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The International Journal
of Not-for-Profit Law

Volume 9, Issue 3, July 2007

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Civil Society in Complex Environments

Safeguarding Civil Society in Politically Complex Environments
David Moore

A Cat on a Hot Tin Roof: Arab Civil Society
Ibrahim Saleh

Articles

A Comparative Analysis of the European Legal Systems and Practices Regarding Volunteering
Katerina Hadzi-Miceva

Strategic Reputational Signaling in Competitive Charity Markets
Anas Malik

Developmental Issues in News Media: NGO-Media Interaction in Bangladesh
Masudul K. Biswas

Review

Charity Law and Social Inclusion: An International Study
By Kerry O'Halloran
Reviewed by David Robinson

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Strategic Reputational Signaling in Competitive Charity Markets

By Anas Malik1

INTRODUCTION

What happens to people unable to provide adequately for themselves when government does not step in with support? Do they starve, beg, steal, or migrate?

Nonprofit social welfare organizations partly fill this social need. In weak states where instability and corruption can be rife, such organizations can produce significant results. Some have clear attachments to a political party or movement: consider the social service activities of the Muslim Brotherhood in Egypt, HAMAS in the West Bank and Gaza Strip, and Hezbollah in south Lebanon. Each organization invested in social services such as health care, developed roots in the broader population, and reaped political rewards including increased allegiance, a positive public image, and more potential recruits. But not all social service organizations have such direct ties to a political movement.

This article examines the case of the Abdul Sattar Edhi Foundation and considers its implications for social services in developing countries. The article partly chronicles visits to several Edhi offices and facilities, informal interviews, and examination of documents. I argue that the Edhi case demonstrates the strategic, adaptive, and sophisticated efforts that organizations make to obtain donations and thereby sustain and enhance their activities. A comparison between Edhi outreach efforts in different environments shows subtle but revealing differences in emphasis.

Using original evidence, I argue that such differences are not accidental, cultural, psychological, or sociological in origin. Rather, they are strategically sophisticated responses to different transaction cost environments. Where factual information is unreliable and difficult to get, a reputation-based outreach strategy is prudent. Where information is easily verified, subject to public accountability, and reliable, a record-based outreach strategy makes more sense. An important unintended consequence is that reputational outreach can bring long-term organizational instability, a particularly critical problem if the founding entrepreneur exits the scene. This unintended consequence poses a strategic dilemma for organization managers and their supporters.

The broadest way to frame the rival hypotheses underlying my study begins with the theoretical debates over what better explains “Oriental” social outcomes – “irrational” or “nonrational” cultural, psychological, or sociological factors – versus “rational” strategic choices by organizational decision-makers pursuing survival, resources, and power. The literature has tended to emphasize nonrational factors over rational ones. By holding nonrational factors constant and considering a change in environmental incentives, one can assess the strategic choice element in organizational behavior. An important implication for policymakers and development analysts is that sophisticated and appropriately designed efforts to adjust such incentives can produce socially desirable outcomes, such as increasing organizational stability and predictability.

The article starts with a theoretical look at weak states and their typically high transaction cost environments. A market analogy is used to illustrate the strategic implications for social organizations as they compete for donor support. After describing the main hypothesis, a case description and specific evidence relevant to the theoretical argument are elaborated. The findings are then summarized and discussed, and their implications for the theoretical literature and for organizational managers are assessed.

THEORY

Tactical and strategic considerations matter, because it is highly unlikely that successful organizations arise and sustain themselves without viable strategies and learning. This section draws on several literatures that locate the context for rational action. High transactions costs, an inadequate rule of law, and challenges for leadership are particularly prevalent in “weak states.” Building and sustaining a functioning organization in such a context is the broad theoretical focus below.

Weak States, Strong Societies

In weak states, local strongmen can dominate politics. Joel Migdal describes this as the “weak state, strong society” phenomenon typical of developing countries. The current policy literature refers frequently to “failed states,” countries in which the governing apparatus has fallen significantly short of meeting its presumed basic obligations, such as providing law and order and the necessities for survival. References to failed states are usually references to states that are highly and chronically weak.

Market analogy

It is helpful to draw an analogy with the market as portrayed in transaction cost economics, which overlaps with the “New Institutionalism” in political science. That literature provides theoretical concepts and vocabulary useful for understanding the strategic environment and tactical considerations facing social actors in exchange relationships.

The models of neoclassical economics describe free market behaviors under the simplifying assumptions that information is perfect and transaction costs are zero. A new approach called “transaction cost economics” has recently arisen. With roots in Ronald Coase’s “theory of the firm,” and more recent work (e.g., North, 1990; Eggertsen, 2005, 1990), transaction costs economics spawned new thinking about growth, development, and risk. Information is an important component in transactions, and it includes knowledge about the market, predictability or uncertainty about the future, and guarantees that commitments will be met. The easier it is to get information, the more transactions are facilitated, which in turn can mean more productive bargains and exchanges.

But information in the real world is rarely perfect, and reliable, relevant information is generally costly. Accurate information is far more difficult to obtain in some situations than others. Insecurity about what one’s potential partner in exchange may do, and worry that the other party may defect from the agreement and cause losses, make it more costly to reach an agreement. In such a context, signaling intentions and providing other reassurance becomes vital. The problem is how one demonstrates a credible commitment to fulfilling one’s obligations in a bargain. As this is a fundamental issue in exchange relationships, the “credible commitments” problem has received wide attention in the New Institutionalist literature (e.g., Libecap, 1998).

Information problems are only a subset of transactions costs incurred in exchange relationships. Consider a person shopping for groceries. The exchanged goods (money for groceries) have a particular value, and above this amount are additional expenses. The person going to the store must pay with time, energy, and gasoline. He must engage in decision-making that requires information about shopping options. Depending on the shopper’s zeal and care, advertising claims must be investigated to ascertain a product’s quality. All these costs are additional to the price paid at checkout. Consider also the problem facing the grocery store. The owner must not only monitor customer traffic and prevent shoplifting, but also be on the lookout for counterfeit currency and bad checks. These, too, are additional costs incurred in the exchange process.

In grocery shopping, it is relatively straightforward to evaluate information. The transactions costs problem takes on different dimensions when delegating a task to a paid worker or buying a service, commonly known as a “principal-agent” relationship. The person seeking the service or delegating a task may be described as the “principal” and the hired worker as the “agent.” The agent finds it rational to do as little work as possible in return for the same remuneration from the principal. The agent would ideally like to shirk all obligations and still get paid. The principal, by contrast, would like to extract maximum work from the agent for minimum pay. The core problem for the principal becomes reducing or eliminating shirking.

To guarantee that the agent actually does the assigned work, there must be monitoring and enforcement. The principal must be able to ascertain whether the agent is performing the agreed-upon service, and then reward or punish accordingly. Leaving aside ethics for the time being, it is rational for the agent to pursue self-interest regardless of whether it operates to the principal’s detriment. When monitoring and enforcement are poor, the agent can get away with much more shirking. Because there is low information, and because reputation does matter, prospective agents commonly adopt signals to enhance their perceived trustworthiness.

The principal-agent problem falls in the collective action (CA) problems category. These problems make social exchange and cooperation more costly and difficult. One way to understand institutions is that they help overcome these problems. Where institutions are generally weak, transactions costs are higher, and exchange relationships in society and markets become more costly to facilitate.

Although we do not usually view charitable giving as a market activity, the analogy is nevertheless useful. In conditions with widely recognized humanitarian needs, and with people who wish to donate to humanitarian causes, a “market” emerges. Donors and potential donors are the buyers. Humanitarian social welfare organizations are the sellers. They promise to provide the “goods,” by using the donations appropriately. As in other markets, competition arises – sellers compete for buyers. Those sellers that cannot attract enough buyers end up exiting the market.

Organizational imperatives

Humanitarian organizations need resources in order to survive and fulfill their organizational goals and mandates. The resources may include material donations as well as volunteer services or labor. How to generate the resources needed for organizational success is a critical problem. Many organizations succeed by offering selective incentives to donors and participants- solidarity and belonging to members in exchange for fees or dues (the Jamaat Islami in Pakistan and the Muslim Brotherhood in Jordan follow such models). Those who do not contribute to the organization do not receive such “solidarity” rewards. Selective incentives can be bolstered by ideology. If people believe in the organization, they are more likely to give.

Personal reputation matters in low-institutionalized contexts. Where there is little faith in institutions, individual personalities need to provide the attraction. Personality looms large because there is little else to rely on – everyone knows that books can be cooked. Over-reliance on personal reputation, however, puts the organization at risk once the founder dies, because the leadership mantle and the organization itself are inextricably attached to the founder.

Investing in a leader’s personal reputation to appeal for donations is similar to trying to exercise charismatic authority. Max Weber categorized authority in society as resting on legitimacy driven by a leader’s charisma, tradition, or legal-rational rules and roles. The three sources are not equal.

Charismatic authority, in Weber’s view, is the most unstable form of legitimacy. Once charismatic leaders die, their ideas and supporters can die with them. To prevent this from happening, the charismatic leaders and successive generations of followers must institutionalize (or “routinize”) the leaders' charisma by building institutions that will survive.... (Sodaro, 2004: 103).

Charismatic authority contrasts with legal-rational authority, characterized by “the belief in the legality of rules and in the right of those who occupy positions by virtue of those rules to issue commands” (Weber, 1968, quoted in Sodaro, 2004: 103).

Greater belief in legality and formal rules are likely to correlate closely to lower transactions costs. Such societies are generally more institutionalized. Organizational outreach to prospective donors in such societies emphasizes records, documentation, and facts over glorified personal reputation and integrity. By contrast, societies with greater transactions costs will generate more personality-based appeals to donors.

HYPOTHESES

This study’s general hypothesis is the following.

The transactions costs environment will shape a charitable organization’s marketing strategy.

This contains two corollary hypothetical expectations.

Where there is little faith in information, the charitable organization’s marketing strategy will be based more strongly on adulating the leader as extraordinary rather than the “record.”

Where people are used to reliable information and critically assessing it, the organization’s marketing strategy will emphasize the “record” and minimize adulating the leader.

METHOD

Archive research, original fieldwork, and interviews are used to explore what happens in one case when a humanitarian, donation-seeking organization – the Edhi Foundation – addresses different audiences: an audience primarily inside Pakistan and an audience primarily in English-speaking “developed” countries.

Because I am interested in the impact of differences in transactions costs, it makes sense to eliminate or control for potential rival hypothetical causes. Two major rival hypothetical causes here are culture and education. This research design successfully controls for their influence if these major alternative explanations remain stable while the hypothesized influence (transactions environment) changes. If the evidence shows that the outreach strategy changes when the transactions costs differ but the educational and cultural environments remain similar, then a strong case for the hypotheses can be made.

THE CASE

Context: Pakistan

With a per capita GDP of $720 and rural poverty rates as high as 41%, Pakistan is a severely indebted, low-income developing country (World Bank, 2006). Pakistan is also a classic weak state: its extractive capacity is below what one would expect for countries endowed with similar resources (a measure developed by Snider, 1997). The governing apparatus is inefficient, stretched for resources, unable to monitor society effectively or to enforce laws appropriately, and unable to assess and collect taxes except from a tiny minority, probably reaching only 2% of the population. No unemployment benefits, sick pay, or other social safety nets are available to the full population.

Transactions costs environment

Corruption, graft, fraud, and failings in the “rule of law” are common problems in Pakistan and impediments to effective administration and successful development. According to a wry joke, Pakistan was voted number one on the most corrupt countries list – or voted number two but bribed the vote-counter. Transparency International, a global anti-corruption nongovernmental organization, has repeatedly ranked Pakistan among the 25 most corrupt countries (#11 in 2001 from 91 countries examined, and #23 in 2002 from 102 countries examined); in 1996, Pakistan did actually rank as the second most corrupt country (Transparency International, 2002).

A common argument is that there are four pillars in Pakistani society – the military, the bureaucracy, the civil society, and religion. Of these, one skeptical observer has suggested, all except the military have been discredited by corruption, infighting, and weakness. Consequently, it is common to find people who openly disparage social institutions and organizations, and rail against religion. Previously credible reputational signals – religiosity, or appearing “sharif” or decent, for example – have been widely discredited. Misuse and corruption have contributed to this erosion.

The consequence is increased anarchy, because there are few reliable guidelines to shape exchange relationships, and because trust is often violated. Jirgas – semiformal decision-making councils, typically including clan elders – make decisions about appropriate punishments for crimes, and sidestep or ignore the formal legal requirements. Personalistic politics and charismatic leadership in Pakistan are generally popular. There are many “pirs” – social leaders who often claim religious legitimacy, sometimes acting to advise people on personal problems, and other times functioning as patrons who command loyal followings.

Reputational signals: religiosity

Outward religiosity as a reputational signal in Pakistan has eroded in value, particularly in urban areas. Religiosity is traditionally associated with highly ethical behavior, including honesty, sincerity, and genuine customer care in business. Conmen, fraudsters, and everyday cheaters, when they convincingly signal religiosity, can more easily victimize people. There is widespread cynicism about “fraudy mullahs” – allegedly hypocritical, corrupt individuals in religious garb. Appearing religious is a quick and appealing route to social legitimacy in Pakistan, because of the deeply ingrained respect for religion and the traditional respect for religious teachers and scholars. But today, anyone can adopt a religious “look.” After listening to one “bayaan” or demonstrative announcement from the Tablighi Jamaat, a popular proselytizing movement, one can go out and proselytize. The generally increased popularity enjoyed by such movements has diluted the public's respect for religious figures. Such easy signaling has attracted many conmen. Beggars typically appeal to one’s religiosity, and ask if the giver believes in God.

When a family hires a builder to construct a house, as frequently happens among the Pakistani upper middle class, many headaches commonly follow. The family, the principal in this case, must closely monitor and assess the builder’s (agent’s) activities. Construction in Pakistan is known as an industry where fraud is rampant, taking such forms as broken promises and substandard materials. Recognizing this, builders, in order to attract business, engage in reputation-building and signaling.

Reputational signals in a low-information, high-transaction costs environment come with an unwritten “buyer beware” rule, as illustrated by the following anecdote. The builder one family hired had all the religious trappings – a gray beard, modest dress, the forehead marked from repeated prostrations on hard mosque surfaces – and he made a point of racing for the mosque at every call to prayer. Surely someone so religious must be honest in business, as honesty is a highly prized religious virtue. Yet he allegedly ended up defrauding the family by a million rupees through overcharging for items and services. Such stories are frequently heard, and in fact the only social recrimination is for the family and its gullibility.

Environment for Nonprofit Welfare Organizations

There is a social service delivery vacuum. Even a short visit to Pakistan will convince one of the significant humanitarian needs in the country. Into that vacuum, a man with extraordinary motivation, resilience, and practicality can make an enormous difference. But he must be prepared for many setbacks.

For donors (the principals) to the foundation (the agent), the critical question is whether they believe that the foundation will use the funds for the donor’s intended purposes. In other words, is the foundation’s stated commitment to humanitarian goals credible? This is particularly important for those Muslims who choose to give an annual donation to the needy as their religiously obligated zakat payment. In a strict interpretation, zakat requires ensuring that the funds reach the appropriate individuals. For those Muslims trying to fulfill this obligation, an organization with a credible commitment to using funds appropriately is invaluable – it saves the donor from having to find individual recipients for the zakat money. A similar though generally less rigorous principle applies to other charitable giving, known as sadaqa. Estimated figures for total zakat donations in a given year are not easy to compile, because individuals can fulfill this duty through many informal and formal ways. There is no doubt, however, that it is a significant amount.

The Edhi Foundation

The Edhi Foundation was created in 1957. Well before that, Abdul Sattar Edhi had started his humanitarian efforts, including a dispensary opened in 1951, where he famously lived simply and slept on a concrete bench outside the office.

These efforts came shortly after Pakistan's founding in 1947. In a weak state with a social service delivery vacuum, there was clearly a demand for welfare provision. Social welfare needs have continued and even increased with time; Pakistan’s bureaucracies have certainly evolved, but its governing apparatus continues to be generally weak in reach and efficacy.

Abdul Sattar Edhi as social entrepreneur

Edhi started by taking care of his invalid mother, an act exemplifying filial piety and love, and then dedicated his life to taking care of others. His success grew such that the Edhi Foundation now runs what has been touted as the largest private ambulance service in the world. One only has to spend a day or two driving in Karachi before seeing an Edhi ambulance.

Originally from Bantva in Indian Gujarat, Edhi and his family relocated with several thousand other Memons to Pakistan during Partition in 1947. Many in the Indian subcontinent experienced brutality and atrocities; others feared them. Pakistan, the newly formed state, promised change and progress. But hope rapidly dissipated in refugee camps and competition for the Hindu evacuees’ properties. Edhi witnessed his first violent crime, a stabbing murder in broad daylight amid crowds. In 1948, he watched with excitement as the Bantva Memons set up a charitable dispensary in Mithadar.

Even at that early stage, Edhi rebelled against the different treatment meted out to non-Memon supplicants – and, after expressing his frustration, was rebuffed and harassed by an elders’ committee for his disobedience and disrespect. This gave him “insight into the working of the entire country” (Edhi, 2001: 47). Edhi publicly denounced the ceremonial public events attended by local bigwigs as propagandic, personal publicity, and sought in his own life to retain simplicity and authenticity. He had political ambitions, but found that the normal processes – elections, party politics – were not for him. They involved distant, superficial efforts to introduce change from the top; real change, he came to believe, must start “from the very bottom” (Edhi, 2001: 188-189).

Edhi’s success and prominence have given him opportunities to address the official elite. He expressed his political philosophy in a speech to the Pakistani National Assembly in 1984, where he declared that legitimate government must reduce unemployment through small loans, be self-reliant, protect human rights, rehabilitate the destitute, and reduce illiteracy (Edhi, 2001: 189). Elsewhere, he argued that in the absence of a Saudi-style execution policy for traffickers, criminalizing narcotics was counterproductive where drugs were easily available (Edhi, 2001: 180). Edhi’s own strategy was cold turkey detoxification and gradual rehabilitation with dignity regained through self-help and labor, such as painting and carpentry.

Social change and transformation by example and dedication are great motivations for Edhi, and he has found a way to engage in this effort while sidestepping the elite-mass division that plagues everyday Pakistani politics. He frequently makes assertions that his foundation’s work is Islamic, while decrying many existing policies and processes because they lack authentic roots in religion and principle. Edhi uses a religious vocabulary and believes in religiously grounded moral, social, and political precepts. Given the competition in the market for donors and donations, it is unsurprising that he and his organization have been criticized for lacking religious authenticity.

Thus, Edhi is an ambitious political entrepreneur and social movement architect, spurred by self-belief. His models as social reformers and revolutionaries include Islam’s Prophet and his progressive companion, Abu Dhar Ghaffari; Gandhi and his Pushtun contemporary, Abdul Ghaffar Khan, with his well-known nonviolent social organization, the Khudai Khidmatgar; and Karl Marx, whose class analysis confirmed Edhi’s distaste for powerful capitalists (Edhi, 2001: 34-35).

The Foundation’s activities

A personal anecdote describes the Edhi Foundation’s reputation. As a child, I encountered a mentally retarded cousin who was difficult to control. Later he ran away or wandered off from his home and was lost for years. Finally, his mother somehow received word that her son was in an Edhi facility. When his mother visited the facility, she found her son there, a young man now. Straightaway, he ran to her and hugged her. She pledged not to let him go again and took him home. However, he proved difficult to manage, so she returned him to the facility. Some time later, he died. In commenting on the experience, my relatives had only positive things to say about the “Edhi wallay” (Edhi’s people), only expressing gratitude.

The Foundation’s published accomplishments are impressive: over 100,000 unclaimed bodies buried; nearly 100,000 destitute or mentally handicapped rehabilitated to their homes; almost 200,000 missing children found; nearly 200,000 girls provided social counseling and persuaded to return to their families; 1.75 million injured or dead receiving free ambulance service after accidents, violence, or natural disasters; almost 9 million patients treated in free dispensaries; 8,500 abandoned babies rescued; millions of kilograms of rations and clothes given to the needy; activity in virtually every major Pakistani calamity and many international disasters; facilities including 500 ambulances, 300 relief centers, three air ambulances, 24 hospitals, and three drug rehabilitation centers; and many national and international recognitions and awards, including a Guinness World Record as the Biggest Volunteer Ambulance Organization (Baloch, Qazi, and Edhi Foundation, 2000).

But the Edhi Foundation needs resources – volunteer workers, supplies, and money. The Foundation receives five million rupees (roughly $100,000 USD, a large sum in Pakistan) in yearly nongovernment donations. On principle, as a way to eschew political entanglements, the Foundation does not accept funds from government agencies. The Edhi Foundation’s famous claim is that even in disaster and violence-stricken areas, Edhi relief workers are given free passage and access, because the organization has the reputation for being solely humanitarian rather than partisan or political. This has been valuable in providing access during the Afghan guerrilla war and in preventing mobs from attacking and burning Edhi facilities or vehicles (as sometimes happens to those buildings associated with the government after a disaster).

Visiting Edhi facilities

My interactions with the Edhi Foundation’s offices began with a visit to a women’s center in Karachi. A relative and I went there to inquire about options for an acquaintance who was a battered wife, sometimes beaten so severely that she would disappear for days. It was a shameful, tragic situation – she was unwilling to go to her sisters or the police for fear of incurring further wrath from her husband. Besides, the social humiliation, lost face, and possible broken marriage are all unbearably high costs. It was easier for her to submit to the beatings.

We described the situation to the social worker at the Edhi shelter, including the fact that the husband begged her forgiveness and appeared to regret the beatings, but that he remained extremely jealous, suspicious, and controlling, and that he seemed to assume the worst about his wife. The social worker patiently heard us out, and then said flatly that the only solution was for the wife to leave her husband. She had seen many such cases, she said, and someone like this abusive husband does not “get better.”

We looked around at the facility. It was a depressing institution, grimy, with peeling paint and iron bars across entrances. The workers would not give out their full names for fear that aggrieved spouses might retaliate; this was policy. I saw some children playing, using a driveway as a cricket ground.

The staff suggested that I contact the central office headquarters in Mithadar. I went there, spoke with the staff, toured the facility, and collected promotional materials. The next step was a long phone conversation with Faisal Edhi (son of Abdul Sattar Edhi), and then a longer visit and field trip with the Edhis.

Edhi facilities are generally not extravagant but are functional and practical. The compound we visited outside Karachi looked clean and well-maintained, with even the large open space ringed by covered halls in which the retarded and psychologically disturbed reside. I met a young man who spoke fluent American English – apparently he had lived in the United States for a while with his uncle. I suspected that he had left a traumatic past – he was soft-spoken, shy, and retiring, and appeared glad to be staying at the Foundation’s facility.

According to Faisal Edhi, the inmates are free to leave, and once in a while some do, but they end up returning on their own. There is usually no other place for them to go, and the city is rather bewildering and huge. I saw one slight, bearded man who had some visitors. He pleaded to be allowed to go home with them, and they kept promising to take him, but it was all a ruse to keep him quiet until they left. He was frantic, crying, threatening to bang his head on the ground and injure himself. He kept racing between staff members and asking for his papers. As his relatives made their getaway, the fellow wailed. Other interactions remain vividly in memory. There was a smiling young adult or possibly a teenager called “chooha” – mouse in Urdu – probably because he had a deformed, abnormally tiny head. He would dance to entertain the other inmates.

The Edhi Foundation also provides constructive and rehabilitative training programs – sewing and other light industry – to give technical vocations to Edhi inmates, and schooling for the children. There was a cheery reception for my visit to a large compound a short distance from Karachi – they are clearly used to visitors. The facility included a residential school for destitute children. Every classroom we would pass had students sitting in organized rows, who would say “salaam alaikum” in unison to me as I passed. There were children by the hundreds in the school. The facility itself is pleasant with greenery and play spaces.

Faisal Edhi showed me the slanting covered holes in school corridors and rooms, which allow ventilation and draw in drafts while blocking rain and direct sunlight, a natural “air-conditioning” that shows a low-cost method for maintaining a habitable temperature. And the facility appeared generally well-organized – individual donors had supported each classroom, and plaques commemorating the donors’ gifts dotted the walls. Faisal Edhiwas interested in developing the compound, and described plans to construct a swimming pool.

Bilqis Edhi, Abdul Sattar Edhi’s wife,likewise contributes to the Foundation’s work. She is placid and pleasant, with a quiet grandmotherly air. On my Sunday visit, I saw her arrive and bring fruit for the children at the school for the destitute. Evidently this is her routine on weekends. She is reputed to have been doing such work for nearly 40 years. Mr. and Mrs. Edhi’s personal integrity appears unimpeachable.

Edhi Foundation’s outreach through printed literature

There have been some public moves toward Abdul Sattar Edhi’s “beatification.”2 One commentator described him as a “living saint” (Commenter on Siddiqui, 2005). Such views have an authentic ring about them, and do not appear planted by strategic public relations agents. His image has credibility and does not appear manufactured. I had presumed that the organization behaved consistently in a homespun fashion. Consequently, I was surprised when I found that the promotional literature – some books I bought at the Foundation headquarters – were well-made by Pakistani standards, functioning as rather slick public relations products. One book, an overview titled Breaking the Silence… Abdul Sattar Edhi, was less informative than adulatory. This exemplifies building personal reputation to gain donor support, which was previously identified as a common strategy in developing countries.

The second book, containing much more detail, was Edhi’s “autobiography.” Tehmina Durrani, famous for writing a racy, scandal-tinged exposé called My Feudal Lord, recorded and ghost-wrote Edhi: A Mirror to the Blind. She clearly is on his side, an open admirer interested in conveying Edhi primarily according to his self-depiction. Most readers will be struck by his purposeful, committed, and Spartan life, and his perseverance through family tragedies.

Their promotional book’s 50th anniversary edition is embossed throughout with a ribbon reading “50 years of Selfless Service” (Baloch, Qazi and Edhi Foundation, 2000). It is sprinkled throughout with portraits featuring Edhi feeding the hungry, nurturing the sick, and looking after children, and supplemented by such adulations as “a living legend… an example of devotion.” Edhi is explicitly depicted as a great man, as seen in the opening poetic couplet, below his picture:

Heights by great man reached and kept…
were not attained by sudden flight…
But they while their companions slept…
were toiling upwards in the night….

(Baloch, Qazi, and Edhi Foundation, 2000). Thus Edhi is projected as great and tireless, an inspiration to believe in and follow. His book’s opening page declares “Dedicated to the Service of Mankind” (Edhi and Durrani, 2001).

The net effect is to convince many people that the Foundation’s stated commitments are credible. Here is what one visitor had to say:

Upon leaving the premises after about 40 minutes, a lot of things came to mind. With ambulances, hospitals, emergency centers, housing, maternity homes and even helicopters plus a lot more (for those who cannot afford it) the Edhi Foundation certainly makes a strong case for legitimate donation gathering.

Abdul Sattar Edhi must love his land and people and shows it with his deeds and not just words like many of us. He is often too frank and sometimes caustic. He may not sound saintly but his work speaks for itself. And for that he retains much respect.

(Siddiqui, 2005). The Edhi Foundation’s expansion and continuing activities testify to an ability to build on past successes. Moreover, the Foundation has maintained formidable reputational resources, crucial in contexts where all information is suspect.

Edhi Foundation’s outreach on the internet

Pakistanis generally do not have frequent internet access, especially compared to other countries. The Edhi Foundation’s presence on the web reaches out primarily to an English-speaking international audience and that very small segment of Pakistani society that uses the internet to get information. It is arguably also the case that expatriate Pakistanis make up the main audience the Edhi Foundation seeks to reach in countries like the United States.

One can find “between the lines” on the Edhi Foundation webpage a self-conscious awareness that foreigners including expatriate Pakistanis make up the primary readership. The adulatory slogans describing Abdul Sattar Edhi have been stripped from the activity descriptions. While there are photographs, the pictures generally point to specific activities undertaken by Foundation workers. The sense that Abdul Sattar Edhi’s person is larger than life or saintly has been replaced by a more fact- and record-oriented depiction.

This is not to say that worries about the reliability of charities do not exist in the United States. Alleged fraud, mismanagement, and misuse in “Islamic” charity collection have caused disenchantment with those charity organizations in the United States. The situation is somewhat particular to the United States: post-9-11 pressures have made it difficult to donate to Muslim because of the fear of guilt by association. The collective consequences have been to make legitimate organizations’ outreach efforts more difficult.

The problem extends beyond the Muslim community and “Islamic” charities. In Hurricane Katrina’s aftermath, Diane Rehm's National Public Radio show (September 7, 2005) discussed possible fraud or mismanagement in American charities. One panelist advised that reputation matters, so donors should give to the biggest charities – Red Cross, Salvation Army – which have the best-established internal and external audit features too. The United Way’s scandal a few years ago shows that the United States is not invulnerable in the well-intentioned charity sector. Thus, fraud-related problems for donors certainly extend beyond the developing world. Critically, though, the “reputation” referred to in the United States is not the leader’s personal integrity as much as the charity’s reputation for transparency and accounting for how received donations were used.

Findings and Analysis
Table 1. Results Summary  

 
Marketing strategy emphasis  

 

Transactions costs environment

 

Record

Extraordinary leader’s reputation

High faith in info, low transactions costs

Web outreach, targeting mainly overseas audiences

Limited adulation for Edhi’s personality on the web

Low faith in info, high transactions costs

Secondary references to record in promotional literature

Promotional literature and other signaling inside Pakistan

The results are consistent with the hypothetical expectations. The Edhi Foundation functionaries are highly conscious of the need for effective outreach to generate the resources they need to continue functioning. Edhi Foundation leadership explicitly describe the need for publicity and opportunities. Strategic intent is a logical explanation for the Foundation’s marketing strategy to potential donors. In the domestic Pakistani context, where there is relatively little faith in published data, information is unreliable, and fraud is prevalent, the Foundation emphasizes its founder and manager’s unimpeachable dedication and character. In developed overseas contexts such as the United States (as well as the United Kingdom and Australia), where the audience is assumed to have more faith in information and published data, there is greater emphasis on the Foundation’s record and comparatively less on the founder’s personal reputation.

An important confounding variable might be culture. A possible counterargument is that cultural factors rather than strategic calculation account for this variation in marketing to different audiences; a Pakistani organization speaks to Pakistanis in one way and non-Pakistanis in another. The cultural explanation is an unlikely candidate for a rival hypothesis, however, because many who learn about the Edhi Foundation over the internet are themselves expatriate Pakistanis. The Edhi Foundation’s activities in the United States have been tailored to the needs expressed by such an expatriate community, including such things as basic religious training, something not emphasized in Pakistan. This shows that they are aware of their primary audience in the United States – expatriate Pakistanis and recent immigrants. But such Pakistani-American communities carry much Pakistani culture into the new contexts, and do not represent a culturally different audience. Nevertheless, they are presumed to be more interested in transparent accounting of the Foundation’s activities than in adulating Abdul Sattar Edhi’s character.

Edhi’s self-proclaimed goals are humanitarian. By all accounts he has worked selflessly and tirelessly for half a century, and forged an exceptionally large and effective social welfare organization. It would seem logical to point to the organization’s successes and growth as a way to attract donations. Yet the literature provided by his Foundation in Pakistan is largely an adulatory portrait.

The puzzle is why there is such an investment in the Edhi personality. The literature distributed is plastered with his pictures, usually with an excessively flattering caption – “Edhi … father of the fatherless!” “Edhi … a common man with common people” (Baloch et. al., 2000). Why such open adulation? Could not the accomplishments stand on their own as testament? The propagandic sloganeering seems incongruous with the selfless service and humanitarian goals the Foundation espouses – it appears egotistically self-absorbed.

This apparent puzzle, personal glorification of someone whose actions are unselfish and who himself is by all accounts humble and even shy, could be discredited as vanity, humbug, and hypocrisy. In this view, Edhi claims to be selfless, but is in reality a self-promoting megalomaniac.

Alternatively, one may argue that eastern culture, or South Asian culture, or any other label demarcating a culture one views as “different,” is less concerned with abstract facts and processes and more with charismatic individuals – describing history and the present as an ongoing interaction between “great men,” heroes, and colorful movers and shakers. Superficially examining the everyday language used by taxi drivers and vegetable sellers to describe events certainly fits this image – they routinely describe events as “Musharraf sahib did x” and “Osama did such and such.” According to this view, “Edhi sahib did x” is more comprehensible than “the Edhi Foundation did x.” Something might also have been lost in translation by the Edhi literature publisher, if directly translating from Urdu. But such vernacular tendencies are not sufficient reason to assume that they are culturally unable to think beyond such simplifications.

There is another interpretation. Creating a mini-personality cult can be a strategic choice to generate resources and support in an information-poor environment with little transparency and accountability. This choice, however, produces unintended and unwanted consequences, particularly threats to organizational survival beyond the founder. As a viable tactic for building civic capacity in the developing world, it carries far-reaching implications.

Where there are high transactions costs and low information, it is difficult to get reliable information about the organization’s actual workings and successes and failures. Reputation is uncomplicated, easy to communicate, and fits well within the socio-cultural milieu – people are accustomed to pirs, saints, and charismatic figures who attract followings. Seen in this light, flowery slogans appear more comprehensible

Faisal Edhi asserted that both “political parties” and “social parties” run on publicity. Public relations are their lifeblood. From a “marketing to constituency” perspective, the organization has to convince donors and potential donors. The actual welfare recipients are rarely and only marginally the constituents or patrons. That is a useful way to think about the Edhi Foundation’s strategy. It may be that satisfying the constituents requires demonstrating that the organization has in fact met welfare needs. But in the low information environment that Pakistan represents, reputation is the best low-cost decision-making shortcut. For most constituents, reputation is enough. Investing in reputation in such a situation is a rational choice.

It is in such a context that Edhi’s reputational signaling should be understood. His saintliness must be elevated to stand out from the probable charlatans. There are other mechanisms too – visible activity in crisis periods, for example, and pairing adulatory words with references to tangible achievements. Major disasters are usually met with an Edhi volunteer contingent. Edhi ambulances, services, and facilites are widely distributed and clearly labeled, and passersby thus are reminded that the Edhi Foundation’s work continues. Yet the continuing investment in Edhi’s personal reputation, as seen in the promotional materials I received on my visit, all speak to the low-information, low-accountability, and low-transparency environment in Pakistan. Prospective donors cannot simply rely on the public record, because it is unclear and may have been manipulated or corrupted.

To argue that it is a rational investment in the Edhi Foundation’s tactics for survival and well-being is not tantamount to claiming that this is a cynical, hypocritical, or insincere move. An ends vs. means distinction is appropriate here. The Edhi family, the Foundation’s activists, and its other staff and officers are to all appearances highly dedicated individuals who are trying to better social conditions. Yet they are not so purely zealous as to be tactically shortsighted – pragmatism and sound strategy will better fulfill their goals in the long run. Because resources are scarce and because there are always other uses to which they can be applied, it makes sense to select strategies that have lower net costs. This rationality assumption does not necessarily mean that all strategies are evaluated at all junctures. It does mean that when alternatives are understood, then strategic choice will be based on least expected net cost – i.e., expected benefits minus expected costs will be maximized.

That is one generalizable lesson the Edhi Foundation offers. Where transparency and accountability are rare, and the rule of law is weak, civic organizations face peculiar challenges. In such weakly institutionalized contexts, civic organizations cannot simply be highly transparent, rule-abiding entities. Instead, they must appeal to people for resources and other support, and they must operate within their functional environment. In practice, this means flexibility with rules and procedures, trial and error, and charismatic leadership. Where there is little faith in institutions, an august personality matters greatly. Abdul Sattar Edhi’s contributions are thus legendary and near mythical. Hence the propagandic and near-saintlike depictions in Foundation literature.

I suspect that the criticism Edhi has received from other groups – especially political movements – is partly an effort to revitalize their own resource base by discrediting him and his organization. There are substantive issues too. Perhaps most important is how women are treated. Edhi believes he offers choice and meaningful rights for women. His conservative critics argue that his is a recipe for socially destabilizing, unconstrained mingling between the sexes, and also suggest that his services promote extramarital sex and unwanted pregnancies. Edhi has publicly opposed the Hudood Ordinance (an effort under General Zia ul Haque’s regime to introduce an “Islamic” legal code). In his view, the law allowed too much room for manipulation, with rape victims unjustly imprisoned on adultery charges, and general impunity for men and the privileged (Edhi, 2001: 203).

Ego, culture, and education level as alternative influences

Ironically, Edhi initially denounced local bigwigs as propagandic, publicity-seeking high-flyers; he is now targeted by others, though rarely smeared as a publicity hound. High ideals without pragmatic entrepreneurship certainly could not have succeeded, but at what point do ideals became debased as vehicles for other purposes? Could someone make this accusation against Edhi? It seems unlikely, and all the more so because an ego-driven choice would not be restricted to the domestic-oriented print literature but would also extend to the organization’s website.

Other explanations, such as Pakistani culture and the target audience’s education level, also are not satisfactory. The audience inside Pakistan clearly is entrenched in Pakistani culture, but Pakistanis and Pakistani-origin individuals who are typically first-generation emigrants largely make up the international audience also, as explained above. Since culture is generally assumed to be stable, it is arguable that the audience culture in both contexts is similar and comparable. Furthermore, the promotional efforts targeting non-literate individuals (and there will be few such efforts, since most donors are likely to be literate) are not going to use written materials. Thus the audiences targeted by the outreach strategies described are culturally similar, literate, and educated to at least a minimal competence.

Other social service delivery organizations in developing Muslim-majority countries exist – those associated with Hezbollah in Lebanon, Hamas in the West Bank and Gaza Strip, the Muslim Brotherhood in Jordan and Egypt, and others – but nearly all are attached to a clearer political ideology. Edhi has generally secular and humanistic tendencies, but he does not articulate an elaborate political ideology, and tends to stick with aphorisms and generalities. Edhi’s “four personal principles” – simple living, hard work, punctuality, and prudence – are among the few examples. The Edhi Foundation does not appear to fit the political recruitment/mobilization mold generally characterizing Islamist social movement organizations. It disavows political attachments in theory and has a reputation for being apolitical in practice.

IMPLICATIONS

The Edhi Foundation has to tread a delicate line, promoting Edhi’s personality but also supplementing it wherever possible with facts, figures and tangible claims about the Foundation’s achievements. Over-reliance on published factual information without investment in reputational signaling would be inefficient, since people based in Pakistan have little faith in their information environment. But reputational signaling alone would not work either, because corruption and fraud have eroded the value of such signals significantly. Both are therefore used simultaneously.

A succession crisis will likely require that this strategic mix be reevaluated. The potential for corruption is huge. The board head oversees funding and workers. It appears that aside from a trustee board headed by Faisal Edhi, the Foundation has not institutionalized the organization so that it can outlive its founder and continue to thrive. That results in part from the flexible attitude to rules often taken by Edhi himself. Once this central and unifying figure is gone, however, I suspect that things will be thrown into disarray and donations may drop. It is legitimate to ask whether the Edhi Foundation will persist for long without its charismatic founder and driver, Abdul Sattar Edhi.

These concerns are all legitimate, but secondary to the rational need to maintain this symbolic personality. Reputation counts for a great deal because it is a signal when other security guarantors, such as laws and records, are unreliable. Donors want to know their funds are put to good use. Battered wives and their allies need to know that the organization is a secure sanctuary. The Edhi name and the engaged leadership from his family signal that the organization is bona fide.

The transparency and accountability requirements that seem important for civil society organizations in developed countries matter less in places where there is weak rule of law. There, factors such as reputation and the leader’s character and personality count for more. It is for this reason that the outreach literature so emphatically focuses on the near-saint-like qualities Abdul Sattar Edhi possesses. The Foundation’s website argues that the developing world needs private organizations to step in and fill people’s needs. Looking over the website and noting their ambitious plans, I feel that there is another lesson here too: a can-do spirit that relies on results, with one success leading to another. People want to donate to useful and noble causes, and the Edhi Foundation provides such an outlet.

Reputation certainly matters in developed contexts too, but most institutionalized organizations rarely stress the leader’s saintliness. Most people who donate to the Red Cross, the Salvation Army, and Goodwill do not even know their leaders’ names. The thesis is not moot, however. The populist approach that won office for Huey Long in Louisiana, for instance, could in theory help an American charity succeed.

The next steps in investigating this study’s hypothesis would consider other cases – increase the “n” and thereby more rigorously evaluate the hypothesis. One way to do this would be to find other donation-seeking organizations and compare their marketing strategies. This could be expanded to areas and audiences beyond Pakistan and Pakistanis.

One could argue that contexts in which religious rhetoric and symbolism permeate the public arena are also contexts in which faith in a person’s reputation matters more, based on a claim that the religious individuals’ social psychology differs from that of others. When religious appeals are excessively used to bolster legitimacy, though, the opposite may happen: all religiosity becomes suspect, and reputation for religiousness may lose all credibility as a guide to decision-making. Are religious audiences more susceptible to reputational signaling than nonreligious ones, or do religious environments promote reputational marketing strategies? Such questions could form related but separate research hypotheses.

Further research could also look at strong states in the developing world, and compare them to weak states. Do stronger states promote more record-based marketing strategies? Stronger states enjoy high political capacity, meaning that they are able to monitor and enforce rule-obedience within their own borders. There should be an inverse correlation between a state’s political capacity and the perceived transactions costs faced by social actors in exchange relationships. The findings also generate a related transactions-based hypothesis regarding Max Weber’s categorizations of social leadership (Weber, 1968). High transaction costs environments are likely to favor charismatic leadership. Therefore, we should expect that as state political capacity increases, the charismatic leaders and traditional authority figures decline in number and influence compared to rational-legal leaders.

CONCLUSION

The Edhi Foundation looks after orphans, the destitute, and those who are not able to look after themselves. The Foundation provides an invaluable service in a country where unequal growth, social dislocations, strife, and corruption have left many without a social safety net. This service is morally appealing and heartwarming. But the factual record and abstract appeals are not enough to raise resources.

Publicity based on Abdul Sattar Edhi’s personal reputation and image is a significant plank in the outreach strategy. This may be a cynical move designed to mask internal corruptions or problems that would not withstand scrutiny. Or it may be a psychological need for recognition, seeing his name among the best-known in Pakistan, and running a Foundation with offices in several countries. But most likely, this is simply the tactically best strategy for maintaining the Foundation's needed resource inflow in the short to medium term: convince people that their money is going to a near-saintly figure who can be trusted (as shown by visible results) to use donations in a morally correct manner.

There may be a virtuous cycle sparked by gradual shifts toward record-based marketing. If a successful organization such as the Edhi Foundation adopts certain marketing standards (in truth-telling, transparency, record-based outreach, for example), then competitor organizations may feel compelled to follow suit. There is a problem in making this a reality, because the first organization to adopt it risks public criticism and disrepute. Imagine the Edhi Foundation adopting full disclosure and submitting to a thorough public accounting and audit, and then revealing the results, as a public company may do. Competitors and detractors may see this as a windfall – they could mine the information for ammunition against the Edhi Foundation, particularly if problem areas or abuses turn up. Rather than revamping the cultural context, the Edhi Foundation might instead lose some of its public support. In other words, it would be a risky action, ambitious but fraught with threats to survival. For now, the Edhi Foundation is likeliest to thrive by stressing personality at home and facts and figures elsewhere.

REFERENCES

Baloch, Mohammad Alim, Arshad Ovais Qazi, and Edhi Foundation (2000). Breaking the Silence…Abdul Sattar Edhi. Karachi: Abdul Sattar Edhi Foundation.

Edhi, Abdul Sattar (2001). A Mirror to the Blind: Abdul Sattar Edhi, an Autobiography. As Narrated to Tehmina Durrani. 4th edition. Karachi: A. Sattar Edhi Foundation.

Thrainn Eggertssen (2005). Imperfect Institutions: Possibilities and Limits of Reform. Ann Arbor, Michigan: University of Michigan Press.

Eggertssen, Thrainn (1990). Economic Behavior and Institutions. Cambridge: Cambridge University Press.

Kumar, Mithilesh (2005). Personal conversation with author.

Libecap, Gary D. (1989). Contracting for Property Rights. Cambridge: Cambridge University Press.

North, Douglass (1990). Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge University Press.

Rehm, Diane, and guests (2005). “The Diane Rehm Show.” Broadcast on September 7, 2005, on National Public Radio through member station WVXU.

Siddiqui, Ras (2005). “Meeting Sattar Edhi,” Chowk, January 16. Accessed on August 25, 2005, from www.chowk.com; see “Comments.”

Sidel, Mark, and Iftekhar Zaman (2005). “Philanthropy and Law in South Asia: Key Themes and Key Choices.” The International Journal of Not-for-Profit Law. Vol. 7, Issue 2, February. Accessed on December 22, 2006, from http://www.icnl.org/journal/vol7iss2/ar_sidel.htm#_edn7.

Snider, Lewis (1997). Growth, Debt and Politics: Economic Adjustment and the Political Performance of Developing Countries. Boulder, Colorado: Westview Press.

Sodaro, Michael (2004). Comparative Politics: A Global Introduction. Second edition. New York: McGraw-Hill.

Transparency International (2002). “Press Release: Pakistan’s politicians asked to sign anti-corruption pledge at invitation of Transparency International”. September 12. Accessed on September 8, 2005, from http://www.transparency.org/pressreleases_archive/2002/2002.09.12.karachi.html.

Weber, Max (1968). On Charisma and Institution-Building: Selected Papers, ed. S.N. Eisenstadt. Chicago: University of Chicago Press.

World Bank (2006). “ Pakistan Country Overview 2006”. Accessed on December 22, 2006, from www.worldbank.org.

Notes

1 Anas Malik is an Assistant Professor of Political Science at Xavier University in Cincinnati, Ohio.

2 “Beatification” here is not meant literally; unlike the Roman Catholic process elevating an individual’s status, there is no comparable formal process in most Muslim contexts. The term is used to signify a more informal social elevation of an individual’s reputation.

 

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