Decentralised Grant-Giving in the Nonprofit World Part I
The Lien Foundation’s experiment with blockchain-inspired funding models
When we first heard of public goods getting funded using new methods in blockchain, we were intrigued. We wanted to learn about democratic ways to allocate funds.
The Lien Foundation funds its share of public goods. We are a Singapore-based philanthropic organisation supporting initiatives such as palliative care across Asia to anti-frailty senior gyms in Singapore. So, this piqued our interest to improve our decision-making process to fund projects.
Can we mix the unmixable?
We were particularly keen on palliative care. Would something ‘cold’ and ‘hard’ like blockchain be suitable? Palliative care seeks to reduce suffering for people with chronic disease, including those at the end-of-life. It’s often not a revenue-maker. People are reluctant to pay to die well, many are bankrupt after costly treatment failed them. Palliative care is the very definition of market failure, the same problem blockchain is solving.
In July, we held a small pilot inspired by blockchain’s decentralised funding pioneers. A grant pool of US$4,000 was established for palliative care in India. 7 hospitals submitted proposals. 2 hospitals split US$4,000.
More on that in Part II. Because none of that will make sense without some background. So, let’s dig in.
Nonprofit Funding on the Blockchain
In the early 2020s, the blockchain boom enabled nonprofit software (open-source projects) to get funding. Developers built voting mechanisms to decide where money should go, although this wasn’t without problems.
This was all exciting. But at Lien Foundation, we work with charities and providers who operate in an off-chain world. Copying directly from blockchain solutions would fail. So, we aimed for a super simple pilot.
We studied blockchain tools and solutions. Two platforms stood out. Gitcoin (a crowdfunding platform) and Optimism (a network which as a side project, supports developers who build Optimism tools/infra for free).
For our use case, this is what we liked:
- Leveraging wisdom from a group of experts: Funding the right thing is hard. We liked that Optimism tapped on experts to vote, decentralising the decision-making. In its first round, 22 tech experts distributed $1 million to 58 projects. Loose voting guidelines deliberately placed the burden on experts to utilise their collective knowledge.
- Quadratic funding (QF): A much-lauded formula/algorithm that rewards projects that has more supporters. Say a project gets 10 votes from 8 users, and another gets 10 votes from 2 users, the former gets more funds. This reduces the power of big wallets and we resonated with it. Would QF diversify voting outcomes?
- Beyond blockchain tech: Gitcoin’s Unicef round was exciting, involving 10 projects working on social issues. Some didn’t use blockchain tech. (We’re curious if there were rounds with more charities)
- Transparency: Rare in philanthropy, and sometimes not useful (we found). But we wished to try something new. Optimism’s voting process was made public: choosing experts, a zoom call assessing projects and a spreadsheet documenting final votes.
The Lien Collaborative for Palliative Care
We selected one of our programmes, the Lien Collaborative in Palliative Care, for the pilot. Doctors and nurses — a ready pool of experts — have been training healthcare workers across Asia since 2012. India’s Lien Collab successfully trained many hospitals, some who are starting palliative care services. We could invite these pre-screened hospitals to apply for grants.
Technology vs. Empathy
We had big dreams for end users to vote. But palliative care beneficiaries in India would be off-chain or offline. This ruled out Gitcoin for our pilot. Even the private grants stack was difficult; onboarding experts onto wallets was going to receive the Indian doctor equivalent of a table flip.
Blockchain’s current onboarding UX is not ready for our clinicians. They are busy folks who will rightly see little value in putting up with a 12-word secret phrase for an experiment. Few will use wallets in the near future.
So, blockchain wallets, and thus blockchain tech, was out.
We decided to use good old Google Forms and wondered how to adopt best practices from blockchain-based grant-giving without…the blockchain.
Decentralised grant-giving without blockchain
We believe this pilot is still novel. Tech is just a tool. What we admire and hope to learn from is blockchain’s culture and ways of working.
It’s rare for non-funders to make grant decisions. Even rarer, for palliative care in low and middle income countries to receive grants to unblock localised issues. We hope to eventually tap on blockchain as a source of funding for non-digital public goods. Our public goods are unsexy, e.g., helping cancer patients access painkillers (our first project in India a decade ago involved $50k of morphine). They don’t fit what blockchain funds. As the ecosystem evolves, we look forward to the day palliative care can compete alongside blockchain public goods.
Our MVP voting mechanism and process
- Call for proposals from Indian hospitals to start palliative care services
- Lien Collab doctors and nurses to be the expert voters
- Facilitate a zoom call for experts to discuss proposals
- Same number of votes per expert and apply QF
- Vote using Google Forms
Time to BUIDL!
In Part II, we dive into the actual experiment and implications for the future.
Annex: Optimism and Gitcoin’s funding round details
