Tuesday, April 17, 2012

Social capital and the case of the parent council's missing $70K

How did my kid’s school’s parent council lose $70,000? The whole mystery still isn’t solved, should any budding Sherlocks or Miss Marples be looking for a case. If you want the facts and nothing but the facts (or at least, those facts that are public), you can Google it and find out.* Being a pedantic professor-type, I’d rather offer the longer version, geography-lesson-containing answer so far as I understand it. It starts and finishes with place-based social capital or, more precisely, the absence of it.

Social capital, it is often argued, is both a product and a builder of successful communities. The World Bank embraces the concept as a key component of international development, the climate change research community suggests it is a key ingredient for enhancing our capacity to adapt to the impacts of global warming, political scientists have lamented its erosion in 21st century North American life as we spend more time on our couches and less time interacting with our neighbours. Most people in the know think it’s a pretty good thing.

What is social capital? It’s a social scientist’s slang for the economically tangible benefits that arise from trusted social connections. For example, if a friend gives you inside information about a job that’s opening up at her office, and you end up getting it because of her, that’s social capital. If your neighbour offers to look after your kids tomorrow night to save you the cost of a sitter – that’s social capital. If you go out on a date with someone who picks up the bill for dinner, that’s not social capital. Their motivation is not to make sure you’re well fed.

There are two key elements linked to the formation, maintenance and use of social capital – reciprocity and trust. These two elements mean it’s often family members with whom we develop our biggest reservoirs of social capital, but large amounts of it can develop among friends and neighbours as well. Why is reciprocity key? If an acquaintance helps you out and you don’t reciprocate at the next opportunity, chances are they won’t help you again. But if you do reciprocate, your friendship is likely to grow stronger (and you reinforce the likelihood of future reciprocity). As you form a social network of likeminded people who informally share resources and help one another whenever possible (i.e. where reciprocity is the norm), you develop a high level of trust in your social network (and they in you). Honest and caring behaviour toward one another becomes the expected norm; the social capital is too valuable to jeopardize through negative behaviour. With high levels of trust, you feel willing to loan or share with one another valuable possessions, and help one another out in times of difficulty. There’s the old saying that when times get rough, you learn who your real friends are; a social scientist might argue it’s when you find out how much social capital you have.

I am fortunate to live in a small neighbourhood where there is strong social interconnectedness and a lot of latent social capital, well beyond ordinary neighbourliness. You see it in many places – like our Saturday morning soccer league for the kids that is better organized than Toronto FC and where the games are just as well attended, and the outdoor rink maintained by the hoser dads that has the best ice you’ve ever skated on. Last Saturday was the neighbourhood park cleanup, which drew dozens of families and finished with a BBQ of the best locally made sausages. If a family experiences a serious illness or worse (and most of us will eventually), that family won’t need to feed itself for weeks, the neighbourhood looks after the cooking. I could go on, but you get the picture. I should note that not all families who live in this neighbourhood are equally interconnected with one another, and that a lot of the networking centers on families with kids. We have a great person at the community centre who acts as a focal point for communication and organization. There are also plenty of homes where the people keep to themselves or have their connections elsewhere And, we all have our own social networks that extend beyond our neighbourhood elsewhere. My point is simply that there is a specific set of social networks and social capital that are specific to this place, to this neighbourhood.

My kid attends a public school in the next neighbourhood over from mine. The school has its own social networks associated with it; some of them overlap with those of our neighbourhood, others don’t. Some are informal, like the parents who take turns picking up one another’s kids, arranging play-dates and so forth. Two others are formal: the parent council and the book fair organizing committee. The book fair has been going for fifty years now. It collects used book donations throughout the year and each fall hosts one of Canada’s largest used book sales. It is a big undertaking requiring scores of volunteers (my family included), and raises tens of thousands of dollars. The money raised is then given to a school in Africa, to the district school board to support activities at less fortunate schools in our own city, and to the parent council of our school. This past year, the parent council’s share was $25,000 – no small amount of money.

The parent council is also a volunteer organization, with the formal purpose to serve as a liaison between parents and school administration. It is not run by the school itself or the school board. The parent council also operates a lot of activities that benefit the school. For example, it runs the lunchtime milk program, it sells wholegrain-crust pizza for Friday lunches, and it organizes the on-site after-school childcare program. Through its own fundraising programs and the book fair donation, the parent council has organized lots of activities for the kids they might not otherwise get, and was planning to help redevelop the aging play structure in the kindergarten area.

Sometime between February and March, all the money disappeared from the parent council’s bank account, as did the treasurer. The missing amount is estimated at $70,000. All the pizza money, all the milk money, all the parents’ cheques for the after-school care program are all gone, and none of the bills have been paid since January, meaning the council is now tens of thousands of dollars in debt. No one is saying publicly the treasurer absconded with the money, only that it's suspicious and the police have been called in. The most recent parent council meeting was, as might be expected, well-attended (including by the media). So what happened? The president of the parent council explained that the council functions on a basis of trust; they are all volunteers and must trust each member to perform their roles responsibly. The treasurer had held his position for many years, and there had never been any problems in the past, so no one was keeping a close watch on the finances. In February, council members learned the daycare co-op that runs the after school program and other outstanding bills had not been paid, so an e-mail was sent to the treasurer. He replied that it was a mix-up in the accounts and would be resolved right away. Instead, he broke off contact with everyone, and has not been heard from since. The only saving grace is that when the book fair president caught wind of bills not being paid, she immediately made sure the $25,000 book fair donation got deposited to a school-run bank account, otherwise it might have disappeared too. It remains to be seen how this will all shake out. The parent council is currently asking the school board for a loan to pay off their outstanding debts. How they will then pay off the loan is anyone’s guess, especially if the authorities are unable to track down the wayward treasurer and the missing funds.

There are a number of practical lessons to be gained from this experience, but I’d like here to look closer at the linkage between social capital and trust. Members of parent council share a common interest in doing things for the school on behalf of the parents at large. They are volunteers, and very giving ones, but their allegiance is not necessarily to one another. Yes, to accomplish their goals, they must work productively with one another, but they are not necessarily engaged in reciprocal, giving relations directly with one another. It is through mutual reciprocity that trust forms, and not through merely a shared commitment to the school and a will to work with one another. In the absence of reciprocity between individuals and the ability to regulate one another’s behaviour through the giving and withholding of social capital, trust is unreliable. Trust was not the way to operate parent council. That is why formal organizations – even volunteer ones – require rules, regulations, constitutions, transparency and public financial reporting.

A second problem with our parent council – and here’s the geography lesson – is that social capital functions best when it is grounded in place. In that bygone era when all Canadians lived in small towns, they knew all their neighbours and a handshake was as good as a contract. If you participated actively in community social networks, your “word” was good. You could enter a store with no money and walk out with what you wanted, the shopkeeper knowing you were “good for it”. A trade-off, of course, was that everyone knew your business, you could never keep anything important secret.

Social capital-based trust is still reliable when it's place specific, the only thing is, we urbanites don’t know all our neighbours today. That was also a problem with our parent council. Nobody seems to know where this treasurer had been living (and his address isn’t in the school directory – a bad sign) nor seen much of him lately. Given the minimally reciprocal relations among council members, having a treasurer with no visible presence in our community – no matter who that person might be and regardless of past experience – was not such a great idea in hindsight. Now, I do believe that most people act properly most of the time even when no one is watching them, as appears to have been the case with our treasurer for a number of years. And most people do the right thing toward others whether or not a payback in social capital might be earned. But, a situation where trust is unreliable, where there is no social capital to enforce good behaviour, and where there’s lots of money floating around is a situation best avoided. And that, I think, is the solution to this mystery.

*You'll note I've avoided any names. This case is public knowledge, but I'm not going to further fuel the notoriety - after all, I do have to live here.

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