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#308 Gratuitous Haggling- A Living Example of Power Imbalance

May 15th, 2018

Richard Marker

For several days, I have been trying to figure out why this incident bothered me so much.

Some out of town visitors wanted to be tourists for a few hours. Before doing so, they decided, wisely, that they needed protection from the harsh sun and stopped at a street vendor selling caps. They were committed to buying two, and spent some time deciding which “statement” they wanted their new caps to make.

Once they decided, they asked what the price was. The response “$10 each”. They replied, “can’t you give us a discount since we are buying two?” The street vendor hesitated, and then reluctantly agreed to reduce the price by $2. Our friends were very proud of themselves for a successful negotiation.

The episode has made me uncomfortable since then, and I finally understood why. It reflected a deep power imbalance that reminds me of a pattern too often played out between funders and grantees.

I have no clue about the financial situation of those working in that kiosk. It is fair to assume that no one sits out there all day in the rain or shine, heat or cold, if they have substantial financial reserves. Whatever they may charge per hat, I am sure they don’t make very much. Every sale matters.

I am also sure that our friends, wonderful and caring people, didn’t think anything about that when they haggled. The $2 made no difference to their financial well-being whatsoever. For them it was a bit of sport. And in this instance, a small victory made them momentarily happy. And, let me fair, one sees this all the time, and typically we don’t think much about it; our visitors were certainly no different than many others.

Nevertheless, I felt, why begrudge that street vendor the $2 that most probably meant much more to him?

In many parts of the world, that kind of haggling is de rigueur. The initial “ask” is set with the clear understanding that the “buy” will be lower. Both sides start from the same premise. [Ethicists affirm that even that kind of bargaining is unethical if you never have any intention of buying in the first place.] But that isn’t the way most people do things in the USA, and the financial power imbalance is reinforced every time someone with adequate resources tries to do so. One who lives by very limited incremental profit on each sale must weigh the chance of losing a sale altogether. In this example, the original price was not set based on selling to a haggler

I don’t want to make too much of this, but we do see this played out in small ways all the time: in taxis, in restaurants, in hotels… anyplace where workers are paid minimal wages and depend on the good will of patrons to help them along. There may be an occasional story of one of those workers getting rich, but the percentages are hugely against them.

We still see this, sad to say, in the ways many funders treat their grantees. Yes, things are improved and the field is getting much better at it than we were even a decade ago. But too many funders still assume that a grant amount is something to be bargained over, that there is a sense of victory if they can persuade a grantee to accept a lower amount, or have someone else pay for the infrastructure or even part of the project – Why? Just in principle.

All in all, that is bad practice for many reasons:

1. It reinforces the issue raised above – the endemic power imbalance between those who have and those who need.
2. It doesn’t address that the grantee actually needs a certain amount to do the work the funder wants accomplished. It puts the discussion about grant amounts in terms of deal making, not problem solving.
3. It creates an implicitly adversarial relationship between funder and grantee when they and we need it to be collaborative.
4. It leads to grantees feeling that they must oversell their potential success instead of sharing more iterative learning.
5. It assumes that the proper role for the nonprofit sector is to be treated like supplicants rather than professionals with requisite expertise to address social ills.

To be sure, every funder should feel comfortable that an amount being given is the right amount, not too much, sometimes – and, much more typically, not too little. Due diligence is perfectly appropriate. But once that is done, once a funder has decided that this grantee is worth the investment, the rest should be a matter of agreeing on realistic expectations and costs, authentic risk assessment, outcome measures, and more.

Haggling for the best deal shouldn’t be on this list.

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