Crypto-philanthropy is here. What will that do?

Crypto-philanthropy is here.  What will that do?

Story continues Crypto donors have already begun to make their mark. In 2018, a person (or persons) calling themselves Pine gave 5,104 bitcoin to 60 charities entirely anonymously. FTX is the world’s only trading platform, crypto or otherwise, that was founded explicitly, “with the goal of donating to the world’s most effective charities.” It donates 1% of its net fees (in 2020, its founder was baffled to find himself then-candidate Joe Biden’s second largest donor). New structures for giving have also developed. GitCoin uses quadratic funding to crowdsource and match funding for public goods in the Ethereum space. And nonprofit Noora Health issued an NFT promising the purchaser a digital claim to the impact achieved through the NFT’s purchase price. 

For better or worse, new sources of wealth often change how philanthropy works. John D. Rockefeller, America’s first billionaire, built its first modern foundation. Rockefeller had more money than he could give away himself and set up an entity to give according to a broad mandate long after his death. His peers – Carnegie, Mellon, Ford – soon followed and a new philanthropic tool was born.   Related: What If Somebody Hacks the Money Pipeline Next?

Decades later, the personal computing revolution spurred Bill & Melinda Gates to position their foundation as a uniquely influential private player in the public health space. And in the years that followed, wealth from internet companies like Facebook drove the growth of effective altruism (or evidence-based philanthropy), as well as the expanded use of new legal structures like donor-advised funds or L.L.C.s. Joe Huston is Managing Director at GiveDirectly, an organization devoted to delivering unconditional digital funds to the poorest people in the world.

As the Managing Director of a nonprofit called GiveDirectly, I believe charities have much to learn from the transparency, efficiency, and decentralized power at the heart of crypto’s potential. The status quo aid model requires donor money to move through a complex web of multinational and local organizations before reaching its end-destination. Both dollars and information are often eroded along the way, and the end-user is too often deemed a passive recipient of goods or services, instead of an active agent of resource allocation.   One alternative is to simply give people money. At GiveDirectly, we have delivered over $380 million to hundreds of thousands of people, including residents in urban slums, refugees, and survivors of natural disasters across 10 countries. Direct cash transfers are not a silver bullet, but they’re evidence-backed, efficient, and have been increasingly adopted as an industry benchmark.  So how can crypto donors do the most good? First, they can join pioneers like Open Philanthropy Project in helping make altruism more effective. Too much giving still turns on anecdotes versus data. And more of those controlling the purse strings must ask the difficult questions about evidence and impact. 

This is just the beginning. In a conversation with economist Tyler Cowen, Coinbase CEO Brian Armstrong said if Bitcoin’s price reaches $200,000, half of the world’s billionaires would be crypto billionaires. Related: What’s the Carbon Footprint of Fiat Money?

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