Request for Comments: Donor Score
A ranking of top donors to pave the way to impact markets
I project that our efforts to seek legal clarity on the status of impact certificates and their tradeability will take more time and money. I also don’t like that our marketplace is fully dependent on a funder to generate value for issuers and investors. Especially now, post FTX, depending on funders seems risky to me.
Hence I’m proposing a “legally easy” feature that is quick to add and that can be very valuable even absent a funder.
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Three problems of donors and grant applicants
Donors and grant applicants face the following three problems at the moment:
Large funders generally don’t want to invest much more time and money into vetting a project than it would cost them to fund it. Hence funders are forced to ignore projects that are too small.
Donors, especially if they are “earning to give,” often don’t have the time to do a lot of vetting. Funds and donor lotteries address this, but a team of fund managers needs to win their trust first, which is not a given, and maybe they don’t want to take months off work in case they win the lottery.
Finally, grant applicants are known to waste a lot of time on redundant grant applications – each tailored a bit to the questions of the respective funder but otherwise virtually identical in content.
I would like to invite you to critique this proposed solution:
We promote impactmarkets.io as the one platform where grant applicants can publish their project proposals. No particular format: They can just use whatever draft they already have from another application. There’s a Q & A system though for funders/donors to ask further questions as needed. Questions and answers are public too. Funders can subscribe to notifications of new, popular projects in their cause areas.
When a donor supports a project, that is recorded. When a project claims to have succeeded, some experts evaluate it. Eventually early donors to successful projects (“top donors”) will stand out as having unusual foresight, especially if they can repeat this feat several times. Donors who don’t have the time to do as much research can follow the top donors to inform their own donations.
Bigger funders can (1) also follow the implicit recommendations of top donors, (2) encourage top donors with prizes, and (3) recruit grantmakers from the set of top donors.
To compute a high score table of top donors on the platform, we first need a score.
First, I want to set up a “contribution score” for donors that tracks how much they donated and how early they donated in a project’s history. I’m imagining a percentage here that signifies their relative contribution to the funding of the project.
It considers the size of the donation so that it can’t be gamed quite so easily by blindly donating small sums to every new project, and it considers the earliness so it can’t be gamed so easily by blindly following smart donors.
Second, I want to set up “impact credits” (or “impact marks”) that initially only expert project evaluators hold. They can assign it to projects that they feel were successes (and seemed robustly good from the outset). I would recruit this first set of seed evaluators from my networks and/or copy the decisions of prize committees I trust if the respective project participated in a prize contest.
Over time top donors will become richer in impact credits and so increasingly able to assign them on projects themselves as opposed to my recruited evaluators having to do this job. This, I hope, will diversify the set of opinions on the marketplace while privileging dollar-rich donors less than is the default.
Proof of Concept
This is the current ranking (to be released to production soon) of the donors and issuers on the platform:
Here is the ranking according to a subset of the data on donations.vipulnaik.com and my five-second snap judgments of the effectiveness of some 70 of the listed charities that I know:
In practice I don’t expect many funds to participate in this tournament, so that the eventual list will be dominated by individuals.
So what do you think? Will this project fail? Is it redundant? Is it illegal?
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