Imagine you come across a project that improves your or other peoples life. It may be a content creator, an open source project, a local theater group, a charity or anything else. What do you do?
You probably consider supporting the project ensuring it keeps on existing or can even grow. Great! Unfortunately, that’s where most of the time most people stop, including myself. That’s not surprising given the difficulty of deciding whether you can afford it on the spot. What makes matters worse is that this decision becomes harder every time you choose to support a project because your overall budget is smaller.
What if the question of affordability could be removed?
Imagine the same situation again, but this time make the following assumption: You have already decided on a total donation budget that you can afford to spend on such projects each month beforehand. Each project gets a percentage of your budget.
This changes the situation entirely. Now you can start supporting new projects at no additional cost. It just takes a small cut from all the other projects you support already.
Among others, this approach has two significant benefits. First, you don’t have to think about whether you can afford to support a project because you don’t pay extra for it. Second, at any time you are in control of your budget and can adjust it based on your life situation without having to stop supporting the projects you care about.
I call this relative giving because each project gets an amount relative to your total budget. Additionally, ideally your budget is relative to what you would otherwise save each month.
Most projects directly or indirectly depend on other projects to achieve their goals. For example, a content creator is inspired by others or uses open source software which depends on other open source software.
If a project stops because of a lack of funding, then all projects that depend on it will have trouble, even if they are better funded. Therefore, it is in everyone’s best interest to distribute the money fairly so that everyone can grow together.
This can be achieved by encouraging each project to pay forward some of their income to related projects. I call this relative taking because each project only keeps a percentage of their income.
You may wonder why projects would give up some of their income. I think this comes down to building a social expectation around giving. This can be encouraged by making every project pay forward some percentage by default.
Every project has to realize that it does not live in a vacuum. Projects supporting each other can strengthen their relation likely resulting in a better outcome for everyone. In a community of giving, no one looses by giving to others.
The ideas described above require an intermediate platform managing the distribution of funds. I believe this platform has to be global and non-profit to be successful. The benefits the platform can bring to society are strongly affected by the network effect, i.e. it becomes worth more, the more people and projects use it. Being non-profit is essential to make it a feasible funding platform for all other non-profit projects.
The platform itself can be funded through voluntary donations by each user. For example, everyone could donate 1% to the platform by default, but that percentage can be changed arbitrarily, even to 0%. All money that’s not required for running the platform can be distributed like it would otherwise so that the overall voluntary platform fee will be lower than what users have set up.
I believe the described platform has great potential for the future of funding public benefit projects. It makes it easier for everyone to invest money in the projects they care about. For projects, it becomes simpler to ask for and receive money. And it can lead to an overall better distribution of funds than is currently the case.
There are many more interesting aspects of having such a platform. Some of those are described below, but feel invited to think about more!
Obviously, actually building such a platform is a huge undertaking requiring many skills and resources I don’t have. So for now, I’m just putting this idea out there to spark interest and discussion. My hope is that such a platform will exist eventually, whether I’m involved in it or not.
This section has some thoughts on various aspects related to the described platform.
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What is considered a public benefit project here?
Pretty hard to come up with a rule that always applies. This is my best definition so far: A project that benefits the same people even if the income would come from different people.
This implies that no one gets a personal benefit by being the one paying for it.
It also implies that for-profit projects (like a self-employed content creator) is seen as a public benefit project here, as long as one does not buy exclusive content with the payment.
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How does this affect how projects ask for money?
Relative giving not only benefits people spending money but also the projects receiving money. That’s because it’s much easier for them to encourage you to make them part of your budget, instead of trying to make you spend extra money on them, you might not have.
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Giving as part of budget planning?
A benefit of relative giving is that the decision how much to spend is decoupled from the decision on what to spend the money on. This makes it possible to integrate this decision into the normal budget planning that many households do.
All people I talked to do donate but typically in a very unstructured and ad-hoc way. People are generally never taught how to donate and to whom etc. I think it would be very beneficial if donating could become part of standard financial education where it is more of an afterthought right now.
This could encourage people to spend some percentage of the money they would otherwise save to projects they care about. It feels like this can also improve peoples relation to money because they are showing themselves that they have enough to live a good life because they can afford to support other projects regularly voluntarily.
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How to overcome the challenges of the network effect?
Network effect describes the phenomenon by which the value of a platform depends on the number of users. A typical example is a chat app. The best chat app in the world is worth nothing if no one uses it.
The same applies to the platform described above. If there are no or very few projects on there, users don’t have much of a benefit from using it because they still have to donate through other means. For projects the platform is not helping either when there is no one spending money on it.
Fortunately, this seems solvable by starting out inviting popular projects to the platform. That can work, because for projects this does not have to be an exclusive platform for getting their funding. They don’t lose anything by also being on that platform. This is especially interesting for projects that right now use for-profit funding platform that might take a large cut of what users spend.
This can start a positive feedback loop. These projects are interested in getting people to use the platform because it can be cheaper and feels better. After that, the users are encouraging more projects to use the platform because it simplifies managing their budget.
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Fair funding of local projects in poorer communities?
One problem with funding local projects exclusively by the people living there is that richer communities get better public benefit projects than those in poorer communities, even though the latter would likely benefit more.
Relative taking is an attempt to solve this to some degree. All local projects could pay forward some of their income to many similar projects. This naturally leads to more funding going to projects that don’t get much funding otherwise. People donating their money still know that they are primarily investing in the local community while also benefiting everyone else.
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What kinds of projects should everyone consider supporting?
I can currently think of three main categories of public benefit projects, there may be more though:
- Local: These are all kinds of projects that exist in your local community which are often supported by volunteers which may be your neighbors. Supporting these projects has the nice benefit that you can see the impact very directly, maybe even encouraging more donations.
- Online: These are all kinds of projects that may benefit certain kinds of people all around the world. Typical examples would be educational content creators and open source projects.
- Charities: Here I group “classic charities” which primarily benefit people or nature that may be much more disconnected from you personally.
I’m not sure how everyone’s budget should ideally be split up between these categories, but it seems like a good idea to encourage people to consider all of them.
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How to find good charities to donate to?
Choosing specific charities to donate to can be tricky given that you usually don’t see their impact directly. Of course one can just donate to the biggest well known charities, but there might be smaller ones that need support too. Partially, this could be solved with relative taking but maybe not enough.
Fortunately, there are already organizations evaluating charities for their effectiveness. One could imagine these organizations setting up “funds” on the platform and all money donated there is automatically distributed to the charities they found to be good.
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What if I don't have any extra money to give away currently?
No one expects people in financially unstable situations to just give away money. However, this is where relative giving shines. It can be a good idea to just collect projects you’d want to support even if you don’t have the means to actually support them right now.
Besides making it trivial to support them in the future in case your life situation changes, it also makes you more aware of all the good projects around you.
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Why give money away when I can save or invest it?
That’s a personal decision of course. Personally, I’d rather live in a society with good public benefit projects than having a lot of money in a society that does not have such projects.
I see giving money away as a kind of investment. Money given away is not invested in my future wealth but in my happiness and that of others around me and in the world.
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Won't this result in much smaller individual donations?
Yes, probably. By simplifying distributing money to many more projects, each individual donation will likely be smaller. By itself, this is not really a problem though if the total donated amount stays the same or even grows. It can also increase income stability for projects as they do not depend on fewer larger donations which can break away more easily.
Overall, the money may be distributed slightly differently than it is now. It seems that this would most likely benefit smaller projects which I think is a good thing.
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How to handle single time donations?
Most projects benefit more from recurring than single-time donations because of increased reliability of the income. By being able to change the total spending budget in a single place at any time, many of the downsides of recurring payments are less bad.
That said, certain projects are short-lived and thus a single time donation works better. For example, a single festival or a disaster recovery operation. Such payments could also be done through the platform and can even still be within the normal budget. For example, you could decide that 50% of your money goes to a specific project in a specific month. Then the remaining projects just get less this month, but you don’t have to spend extra if you can’t afford to.
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How to handle tax breaks?
In most countries there are mechanism to get tax breaks when donating to certain projects. I think the platform will have to be able to handle the complexity of that. When people are supporting different projects only some of which can be deducted from taxes, the platform has to be able to tell them how much they can deduct. Ideally, it can also provide the donation receipts automatically.
Without this, donating through the platform could be more annoying than donating directly, reducing the value of the platform.
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How should the platform be called and what should it look like?
I don’t know. While I have some thoughts on how to communicate certain things, I want to keep that out of this initial post. Having design mockups easily leads the discussion away from the core ideas.
Everyone is invited to think about and share naming and design ideas though.