Jul 17, 2022
I said last year that I’d like to try running this year’s ACX Grants through impact markets. Since then, some people have expressed interest in the technical implementation, and - to nobody’s surprise more than my own - it’s starting to look like it could happen.
A reminder: impact certificates are like a VC funding ecosystem for charity. Charity founders with good ideas sell shares in their proposed projects. Profit-seeking investors buy shares of (“invest in”) projects that they expect to succeed. This funds the project; if it does succeed, altruistic people/foundations (“final oracular funders”) buy the impact, compensating the investors.
For example, suppose I come up with a great idea to end malaria in Senegal. I need $1 million to make it work, and when it works it will be worth $5 million in benefits to the Senegalese. Ordinary charitable foundations don’t appreciate my genius, so I pitch it to VCs with biotech experience. They like it and buy 100% of the shares for $1 million. I take my million dollars, do the project, and cure malaria in Senegal. Foundations see that I have done a great thing with $5 million in benefits, so they give me $5 million. I pass this along to my investors, who make $5 million on a $1 million investment. They’re very happy, and incentivized to do more things like this in the future.
Why is this useful? Try running a grants program and you’ll find out! You, a person who is presumably very altruistic but not necessarily an expert in epidemiology, will be asked to make decisions about which diseases to cure how. If you get it wrong, you’ve wasted your donors’ money. You can ask epidemiologists for help, but it turns out there is no easy way to get in contact with a consensus of all the world’s epidemiologists - let alone with the all the developmental economists, political scientists, etc who might have useful insights. Very large charitable foundations will have hired these people or built relationships with them, but even they don’t always feel confident in their decision-making process.