Rural Development Institute

Nonprofit Management today was focused on an organization called the Rural Development Institute. It was held up as probably the most successful individual nonprofit we had studied so far. RDI's mission is to contribute to the alleviation of poverty by "helping the rural poor in developing countries obtain legal rights to land." Essentially, they research and design land reform programs in developing nations and then work with governments and third parties to implement those programs. While there can be many benefits of land ownership, the two mentioned that I found the most interesting were serving as a potential source of economic surplus (and hence investment -- a model often discussed as one of the first steps toward capitalist reform in China) and providing access to credit by serving as collateral (again facilitating investment).

I also found it interesting that the organization's focus was arguably libertarian: make sure the government protects private property rights and let economic efficiency emerge through bargaining. But this really only applied in countries where they were advocating privatization. Since they also seemed to advocate redistribution where property rights were held privately, I asked the guest speaker why bargaining wouldn't occur spontaneously in such contexts. His answer had to do with the transaction costs associated with buying and selling small plots of land. Essentially, he argued that large-scale reform plans could help reduce those costs by aggregating the plots before placing them on the market. But I wonder whether an argument could also be made in favor of reform on the basis of promoting free and fair competition. In other words, similar to monopolies/oligopolies, leaving property rights in the hands of a few wealthy landowners could prohibit the most efficient outcomes.

Incidentally, our guest speaker, RDI's founder and president emeritus Roy Prosterman, was a former lawyer at Sullivan & Cromwell (who has also twice been nominated for the Nobel Peace Prize), so score one for lawyers in management.