Yonatan Cale already made the case for retroactive funding, i.e. that it’s easier to tell what has succeeded than what will succeed. The questions of what will succeed, in turn, can be answered by a market.
Investors will try to predict which charities will succeed to the point of receiving retroactive funding. A retroactive funder can make larger grants in proportion to their reduction in uncertainty (5–10x), time savings from having to do less vetting (~ 2x), and delay (~ 1.5x). Hence investors with enough foresight can even make a profit and turn the prediction of retro fund decisions into their business model. Promising charities can bootstrap rapidly with these early financial injections, successful serial charity entrepreneurs can accumulate more and more capital to reinvest into their next charity venture, and funders save time because they have to do only a fraction of the vetting.
We – Kenny Bambridge, Matt Brooks, Dony Christie, Denis Drescher, and a number of advisors – are actively working toward this goal. I’ve been thinking about the mechanisms and risks of this undertaking for a few months and I’m working on a future EA Forum post. I’ve also been in touch with Owen Cotton-Barratt.
Impact markets to smooth out retroactive funding
Effective Altruism, Empowering Excetional People, Economic Growth, Epistemic Institutions
Yonatan Cale already made the case for retroactive funding, i.e. that it’s easier to tell what has succeeded than what will succeed. The questions of what will succeed, in turn, can be answered by a market.
Investors will try to predict which charities will succeed to the point of receiving retroactive funding. A retroactive funder can make larger grants in proportion to their reduction in uncertainty (5–10x), time savings from having to do less vetting (~ 2x), and delay (~ 1.5x). Hence investors with enough foresight can even make a profit and turn the prediction of retro fund decisions into their business model. Promising charities can bootstrap rapidly with these early financial injections, successful serial charity entrepreneurs can accumulate more and more capital to reinvest into their next charity venture, and funders save time because they have to do only a fraction of the vetting.
We – Kenny Bambridge, Matt Brooks, Dony Christie, Denis Drescher, and a number of advisors – are actively working toward this goal. I’ve been thinking about the mechanisms and risks of this undertaking for a few months and I’m working on a future EA Forum post. I’ve also been in touch with Owen Cotton-Barratt.