Effective Altruism, Economic Growth, Empowering Excetional People
A low-tech alternative to my proposal for impact markets is to offer regular, reliable prizes for early supporters of exceptionally impactful charities. These can be founders, advisors, or donors. The prizes would not only go to the top supporters but proportionally to almost anyone who can prove that they’ve contributed (or where the charity has proof of the contribution), capped only at a level where the prize money is close to the cost of the administrative overhead.
Donors may be rewarded in proportion to the aggregate size of their donations, advisors may be rewarded in proportion to their time investment valued at market rates, founders may be rewarded in proportion to the sum of both.
If these prizes are awarded reliably, maybe by several entities, they may have some of the same benefits as impact markets. Smart and altruistic donors, advisors, and charity serial entrepreneurs can accumulate more capital that they can use to support their next equally prescient project.
Reading this again, I want to register that I am much more excited about the idea of rewarding donors for early investment than I am about the other elements of the plan. As someone who has founded multiple organizations, the task of attaching precise retrospective monetary values to different people’s contributions of time, connections, talent, etc. in a way that will satisfy everyone as fair sounds pretty infeasible.
Early donations, by contrast, are an objective and verifiable measure of value that is much easier to reward in practice. You could just say that the first, say $500k that the org raises is eligible for retroactive reward/matching/whatever, with maybe the first $100k or something weighted more heavily.
It’s also worth thinking through the incentives that a system like this would set up, especially at scale. It would result in more seed funding and more small charities being founded and sustained for the first couple of years. I personally think that’s a good thing at the present time, but I also know people who argue that we should be taking better advantage of economies of scale in existing organizations. There is probably a point at which there is too much entrepreneurship, and it’s worth figuring out what that point is before investing heavily in this idea.
Owen Cotton-Barrett and I have thought about this for a while and have mostly arrived at the solution that beneficiaries who collaborated on a project need to hash this out with each other. So make a contract, like in a for-profit startup, who owns how much of the impact of the project. I think that capable charity entrepreneurs are a scarce resource as well, so that we should try hard to foster them. So that’s probably where a large chunk of the impact is.
When it comes to the incentive structures: We – mostly Matt Brooks and I but the rest of the team will be around – will hold a talk on the risks from perverse incentives in our system at the Funding the Commons II conference tomorrow. Afterwards I can also link the video recording here. My big write-up, which is more comprehensive than the presentation but unfinished, is linked from the other proposal proposal.
That said …
I personally think that’s a good thing at the present time, but I also know people who argue that we should be taking better advantage of economies of scale in existing organizations. There is probably a point at which there is too much entrepreneurship, and it’s worth figuring out what that point is before investing heavily in this idea.
I don’t quite understand… More funding for donors → more donors → more money to charities → higher scale, right? So this system would enable charities to hire more so people can specialize etc., not the opposite?
This is really interesting. Setting up individual projects as DAOs could be an effective way to manage this. The DAO issues tokens to founders, advisors, and donors. If retrospectively it turns out that this was a particularly impactful project the funder can buy and burn the DAO tokens, which will drive up the price, thereby rewarding all of the holders.
Yep! There’s this other proposal for impact markets linked above. That’s basically that with slight tweaks. It’s all written in a technology-agnostic way, but one of the implementations that we’re currently looking into is on the blockchain. There’s even a bit of a prototype already. :-D
Proportional prizes for prescient philanthropists
Effective Altruism, Economic Growth, Empowering Excetional People
A low-tech alternative to my proposal for impact markets is to offer regular, reliable prizes for early supporters of exceptionally impactful charities. These can be founders, advisors, or donors. The prizes would not only go to the top supporters but proportionally to almost anyone who can prove that they’ve contributed (or where the charity has proof of the contribution), capped only at a level where the prize money is close to the cost of the administrative overhead.
Donors may be rewarded in proportion to the aggregate size of their donations, advisors may be rewarded in proportion to their time investment valued at market rates, founders may be rewarded in proportion to the sum of both.
If these prizes are awarded reliably, maybe by several entities, they may have some of the same benefits as impact markets. Smart and altruistic donors, advisors, and charity serial entrepreneurs can accumulate more capital that they can use to support their next equally prescient project.
Reading this again, I want to register that I am much more excited about the idea of rewarding donors for early investment than I am about the other elements of the plan. As someone who has founded multiple organizations, the task of attaching precise retrospective monetary values to different people’s contributions of time, connections, talent, etc. in a way that will satisfy everyone as fair sounds pretty infeasible.
Early donations, by contrast, are an objective and verifiable measure of value that is much easier to reward in practice. You could just say that the first, say $500k that the org raises is eligible for retroactive reward/matching/whatever, with maybe the first $100k or something weighted more heavily.
It’s also worth thinking through the incentives that a system like this would set up, especially at scale. It would result in more seed funding and more small charities being founded and sustained for the first couple of years. I personally think that’s a good thing at the present time, but I also know people who argue that we should be taking better advantage of economies of scale in existing organizations. There is probably a point at which there is too much entrepreneurship, and it’s worth figuring out what that point is before investing heavily in this idea.
Owen Cotton-Barrett and I have thought about this for a while and have mostly arrived at the solution that beneficiaries who collaborated on a project need to hash this out with each other. So make a contract, like in a for-profit startup, who owns how much of the impact of the project. I think that capable charity entrepreneurs are a scarce resource as well, so that we should try hard to foster them. So that’s probably where a large chunk of the impact is.
When it comes to the incentive structures: We – mostly Matt Brooks and I but the rest of the team will be around – will hold a talk on the risks from perverse incentives in our system at the Funding the Commons II conference tomorrow. Afterwards I can also link the video recording here. My big write-up, which is more comprehensive than the presentation but unfinished, is linked from the other proposal proposal.
That said …
I don’t quite understand… More funding for donors → more donors → more money to charities → higher scale, right? So this system would enable charities to hire more so people can specialize etc., not the opposite?
Thanks!
This is really interesting. Setting up individual projects as DAOs could be an effective way to manage this. The DAO issues tokens to founders, advisors, and donors. If retrospectively it turns out that this was a particularly impactful project the funder can buy and burn the DAO tokens, which will drive up the price, thereby rewarding all of the holders.
Yep! There’s this other proposal for impact markets linked above. That’s basically that with slight tweaks. It’s all written in a technology-agnostic way, but one of the implementations that we’re currently looking into is on the blockchain. There’s even a bit of a prototype already. :-D
I really like this idea, and FWIW find it much more intuitive to grasp than your impact markets proposal.
Sweet, thanks! :-D
Then it’ll also help me explain impact markets to people.