I’ve recently been inspired by internet bloggers dynomite and others who write in a way that actually inspire me to read. Anyone who knows me knows that I largely don’t read for a variety of not great reasons - but apparently not feeling inspired is one of them.
So I’m going to start with a comment on impact markets. There is a great set of ideas and subsequent discussions about these markets and how to make them work. One thing that seemed glaringly unusual was the idea that funders would want to buy these impact certificates in the first place after the “impact” has already been realized. While that might make these certificates work, I’m not sure that this is psychologically what would motivate a funder. I suppose the comparison is that the funder is paying out prize money for a contest they never set up in the first place. Without this assumption the whole thing kind of falls apart so to address this issue of funder incentives I’d like to the propose the following:
The impact certificates value isn’t actually tied to the measured impact of the program, but it’s tied to the right to be able to provide further funding to the program that the original certificates funded.
A funder in a sense would need to buy the rights to be able to provide funding to this organization and the holders of the impact certificates have those rights and are able to sell those rights to another party.
The assumption here is that private parties may be better at finding and investing in promising organizations than funders and bear the risk and search costs. If a specific program or organization becomes a promising organization to invest in because of evidence or belief or what not, there will be demand to be able to realize the impacts of investing in that organization and holders of these certificates the exclusive rights to be able to do so. The value of these certificates themselves can be negotiated between parties. With a transparent ledger, like blockchain, the value of these certificates can be made public information and viola, do we have a working market for impact?