Collective Grant Making

As you'd expect, accessing the Federal aid from the CARES Act has been a challenge:

Jared goes into much more detail on the challenges:

Part of the overall issue is that the need for immediate help outstrips what's currently available.  It's like trying to put out a fire with a single firehose.  You need more throughput, and you need more readily available sources of capital.  In many ways, it's why we have a whole distributed system of fire hydrants and departments, with both paid and volunteer firefighters.

The other challenge is the form of the capital–loans to businesses. In most cases, the loans will be entirely forgiven, however in a crisis like this, what matters most is speed and scale.  That's why so many small businesses have turned to GoFundMe's and direct email campaigns.

A parallel issue here has been unemployment insurance.  From a policy perspective, expanding unemployment to include a wider class of people has been helpful, however there've been a few challenges.

First, there's been an infrastructure failure–many systems are either down or are throttled because they weren't designed to handle the magnitude of applications.  In New York, for instance, you're assigned a specific day of the week based on the first initial in your name, and even with that the online application form is only available during business hours.

Second, the politics of our current administration ignore the reality of our society.  As such, this system excludes the many undocumented workers who are responsible for so much core societal infrastructure.

What I do think has promise are microgrants, and we've already seen this play out in a number of cases, from donors funding restaurants to help them keep their staff employed, and in turn provide meals for all of the hospital workers on the front line; to people on Twitter issuing one-time grants via Venmo to their followers in need.

Some of these cases are individual acts, but as you'd expect with the Internet, they lend themselves well to collective giving.  It takes an individual donor to take the public leap, and usually their friends will privately contribute matching funds in order to make the pool bigger. (We saw this dynamic with the post-2016 election travel bans, the 2018 mid-term campaigns, as well as the child separation debacle.)

In all of these cases, an individual could have easily made a private donation, but instead chose to make it a collective effort.  It's a smart move, and I think it's an underserved use case:

Collective giving has been around for awhile.  Giving Circles emerged in philanthropy because specific communities found that they could fill the gaps that foundations ignored.  The Awesome Foundation emerged with a similar goal of filling the gaps in creative projects.  And, more recently, there've been a number of individual microgrant initiatives.

So, how do you approach scaling this up?

I think Kickstarter is a good model to consider.  Kickstarter has helped normalize a related, but somewhat different  inverse behavior–backers coalescing around a project initiated by a creator rather than a collective coming together to distribute funds to recipients of their choice.  

What's helped them scale the behavior of crowdfunding has been a clear adherence to the all-or-nothing model, a set of guidelines  and constraints (they're not a store and they steered clear of equity crowdfunding), and an organization that supports the creators and enforces the rules.  They've developed a system and put in place a team, structure and found a business model that enables them to maintain it.

I think there's an opportunity to do something similar here around scaling collective giving, but it's going to take time to figure out what the constraints should be, not to mention who the actors are in the system.

Further, you need a system that takes into account all of the different ways for fraud and other bad behavior to emerge.  If you go too far with a command and control model, you're right back where we started w/a slow-moving federal and state process for disbursing funds.  So, naturally, like pretty much every online social system designed today, trust will need to be core to the design.