell, Great NonProfits, Philanthropedia, Keystone Accountability, Charity Navigator, and the BBB Wise Giving Alliance have begun to operate mechanisms that collect and make available data from a wide variety of sources. Technology startups such as Frontline SMS and Ushahidi are making it possible for beneficiaries to have direct input into what they need ex-ante (schools? health clinics? microcredit?) and how well projects are being implemented once underway. Other initiatives (for example, Jumo) are in the planning stages.

Not all of these new initiatives will succeed. But within a few years, it will be possible for any person or group in the world to help answer any of the five questions above that form the core of the aid operating system. If the existing agencies that run closed systems don't adapt to this new set of conditions, they will become as irrelevant as old IBM mainframes.

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This post was written by Dennis Whittle. Dennis is the CEO of GlobalGiving, an international marketplace for philanthropy.

When I went to college in the late 1970s we used punch cards like the one pictured here to put information into the (mainframe) computer. Over the next thirty years, competition in computer technology led to rapid innovation. Over those same thirty years, the aid industry followed a decidedly different pattern of development.

In the early 1980s, the DOS operating system was a huge leap forward since it allowed people to use PCs on their own desktops. Ten years later, Microsoft released the Windows operating systems, which provided a graphical interface - another big advance.

All along, Apple had been selling its own graphical interface while struggling to avoid bankruptcy. But once Apple released its beautiful Mac OSX operating system, it rapidly gained market share, forcing Microsoft to develop (after several failures) a powerful new release of its Windows system. At the same time, Apple released the iPhone, a real game changer, especially when combined with Apple's App Store, which provided a distribution platform for hundreds of thousands of small, independent developers to release software applications. As a result of its competitive success, Apple's market value overtook Microsoft’s in May 2010. Some people think Apple’s new iPad could revolutionize the industry again.

The competition between Microsoft and Apple was based on what the customer wanted and liked. Both companies experimented with many products, some of which failed and some of which succeeded. They got rid (mostly) of the failed products and continually and incrementally enhanced the successful ones. Every once in a while (as with the graphical interface and the iPhone), they made giant leaps.

Contrast this with the aid industry, which, ironically, is managed in a centrally planned way even as it promotes market-based solutions to developing countries. The big aid agencies get very little feedback from their ultimate beneficiaries - the people they are trying to help. There has even been a recent trend around "partnerships and collaboration," whereby agencies agree to divide up their business and not compete. For example, the World Bank might agree to concentrate on telecoms in a set of countries, while the ADB handles health. This further insulates them from competition. The result has been little innovation over the past decades.

The operating system example is a good metaphor in itself. What operating system is the aid industry using right now? Unfortunately, over the past sixty years, it hasn’t progressed much beyond punch cards. While there have been improvements to the various processes, the aid business is still based largely on a "mainframe" model, with a small number of mainframes such as the World Bank, ADB, UN, and bilaterals such as USAID, MCC, DfiD, and AusAID dominating the market. What will it take to move toward a distributed "desktop" model of aid, and to stimulate the parallel creation of the DOS, Windows, Mac OSX, and even iPhone operating systems?

What would a competitive distributed operating system for aid look like? Put your ideas in the comments, and I’ll write a follow-up post.

From Aid to Equality

The Androids are coming, is aid ready?

Is aid stuck using IBM punch cards?