Intro Series 3: The Free-Market Giving Engine

8 min readSep 20, 2019

This post is the third of a five-part series. Check out the next one here or start from the beginning.

Since the moment you walked into this room, five million birds in North America alone have just fallen in the latest ibisitis epidemic.” Jean-Ralphio surveys the room. Among a crowd of lawyers, doctors, and entrepreneurs, he sees only the helpless faces, the faces of powerful men and women rendered speechless at the plight of these noble birds. “But you can stop it. For only the price of a single cup of coffee a week, we can end this tragedy. Together.” A single tear runs down Jean-Ralphio’s face. “Surely, it’s the least we can do.”

Asking for money is part of the time-honored process of good-old-fashioned philanthropy. Over the years, it has taken many forms, from the church collection basket to third-world street beggars and GoFundMe campaigns. However, through all of these iterations, one fact has remained the same: it’s all about the donors.

We believe it’s time to introduce change. It’s time to put the beneficiary at the same table as the benefactor and to put good results before good intentions. In articles one and two, we focused on Universal Basic Philanthropy as a method to empower individuals, a worthy goal in and of itself. But perhaps it is the mark of all worthwhile movements that the benefits go far beyond the surface. In this post, we’ll explain how UBP can radically improve the quality of money that flows into the sector by combining charitable values with the potency of free markets.

A Tale of Two Extremes

In 2018, Giving USA reported 410 billion dollars in gifts to registered 501(c)(3) organizations. All of this money ended up in the nonprofit sector, but where it came from could not have been more different:

What we care about here isn’t so much how much people give, it’s about why. The motivation behind charitable giving is a topic that we’ll cover in excruciating depth in future posts. But for now, we’ll settle with simplistic but helpful generalizations at the extremes of philanthropy.

High on Emotions

Imagine that we sort every donation in order of emotional detachment. On one side of the spectrum, we have everyday individuals who find it in their hearts to give what little they can to local nonprofits. These might be people who were especially moved by a fundraising effort or perhaps people who were personally affected by the underlying social issue.

When most people think about charity, this is probably the sort that comes to mind. Our first category: emotionally-driven donations, describes most of the individuals responsible for 70% of charitable giving. It conforms to one of the oldest adages in philanthropy: giving comes from the heart, not from the head. We don’t give to fight grand global issues but to help the individual suffering right in front of us. In the words of Mother Theresa:

“If I look at the mass, I will never act. If I look at the one, I will”

You might like to think that this sense of interpersonal compassion and empathy is the starting point for responsible philanthropy. You might think that this initial emotion push motivated people to become more educated. They might find more effective ways to give and to use that knowledge to make an even more significant difference.

You would be wrong. As it turns out, the research indicates that people do far more feeling than thinking when it comes to philanthropy. Even worse, the more you make people think about a problem, the less generous we become. While we won’t hesitate to help individuals, there’s something about dry statistics and intractable global issues that makes us ask: what’s the point?

You don’t donate because you want to change the world. You give because, in the right circumstances, it feels good. Unfortunately, what feels good is not necessarily what is most impactful. At some point, we should ask ourselves whether we should run a 400 billion dollar industry on the whims of individual generosity.

High on Numbers

Far on the other side of the spectrum, there is another hidden world of philanthropy. Here, decisions are made by trained professionals at foundations and corporations with one goal in mind: to get the highest return on their investment.

This form of giving best describes at least 88 billion dollars flowing into philanthropy every year. From these sources, we are beginning to notice calls to “run nonprofits like businesses” and a focus on bringing hard metrics to every aspect of charity. The hope is that by replacing wish-washy anecdotes in favor of quantifiable accountability, we can pull the nonprofit sector into the peak efficiency of 21st century corporate America. It’s no easy task.

The first problem is that measuring impact can be both difficult and costly. Even if we knew what to measure, many nonprofits, especially small organizations, don’t have the resources to run extensive studies on their work.

Perhaps more importantly, even if we could develop adequate measures, it’s not clear how to use them. Goodhart’s Law frames the dilemma:

“When a measure becomes a target, it ceases to become a good measure.”

Social scientists routinely use measurements to understand hard problems. Metrics work very well in this context. However, in the grantmaking world, foundations and corporations use numbers to determine winners and losers. That’s problematic. The moment they emphasize one measure, Goodhart’s law says that grantees have no choice but to game the numbers and make compromises everywhere else.

The entire point of the nonprofit sector is to address public problems that are too risky, too obscure, or too qualitative for the government to handle. In many ways, forcing organizations into a quantifiable framework defeats the most critical purpose of philanthropy. In what world can we develop metrics for anonymous suicide hotline centers or hospice work? How can startup nonprofits tackle new problems when they can’t measure what they haven’t done? Numbers and analytics sound like capitalism; it looks like efficiency. It isn’t.

Universal Basic Philanthropy

There’s no way around it: getting money into social profit is hard. Until recently, complaining about emotional donors and misleading charity ratings would have been like complaining about unpredictable weather or bad drivers. Of course, we wouldn’t be blogging today if we didn’t think there was a better way. Here at Token Ibis, we have reason to be optimistic, and that reason is called Universal Basic Philanthropy.

With UBP, every person gets to vote in the form of a charitable donation dividend worth about $150 per month to add your much-needed knowledge to a challenging problem. This dividend is a sum of money that you can donate directly to a nonprofit. Alternatively, you can give it to someone else to donate if you think they can make a better decision with the money. As far as policies go, it is a relatively simple change. However, the difference in results can be immense.

Room for Deliberation

The first problem with traditional philanthropy is that most people tend to give while in the throes of strong emotions. Nonprofits understand this fact. In a way, you can argue that fundraising is essentially the art of getting people so mentally worked up that they accidentally give a damn. Leave us time to think, show us some boring tedious measurements, and suddenly we’re back to day-dreaming about the next vacation to Hawaii. But what if those two options didn’t have to compete with each other?

With UBP, you don’t need to make that choice. No matter what decisions you make with your hard-earned income, ibis (the UBP payout) is money that society has earmarked for charity and charity alone. It enables you to give without worrying about your bills or whether you can feed your family. It allows your values to stand on their own.

This subtle difference is the key to reinventing the way we think about philanthropy. Sure, most people will still sooner give to the adorable puppy in front of them than to the fight against malaria half a world away. No, we will not all become analytical robots. And that’s okay. The point is to give people a chance to think more carefully. If giving must come from the heart, then let it be from love instead of gratification, for hope rather than guilt. Emotions come and go, but true philanthropy should reflect the ideals that we uphold at all times.

Rewarding Impact

The benefits of UBP start at the individual level but shine when many of those individuals come together. Earlier on, we argued that centralized grantmaking by foundations and corporations comes with its own set of challenges. Researchers across the world are working hard to improve the situation with more education and data. At Token Ibis, we are taking a different, complementary approach. In our view, the solution isn’t to bring in more knowledge; it’s to bring in more people.

Democracy doesn’t work because the average person is smarter than a king or queen. It works because, given the right motivation, a million people provide far more perspective and accountability than one person ever could. In the same way, philanthropy desperately needs to involve more people. Currently, it enjoys enormous input from successful entrepreneurs and politicians. But what about social workers and teachers? Is it so unreasonable to think that these professions might be much more sensitive to many of society’s problems? How about volunteers and populations that are served by nonprofits? Why is it so radical to give them a financial vote?

With all the effort devoted to measuring impact, it’s easy to forget that the real goal is to reward it. People want nonprofits to look more like businesses. However, Apple didn’t become successful because its employees delivered the most pristine business reports to Steve Jobs. Apple became successful because the company sold a lot of widgets to a lot of ordinary people. In the same way, a nonprofit that receives the support of the people that they serve is probably a competent nonprofit. A movement that earns the financial vote of a thousand dedicated volunteers may be a worthwhile cause.

Universal Basic Philanthropy creates a system in which everyday people make everyday decisions to support the organizations that deserve it the most. It recreates the magic of the free market in its most pure form. By putting money in the hands of more people, we can exponentially increase the decision-making power of society as a whole.

At Token Ibis, we believe that advocating for democratized philanthropy is the right thing to do. However, the benefits of UBP don’t end there. A voice in social impact is more than a right, it’s an opportunity. Philanthropy has been stagnant for far too long. Through UBP, what we are advocating is a new philosophy for 21st-century philanthropy. But what we are building is an engine, a well-oiled 400 billion dollar machine: the world’s most potent mechanism for turning values into positive impact.