I think the process of issuing charity shares could be automated for the charities.
Yes, that’d be awesome!
Creating a wallet is so easy, there is virtually no need to automate anything further.
Creating a bonding curve auction on Serum is something that would be valuable to automate.
Raydium integration, lending, etc. are slightly less essential, but that would also make sense to automate at some point.
But researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate (I think).
So it varies – a lot of things can be automated but what remains is probably still prohibitively complicated. There are also more things that charities can do with their shares to make them more attractive, such as governance mechanisms. Finally, I don’t want to put all the work into automating the system so long as its demand and product-market fit is unproven.
If desired, it seems not out of the question that these entities could even run as for-profits—given that you are proposing a revolution of the NGO sector, it seems weird to restrict yourself to the most common current legal setup.
I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded. Now that we’re at step 1, I think it’s unrealistic to think that almost any charity will be ready to run these risks and invest any time given the unknown value of the fundraising system for them. But once we’re at step 2, the value of the system will be proven (or else we won’t reach step 2), in which case charities will hope to raise tens of millions or more through the system, and it will be worth going to great lengths for them, e.g., founding a for-profit, hiring lawyers, and going through SEC registration processes.
US for profits of course also have to register their securities. They can do a lot more with them, so doing this as a for-profit is probably necessary, but it’s still very costly. Founding a for-profit branch in another country may be an option, but I don’t know enough about that to tell.
although I agree that tax deductability is nice to have
I don’t see a way to get that unfortunately, but then again the money with the least valuable counterfactuals comes from for-profit investors who don’t expect deductibility anyway. The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities. Especially the second would be a tremendous risk to the whole AI safety ecosystem. Even if the risk of that happening is small because they’re likely to be able to reach a settlement, it may still be too great of a risk for any AI safety charity to touch tokenized impact at all.
I can see that (3) pushes weakly toward impact certs, but not strongly because ideally you also want to have specific markets, and the benefits of liquidity and specificity trade off against one another (in terms of the information that readers can gain). And even if resale markets are fairly dormant, I don’t think it’s a disaster—it should still be at least as good as the status quo (donations), and in many ways better (valuation is done retrospectively).
Yeah, makes sense.
Re charity Vs intervention shares, my thinking was just that it would be more transparent for intervention shares to be constituted of charity shares, and for such shares to be issued by charities. Based on reading your comment, I’m not sure whether you agree?
Ah, you actually intended it exactly like SECO, okay. :-)
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares, because individuals are more likely to be outside the US or UK, and intervention shares because I can do them from Switzerland with minimal buy-in (just an okay) from charities.
So once we are in a position where it becomes realistic to expect charities to issue their own shares, we don’t need intervention shares anymore. They may still have their various benefits, like governance and maybe higher liquidity, so they may continue to be developed, but at that point they can become an afterthought. And maybe there’s a way to convert them into a pool of charity shares too.
Re (4), why can’t charity shares be bought/sold?
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing. The only shares shorts can borrow will then be those that some others have, directly or indirectly, bought from the charity, so relatively few. Conversely, the smart contract that manages the intervention shares could just be developed such that it automatically puts up all the shares it still holds onto a lending platform. It’ll probably take a few years before that proportion is down to 1% and by that point the shares will be distributed across a number of charities of which hopefully very few are evil. ;-)
Re (5), what is the built-in mechanism?
I’m referring to this one:
There could be, e.g., quarterly events where a new organization can receive a fraction (which decreases every time) of the remaining shares. The shareholders would vote on who the new awardee will be, and the issuing organization or a smart contract will donate the shares accordingly.
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out, so it seems very important to me but unfortunately also rather unsatisfactory.
researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate… I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded… I don’t see a way to get [tax deductability] unfortunately… The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities.
VCs often manage to buy stakes in companies privately. Wouldn’t it be natural to sidestep that issue by copying what VCs do (and staying off the blockchain)? i.e. step (1) is privately traded patronage certificates, then step (2) is public ones? If so, then one could imagine a scenario where all you need for now is to do some research, and write up a pro forma contract?
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing...
I can envisage a lot of ways to ensure some lending, so this seems like a small advantage.
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out...
Yes, having the ability to short companies is quite a weak method for punishing companies, because they can just stop selling patronage certs if they go negative. It would be better if we could get charities to pay for their negative impact somehow. An ``absolving″ certificate, of sorts. Maybe the people who would want to sell these ``absolving″ certificates are similar to the ones who look to buy ``patronage″...
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares… and intervention shares...
Ahhhh, OK! I must say though, it rewards and punishes orgs for the performance of other orgs in their area. You portray this as a positive, but it seems like a big negative to me. It incentivises people to start new incompetent orgs in an intervention area, (or to keep incompetent orgs running) just because there are existing competent orgs. Conversely, it punishes competent orgs for the presence of harmful orgs implementing their same intervention. It’s quite messy to require an external panel to divide up the tokens between orgs. Frankly, given the fact that it’s a bit inelegant, I would bet that other problems will arise.
I can’t promise I’ll have much more to say in this thread, but in case I don’t, let me say that I’ve found this an illuminating discussion. Thanks!
VCs often manage to buy stakes in companies privately. Wouldn’t it be natural to sidestep that issue by copying what VCs do (and staying off the blockchain)? i.e. step (1) is privately traded patronage certificates, then step (2) is public ones? If so, then one could imagine a scenario where all you need for now is to do some research, and write up a pro forma contract?
Heh, yes. That’s an option. But I don’t suppose having a contract template has been the bottleneck why this hasn’t happened over the past years? I made a Google Doc for this for one impact purchase, and it worked just fine. They even have a version history that’s a bit like a blockchain. Writing contracts is rather far from my absolute advantages, so maybe it’s also far from my relative advantages…
I can envisage a lot of ways to ensure some lending, so this seems like a small advantage.
Yeah.
It would be better if we could get charities to pay for their negative impact somehow.
No mechanism comes to mind, but that general problem is one I want to think about more.
It’s quite messy to require an external panel to divide up the tokens between orgs.
That’s just for the initial allocation. So long as no one (other than me) has the tokens, no one (other than me) can vote, which is boring. But once I’ve allocated some 50% of them to MIRI, FHI, CLR, AISS, et al., the actual voting can start. I haven’t researched how that is usually done on Solana, but surely there’s some elegant mechanism for it.
It incentivises people to start new incompetent orgs in an intervention area, (or to keep incompetent orgs running) just because there are existing competent orgs. Conversely, it punishes competent orgs for the presence of harmful orgs implementing their same intervention.
If the existing shareholders – MIRI et al. – initially vote to get Evil Org accepted into their ranks, but then it turns out that Evil Org is evil and they regret the decision, then yes, that’s a problem. But if they set a high bar and only vote in orgs that have proven over many years to do high-quality and conscientious work, the risk from that failure mode can be minimized. So for this to become a problem, a new org would first have to impress MIRI et al. a lot, but then completely fall short of their expectations after all.
And if the problem with the disappointing Evil Org gets too bad, someone (me) will deploy an alternative intervention token, and the market will decide which one people like more. There might even be a market of one token against the other.
I can’t promise I’ll have much more to say in this thread, but in case I don’t, let me say that I’ve found this an illuminating discussion. Thanks!
Yes, that’d be awesome!
Creating a wallet is so easy, there is virtually no need to automate anything further.
Creating a bonding curve auction on Serum is something that would be valuable to automate.
Raydium integration, lending, etc. are slightly less essential, but that would also make sense to automate at some point.
But researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate (I think).
So it varies – a lot of things can be automated but what remains is probably still prohibitively complicated. There are also more things that charities can do with their shares to make them more attractive, such as governance mechanisms. Finally, I don’t want to put all the work into automating the system so long as its demand and product-market fit is unproven.
I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded. Now that we’re at step 1, I think it’s unrealistic to think that almost any charity will be ready to run these risks and invest any time given the unknown value of the fundraising system for them. But once we’re at step 2, the value of the system will be proven (or else we won’t reach step 2), in which case charities will hope to raise tens of millions or more through the system, and it will be worth going to great lengths for them, e.g., founding a for-profit, hiring lawyers, and going through SEC registration processes.
US for profits of course also have to register their securities. They can do a lot more with them, so doing this as a for-profit is probably necessary, but it’s still very costly. Founding a for-profit branch in another country may be an option, but I don’t know enough about that to tell.
I don’t see a way to get that unfortunately, but then again the money with the least valuable counterfactuals comes from for-profit investors who don’t expect deductibility anyway. The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities. Especially the second would be a tremendous risk to the whole AI safety ecosystem. Even if the risk of that happening is small because they’re likely to be able to reach a settlement, it may still be too great of a risk for any AI safety charity to touch tokenized impact at all.
Yeah, makes sense.
Ah, you actually intended it exactly like SECO, okay. :-)
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares, because individuals are more likely to be outside the US or UK, and intervention shares because I can do them from Switzerland with minimal buy-in (just an okay) from charities.
So once we are in a position where it becomes realistic to expect charities to issue their own shares, we don’t need intervention shares anymore. They may still have their various benefits, like governance and maybe higher liquidity, so they may continue to be developed, but at that point they can become an afterthought. And maybe there’s a way to convert them into a pool of charity shares too.
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing. The only shares shorts can borrow will then be those that some others have, directly or indirectly, bought from the charity, so relatively few. Conversely, the smart contract that manages the intervention shares could just be developed such that it automatically puts up all the shares it still holds onto a lending platform. It’ll probably take a few years before that proportion is down to 1% and by that point the shares will be distributed across a number of charities of which hopefully very few are evil. ;-)
I’m referring to this one:
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out, so it seems very important to me but unfortunately also rather unsatisfactory.
VCs often manage to buy stakes in companies privately. Wouldn’t it be natural to sidestep that issue by copying what VCs do (and staying off the blockchain)? i.e. step (1) is privately traded patronage certificates, then step (2) is public ones? If so, then one could imagine a scenario where all you need for now is to do some research, and write up a pro forma contract?
I can envisage a lot of ways to ensure some lending, so this seems like a small advantage.
Yes, having the ability to short companies is quite a weak method for punishing companies, because they can just stop selling patronage certs if they go negative. It would be better if we could get charities to pay for their negative impact somehow. An ``absolving″ certificate, of sorts. Maybe the people who would want to sell these ``absolving″ certificates are similar to the ones who look to buy ``patronage″...
Ahhhh, OK! I must say though, it rewards and punishes orgs for the performance of other orgs in their area. You portray this as a positive, but it seems like a big negative to me. It incentivises people to start new incompetent orgs in an intervention area, (or to keep incompetent orgs running) just because there are existing competent orgs. Conversely, it punishes competent orgs for the presence of harmful orgs implementing their same intervention. It’s quite messy to require an external panel to divide up the tokens between orgs. Frankly, given the fact that it’s a bit inelegant, I would bet that other problems will arise.
I can’t promise I’ll have much more to say in this thread, but in case I don’t, let me say that I’ve found this an illuminating discussion. Thanks!
Heh, yes. That’s an option. But I don’t suppose having a contract template has been the bottleneck why this hasn’t happened over the past years? I made a Google Doc for this for one impact purchase, and it worked just fine. They even have a version history that’s a bit like a blockchain. Writing contracts is rather far from my absolute advantages, so maybe it’s also far from my relative advantages…
Yeah.
No mechanism comes to mind, but that general problem is one I want to think about more.
That’s just for the initial allocation. So long as no one (other than me) has the tokens, no one (other than me) can vote, which is boring. But once I’ve allocated some 50% of them to MIRI, FHI, CLR, AISS, et al., the actual voting can start. I haven’t researched how that is usually done on Solana, but surely there’s some elegant mechanism for it.
If the existing shareholders – MIRI et al. – initially vote to get Evil Org accepted into their ranks, but then it turns out that Evil Org is evil and they regret the decision, then yes, that’s a problem. But if they set a high bar and only vote in orgs that have proven over many years to do high-quality and conscientious work, the risk from that failure mode can be minimized. So for this to become a problem, a new org would first have to impress MIRI et al. a lot, but then completely fall short of their expectations after all.
And if the problem with the disappointing Evil Org gets too bad, someone (me) will deploy an alternative intervention token, and the market will decide which one people like more. There might even be a market of one token against the other.
Awesome! Thank you for your input! :-D