Thu, Jan 27, 1994

The Board of Directors
Society for Creative Anachronism
Corporate Secretary
c/o SCA Corporate Offices
P.O. Box 360742

Milpitas, CA 95036-0743

Dear Sirs:

I am writing in response to your actions of Saturday, January 22nd, in particular the decision to require membership of all who attend SCA events. I believe that this decision was a serious mistake, both on its own merits and in the context of the clearly expressed preferences of the membership as shown in recent polls. For my reasons for considering the policy undesirable on its own merits, I refer you to the letter on that subject that I sent you in the Summer of 1982. I will be happy to provide copies to any who desire them, since I understand that there has been some turnover in the Board's membership in the interim.

The purpose of this letter, however, is not to argue that particular issue but rather to discuss what I believe to be the reasons for the problem that led to your recent action, and how that problem might be better dealt with. There are two reasons why you might find my views on the subject of interest. The first is that I have been involved with the Society through most of its history, including having reigned, twice each, over what are now the two largest kingdoms. The second is that I am a professional economist, having taught at (among other places) UCLA, Tulane, Chicago and Cornell--and some, although not all, of the issues I will be discussing are within my areas of professional competence.

It is my understanding, based in part on a recent public letter from the chairman, that the board's action was a response to severe budgetary problems. These problems come chiefly, I believe, from two sources--administrative expenses and legal expenses, the latter including the cost of liability insurance.

This raises an obvious question--what has changed to create such problems? Society dues, in recent years and over the history of the Society, have risen more rapidly then general prices, so why is it that dues which were reasonably adequate a few years ago are now inadequate?

The usual answer is that the problem is the increasing size of the Society. It is not immediately obvious why this should be the case. Additional members bring additional expenses, but also additional dues and potential volunteers. If, fifteen or twenty years ago, we were able to provide for a membership a tenth its present size entirely with volunteer labor, why can we not provide for the present membership with ten times the amount of volunteer labor?

The answer, I think, has to do with the nature of volunteer labor. Volunteers are paid, not with money but with status, gratitude, a feeling of accomplishment, and similar intangibles. These resources, like monetary resources, increase with the size of the Society--but they are much harder to transfer and concentrate. The result is a severe problem for an organization that maintains its centralized structure while greatly increasing its size.

With a membership of two thousand people, we can find (say) ten people living near the Society headquarters, each willing to contribute several hundred hours a year to helping run the Society. When we increase to twenty thousand without changing our structure, we need either ten people willing to each contribute several thousand hours or a hundred willing to each contribute several hundred--still all living in a fairly restricted area. We can find neither.

The lack of volunteer labor is not the only problem that arises as a result of increasing the scale of organization. Social sanctions are sufficient to keep most people honest against the temptation to steal tens, perhaps even hundreds, of dollars. They may be insufficient against the temptation to steal thousands or tens of thousands. So as the sums involved increase, there is pressure to shift to professional employees, legally binding contracts, bonding agencies, and similar formal (and expensive) mechanisms of control.

One way of trying to deal with this problem, and the one you seem to have chosen, is by raising the per member cost, trying to force more participants to be members, and maintaining the present structure of the Corporation. I think there is a better solution.

To start with, note that the shortage of volunteer labor exists almost exclusively at the national level. The kingdoms and the local groups routinely use quantities of volunteer labor, to fill offices and run events, vastly larger than the quantities of paid labor the Corporation finds it necessary to employ. The reason for this disparity is that the resources used to pay volunteer labor are much more readily available at lower levels of the organization. Very few of us know the people who handle the Corporation's membership list, or have an opportunity to thank them. Most of us know who cooked the feast we just ate or taught the class we just attended, and many of us not only have but use the opportunity to thank them.

So the obvious solution to this part of the Corporation's problem is to decentralize its operations, at least to the Kingdom level. One way of doing this would be to maintain the present organizational structure but turn over most of the operating responsibilities to the kingdoms. That would probably include having each kingdom collect dues from its own membership and maintain its own membership list.

A better way, in my opinion, would be to decentralize organizationally rather than administratively. Convert the kingdoms into independent corporations and let the present Corporation convert itself into an organization providing services to the kingdoms. The Society would thus follow the model of many other volunteer groups, including (I believe) most of the other living history groups, in which most of the formal corporate organization is at the equivalent of the kingdom or barony level rather than at the national or international level.

Under this model, the Corporation would continue to produce Tournaments Illuminated. Kingdoms could, and most probably would, include in their membership charge the cost of T.I., which they would purchase from the Corporation for their membership. The Corporation could, and probably would, produce model sets of rules for fighting and other activities, which the kingdoms would be free to adopt if they wished. The Corporation could offer to purchase insurance on behalf of the kingdoms--and the kingdoms could accept or reject the offer, according to whether or not they found that the Corporation could get better rates than they could get for themselves. The Corporation could support itself both by selling services, to kingdoms and individuals, and by requesting subsidies from the kingdoms.

So far I have discussed decentralization as a solution to the problem of inadequate amounts of volunteer labor. It also helps to reduce the problem of legal costs. The more resources the Corporation controls, the more attractive it is as a target for lawsuits.

Suppose a fighter in Florida is injured and he (or his insurance company) is considering suing. Under present circumstances he can hope, if he wins, to receive compensation from the resources of an organization with tens of thousands of members and hundred of thousands of dollars of income. Under my proposal, his direct case would be only against the (incorporated) Kingdom of Trimaris--which has much shallower pockets and is thus a much less attractive target. He might have some case, although a far weaker one than at present, against the SCA Inc.--which would also be a much less attractive target than it now is. He would have no case against the rest of the kingdoms, and thus no hope of getting at the bulk of the resources now controlled by the Corporation.

It follows from this argument that legal costs, both the direct costs of litigation and the indirect cost of insurance against such litigation, ought to be substantially lower for a Society decentralized into a dozen or more separate corporations. This is one advantage of organizational decentralization over the sort of administrative decentralization that I described earlier.

Similar arguments apply to the problem of controlling malfeasance by individuals who handle money on behalf of the Society. Embezzlement is not much of a problem for local groups, although it doubtless occurs occasionally, because the sums available to be embezzled are not very large. It is hardly worth offending all of one's friends in order to steal enough money to run away to Atlantic City for a weekend. By moving most of the flow of money down to the Kingdom, or even the Baronial, level we would restore the situation as it existed when the Society was much smaller--too small to be an attractive target for embezzlers. To put the same argument in a somewhat different form, consider how much more attractive a target we would be at present if the admission fees paid for local events all flowed through the hands of the Corporate treasurer.

Hoping that you will find these suggestions useful, I remain

Sincerely Yours

David Friedman

309 Mitchell Street

Ithaca, N.Y.

Visiting Professor, Cornell Law School

Known in the Society as Cariadoc of the Bow, Knight, Master of the Laurel, Master of the Pelican, and Duke.

cc: All individual board members, their Majesties and Highnesses of the Middle.