Public Goods x Crypto
Exploring New Fundraising Opportunities for non-profit organizations through NFTs, Memecoins, Quadratic Funding, and more!!
Hello!
This article is thought-provoking. It’s about how the integration of Crypto x Philanthropy (Non-profit Organizations) has created new fundraising models and opportunities for new avenues that can help create better social impact and change revenue models of Nonprofits and For-Profit Social Enterprises. This article also explores some experimental fundraising models with the combination of Quadratic Funding and Futarchy.
Profitable organizations exist to make money. The revenue goes to pay the business owner, shareholders and other key folks in the organization. With nonprofits, profit is never the end goal.
These organizations can be classified into humanitarian organizations, hospitals, political organizations, labor unions, and other agencies. While these organizations engage in critical development activities, their financial health doesn’t inspire others, as raising funds for projects remains a big challenge in this space.
Traditionally, non-profits rely on several funding sources, including grants, private donations, and product sales. Although they don’t exist to make money, they have to make money to perform the work they are committed to. Without a reliable revenue stream, non-profit organizations generally fail.
Typically, non-profits have 4 types of funders who give grants to them:
Seed grants: If a non-profit is looking for free money, this is the way to go. The amount is usually small, and therefore less risk.
Program grants: It is applicable to apply for specific programs, which require a project purpose, budget, timelines, and so on. The amount typically ranges between $25,000 to $2,50,000.
Capital grants: These grants are used to construct buildings/infrastructure like hospitals, museums, church buildings, and other public goods/infrastructure.
Conditional grants: A non-profit will often only get the funds from a conditional grant if it successfully raises a set amount from other sources. The funder typically matches the amount raised in these scenarios.
Operating grants: Funds needed for operations. It can be for rent, salaries, and other operating costs. These types of grants are rare, as there is a high chance of financial abuse.
Apart from this, non-profits can raise funds from private donations where folks donate based on monthly/annual subscriptions. Fundraising events are another way that non-profits could gain revenue from ticket sales. The other interesting approach is selling products. The point to be noted here is, the sales of the product should be directly used for the organization’s purpose. If that is done, non-profits have an infinite number of ways to explore selling products that are attached to their purpose.
One of the examples is Isha Foundation. Isha Foundation sells a wide range of products through Isha Life branding. The products include yoga meditation courses, events like group tours/pilgrimage tours, and ayurvedic products. Isha Foundation Inc. is registered in the US as a non-profit, designated as 501(c)(3). This foundation had achieved $40.7M in 2022 with just $13.5M in expenses and a whopping $111M in assets as of 2022. This is huge for any non-profit organization, and it becomes a great opportunity to sell its products and hugely expand its services!
Many people get pained to see not-for-profits making money, but that’s the wrong lens to look at. As long as the work they do adds value to people’s lives, it’s an amazing model.
History
The idea of helping and giving back to others has existed since biblical times. Nonprofits in the US have a much shorter history. Every couple of decades, a new era ushers in a new set of ideas, principles, and practices that affect how the non-profit sector functions.
I would like to quickly take you to the past and learn a thing about how fundraising for non-profits has evolved.
1990s
From the late 1800s to the 1920s, the US experienced the progressive era, marked by social activism and political reforms, including child labor laws, women’s suffrage, and prohibition. As the country grew more prosperous, the wealthy increasingly felt a responsibility to give back, influenced by Andrew Carnegie’s Gospel of Wealth (1889), which encouraged philanthropy.
The YMCA became a popular cause for these charitable efforts. In the early 1990s, YMCA leaders Charles Sumner Ward and Frank L. Pierce pioneered a new fundraising method with the first major US campaign. They set a new building, known as the “YMCA School” of fundraising, where organizations from a local network transformed into a nationally recognized cause for donors.
1940s
During World War 2, Americans mobilized to support the war effort from home, leading to the first large-scale fundraising on a global level. Citizens conserved resources, sent supplies overseas, and developed a relief program for civilians and refugees.
Fundraising and volunteer efforts often became collaborative, with organizations like the YMCA, Salvation Army, and National Jewish Welfare Board forming the United Service Organizations (USO) for National Defense.
The American Red Cross also launched a major campaign, raising millions, recruiting over 10k nurses, and initiating the country’s first war-related blood donation program.
1970s
In the 1970s, after the Civil Rights Movement and Vietnam War opposition, Americans increasingly focused on specific issues. The government expanded its role in social welfare, and the 1969 Tax Reform Act introduced 501(c)(3), defining “private donations” with tax-exempt status. This made non-profits seek 501(c)(3) classification, creating an official non-profit sector with new regulations.
In 1976, a law backed by the Coalition of Concerned Charities allowed non-profits to spend up to $1M annually on lobbying, amplifying their governmental influence. By 1980, non-profits were known as the “third sector,” impacting governments and businesses.
2000s
The advent of the internet in 1991 revolutionized the world, bringing new technology. Online giving/donations rose, generating $2.1B for non-profits in 2012. For non-profits, it is essential to be well-equipped for online giving and transparent about where donations go.
Later, social media platforms gave a powerful tool for organizations to promote their projects. Campaigns like the ALC Ice Bucket Challenge and #BlackLivesMatter demonstrated the impact of online movements, with social media giving awareness and community engagement.
2020s: Financial Internet
Over $2B is estimated to have been donated using cryptocurrency as of January 2024, according to The Giving Block.
The majority of the top US charities accept cryptocurrency donations (56% of the top 100) as of January 2024.
How can Philanthropy benefit from blockchain?
Blockchain could help decentralized charities by directly routing payments from a pool of givers to the recipients without the need for an intermediary in charge of manage the contributions.
For givers, transactions performed on blockchain can reach recipients faster and at lower cost than if performed via traditional methods. For example, a remittance transfer from the US to Kenya via cryptocurrency could cost as little as $0.50 lesser using blockchains like Solana and Sui would take a maximum of 30 minutes to process during congestions. In contrast, using a traditional service like Western Union, which is often considered a reliable option, might cost up to 20x more and require 1-2 business days for the recipient to access these funds. This significant difference in speed and cost is due to blockchain’s efficient approach to verifying transactions and minimizing transaction size.
The other standout feature is transparency. It allows donors to monitor their contributions from start to finish, ensuring their funds reach the intended recipients. As the entire transaction process gets tracked, it enables donors to make well-informed decisions for future contributions.
For recipients, it allows them to receive funds faster. This is huge because it eliminates intermediaries, allowing recipients to receive funds directly. The add-on benefit is, it could eliminate fraudulent activities. This transparency on either side puts charitable organizations under pressure to optimize their operations and helps donors to evaluate an organization’s efficiency.
Why would blockchain revolutionize this sector? I have three simple reasons for that:
Easy to find: The Internet is a key driver for this. Leading crypto-based philanthropy programs ensures that their donors see their crypto giving option on their websites, at events, and in fundraising scenarios.
Easy to give: Crypto is mobile-friendly. Non-mobile-friendly websites had collapsed due to lower search rankings and having less presence digitally. For non-profits that are active on the internet, they can leverage mobile-based technology to accept crypto online.
Easy to accept: Like traditional non-profits, crypto-based non-profits can accept crypto without dealing with issues around price volatility, wallet management, or chain of custody. Today, accepting crypto is as easy as taking online credit card gits.
Crypto that is donated by donors can be directly exchanged into fiat-based currencies and sent to the organization’s wallet. The automation of tax receipts can be synced with an organization’s CRM, creating transparency, one-on-one donation in the sector, which boosted trust in this sector for organizations.
The non-profit sector had become crypto-friendly in 2021. The donations had reached over $500M in the US, according to a PWC report. Ethereum had been the most donated cryptocurrency, with $30.70M donated in 2021. The next comes Bitcoin with $ 25 M. This was the first time Ethereum flipped Bitcoin in donation volume, on the Giving Block platform in 2021.
We had seen USDC, Doge, and Shiba Inu being used for crypto donations. We had seen the TeamSeas campaign led by Mr. Beast and Mark Rober. Out of $34M received, Doge coin donations contribute $70,000. More on the memecoins in the later part!!
Apart from peer-to-peer contributions or one-on-one contributions, let’s look at creative ways in which the crypto x charity intersection has emerged. The concept of fundraising has evolved in the crypto world and has huge opportunities to unfold different approaches to fundraising for social causes.
NFTs
NFTs have played a significant role in broadening the scope of crypto philanthropy, in terms of participation from both donors and non-profit organizations. The auction-style release of NFTs has opened new avenues for non-profits to partner with NFT artists and studios to turn into fundraisers.
Stella Artois, ArtBlocks, and Vayner3
To mark World Water Day 2022, Stella Artois collaborated with ArtBlocks and Vayner3 (Vayner NFT) to host a charity NFT auction benefiting Water.org. The collection, designed by generative artist Eliya Stein, drew inspiration from the organization’s mission, featuring water-themed digital artworks. This initiative was a successful one, with fully-sold out collection raising over $200k for the cause.
NodeMonkes
In 2023, the NodesMonkes, a popular Bitcoin Ordinals collection, made an impact supporting the Pediatric Cancer Research Foundation. The project had raised 2.1 BTC, which was valued at over $120k, to drive medical research aimed at combating pediatric cancer.
reGEN and ArtBlocks
The reGEN generative art exhibition, curated by Foteini Valeonti and Alex Estorick in collaboration with ArtBlocks, leveraged the power of creativity for a cause. It was an initiative to support Alzheimer’s research and treatment, which had raised over $500,000, benefiting both Cure Parkinson’s and The ALS Association.
Bored Ape Yacht Club
Yuga Labs, in 2021, extended its influence in crypto charity. The project donated 169 ETH, which was worth approximately. $389,000 — to Orangutan Outreach, a non-profit dedicated to rescuing and rehabilitating orangutans in Sumatra and Borneo.
Apart from these, World of Women had raised funds and a team with Code Green to expand and execute its charitable vision. The project has raised over $2M in crypto to date. Then there are projects like Woodies NFT, for the cause to support Trees for the Future. And Flower Girls NFTs, which had donated 20% of royalties to non-profits.
There had been many projects, like smArt of Giving, with its unique model to generate funds for charities through mobile gaming and entertainment. Anu Initiative is another interesting non-profit startup, which is designed to connect donors with the impact generated by their contributions through the use of non-traditional NFTs. The organization is trying to bring in the Proof-of-Impact concept via NFTs.
In 2024, I barely saw an influential project for charity donations. The NFT sector had seen a massive decline in the last cycle, where more than 90% of NFT projects died. We have seen NFT-based crowdfunding campaigns, eco-friendly NFTs to fund sustainability, and collaborative NFT drops with celebrity endorsements. There are untapped opportunities to leverage NFTs in the crypto-charity sector.
For example, there could be possibilities of doing things like:
Non-profits could leverage NFTs to symbolize the adoption of specific assets, like a wildlife animal or historical art, or even a square meter of conservation land. These NFTs would represent donors’ contributions while serving as a medium to communicate updates on the project/asset and its impact.
The other approach I imagine is to gamify donations by offering NFT rewards for achieving milestones. For ex, if a community reaches a collective goal, like raising $50,000, participants could receive limited-edition NFTs or unique NFTs.
Artists and non-profits could create an NFT membership where donors receive exclusive arts/services from artists for subscribing to monthly contributions. These NFTs can be leveraged to give access to virtual events, limited-edition workshops, or concerts, etc.
Although this may be a bit capital-intensive compared to others, it is an interesting approach to try out. If artists could create AR-based NFTs that can raise awareness about a specific cause, that could be a massive promotion for non-profits to raise funds.
For example, what if an NFT linked to deforestation could overlay images of a thriving forest with an endangered one when viewed through AR? The other way could be creating dynamic NFTs where NFTs could automatically evolve to reflect the donor’s historical contributions or milestones.
Story-telling NFTs could be another touch, non-profits could explore to raise funds. The stories could be of individuals or communities benefiting from the work. Each NFT could be a chapter or milestone in the journey of the donor’s contributions, which gives a personal touch to the cause that hadn’t been this engaging before.
Memecoins
2024 is about memecoins. Memecoins have played an interesting role in shaping the crypto market. When it comes to the charity sector, non-profits have adopted them for fundraising opportunities due to the viral nature of communities and hype. Yeah, the hype is real!
Bonk
It is the first dog-themed project on the Solana blockchain, which was launched with a tagline - “for the people, by the people”. It was launched with a massive airdrop in December 2022, as a Christmas gift to the Solana community. Although this hasn’t been used for the social cause, Bonk has sponsored a hackathon in Taiwan, fostering the community and ecosystem. Lately, according to The Giving Block, Bonk has been trying to integrate with The Giving Block to allow its holders to donate to social causes.
Baby Doge
The community had opened up an avenue to support animal rescue groups around the world. #BabyDogeArmy has contributed more than $1M to various shelters and animal welfare programs.
BobaCat
This is an interesting project solely deployed as a non-profit organization with a mission to support pet shelters. It is inspired by Dogecoin founder Billy Markus. The BobaCat token includes a 1% transaction tax on buys and sells, which will be used for marketing and philanthropic purposes. The organization has raised over $50,000 until now.
Shiba Inu
Shiba is another memecoin, a sister to Dogecoin, if I can call. Vitalik Buterin donated $1B worth of Shiba Inu during the COVID-19 pandemic to India.
Ponyo Impact
Ponyo Impact is the first of its kind, an anime-inspired “auto-impact” investing token, which drew inspiration from the 2008 Japanese film about a rescued goldfish. The founders had developed a model that directly benefits the environment.
3% of every Ponyo transaction is automatically donated to the Coral Restoration Foundation, a leading non-profit that is dedicated to reviving coral reefs through a natural recovery process.
The tokenomics model of Ponyo allows the organization to operate sustainably by generating continuous funds through transaction fees and ecosystem activities like NFT sales and gaming.
I think the intersection of the memecoins with philanthropy will continue to evolve with new models and approaches leveraging the advantages of blockchain technology. I see no reason if some other memecoin creates its presence in the market, creating value to the community.
AidCoin
This is not a memecoin. AidCoin is a charity token (ERC-20) built on the Ethereum blockchain. Its creators aspire for AidCoin to play a key role in charity fundraising and to access the AIDChain platform.
AIDChain is a platform that allows users to make and track their donations in addition to the accessibility they get to connect with charities worldwide and find meaningful projects to donate to.
For givers, they offer users to convert any major cryptocurrencies into AidCoin and track the transactions of AidCoin both on-chain and off-chain, and send receipts to the donors for tax exemptions.
On the other hand, the team mentioned working on AIDPay, an embedded widget which can help charities, crowdfunding projects collect donations through cryptocurrencies on their websites. The key aspect of AIDPay is that it integrates the funds-receiving wallet with AIDChain, therefore, all the funds get automatically converted into AidCoin.
The team had launched AidPool in response to the challenges faced by the charity organization mentioned in their Medium blog. The key challenge is that charity organizations were hesitant to adopt the non-custodial model, which demands an understanding of and managing private keys and wallets.
In essence, the key challenges mentioned are related to charities seeking a solution to minimize their effort and risk while allowing them to tap into crypto donations.
AidCoin found this as an opportunity to start this off with no decentralization, building a custodian wallet where AidCoin manages charity organizations’ donations. The interesting add-on is that they started to add staking functionality for organizations to earn rewards for their donations.
The team had partnered with partners like CharityStars, Elephant League International, Alice for Children, and others.
However, I don’t see any recent updates from the team. Their last medium publication and twitter engagement was around 2021. There is no recent information on the status of this project.
Intersecting Philanthropy with DeFi is an interesting approach, and I believe has a higher potential to transform the charity sector. Typically, charities often hold idle funds while planning or getting to execute the project. With DeFi, these organizations can generate passive income from these funds. There are a few interesting ways to build:
Tokenized Donations: Donors representing their contributions, which can further be leveraged for governance rights, deciding on what projects to work on, which withdraws high impact through quadratic funding (more on this later!)
Bonds: Charities can issue bonds tied to stable assets, offering donors or institutional supporters a low-risk and impact-focused investment.
With RWAs, there is a huge possibility of executing to co-fund infrastructure or social-impact projects via tokenized RWA pools, which can result in financial returns and full charitable missions.
For example, a charity is focused on renewable energy to transform urban areas or install solar power installations in rural communities. As the project needs an upfront capital, the solar installations can be tokenized and added in funding pools for investors to gain fractional ownership (this can be a revenue generator in the long-term from selling surplus electricity to local grids).This works because it is transparent with recording all transactions, the tokenized model is scalable as it can be replicated for similar projects, and a possibility for sustainability with ongoing revenue.
Staking and Yielding are the options that could be looked at to allow unused funds to earn returns, but liquidation should be a critical metric to be evaluated in doing so.
While going through this sector from a crypto angle, I have noticed the intersection activity happening through fundraising via crypto, issuing charity-based tokens, leveraging meme culture through memecoins, and crypto foundations like Endaoment, BitGive Foundation, The Giving Block, Binance Charity, and other traditional charity organizations accepting crypto donations like Save The Children, Red Cross, United Way, UNICEF, Malala Fund, Stand with Ukraine, and many more.
Quadratic Funding (QF)
Quadratic Funding is an innovative mechanism designed to efficiently fund public goods by valuing the collective preferences of a community. This mechanism was proposed by Vitalik Buterin, Zoe Hitzig and E. Glen Weyl (BHW) in 2019.
Public Goods
Public goods are goods that are non-rival (one person’s use doesn’t reduce availability for others) and non-excludable (no one can be excluded from using them).
Examples include public parks, infrastructure, clean water, air, and open-source software. These goods often face underfunding because individuals may not contribute voluntarily, the classic free-rider problem.
QF addresses this underfunding issue by amplifying collective community preferences through matching contributions. It emphasizes breadth of support (number of donors) over depth (size of individual donations). The funding mechanism is based on a mathematical formula:
Matching Score = (i=1∑nci)2
Where Ci is the contribution of each donor. The more people who support a project, even with small amounts, the larger the matching funds it receives.
Example: Community Funding with QF
Suppose a city has a $100,000 matching fund to allocate among three proposed projects:
Project A: Free Wi-Fi in public areas
Project B: Homeless Shelter Expansion
Project C: Urban Tree Planning Initiative
Let’s say the community donates as follows:
Project A: 400 donors x $25 = $10,000
Project B: 50 donors x $600 = $30,000
Project C: 300 donors x ~$16.67 = $5000
Step 1: Calculating Matching Score
Project A
400 x √25 = 400 x 5 = 2000 = (2000)2 = 4,000,000
Project B
50 x √600 = 50 x 24.49 = 1224.5 = (1224.5)2 = 1,499,402
Project C
300 x √16.67 = 300 x 4.08 = 1224 = (1224)2 = 1,498,176
Total Matching Score = 4,000,000 + 1,499,402 + 1,498,176 = 6,997,578
Step 2: Allocate Matching Funds Proportionally
Project A
4,000,000/6,997,578 x 100,000 = $57,200
Project B
1,499,402/6,997,578 x 100,000 = $21,430
Project C
1,498,176/6,997,578 x 100,000 = $21,370
Final Totals
Project A: $10,000 (donations) + $57,200 (matching) = $67,200
Project B: $30,000 (donations) + $21,430 (matching) = $51,430
Project C: $5000 (donations) + $21,370 (matching) = $26,370
Project A received the highest matching funds due to its broad donor base (400 donors), even though its total contributions were lower than Project B’s. This reflects the core idea of QF: more contributions → more matching.
Project B, despite raising more money overall, had fewer donors and thus received less matching. Project C, though modest in contributions, benefited from a larger pool of contributions than Project B and received nearly the same matching amount.
The funding process is transparent, democratic, and can be automated via smart contracts. It aligns resource allocation with collective interest rather than just individual interest and wealth.
Traditional donor matching is often arbitrary (1:1 matching). QF, in contrast, applies a principled, math-based approach that results in higher social value.
Moreover, QF naturally facilitates donor coordination. When donors have overlapping interests (e.g., two donors value different causes but both moderately support a shared cause), QF ensures that this shared preference is captured and amplified in funding decisions.
Drawbacks
There are problems with QF:
Budget Deficit
If you see that the total matching fund was $100,000, but after QF, it became $145,000. The matching funding deficit is a problem that exists with QF. It exists because the QF mechanism allocates funds based on a theoretical matching formula that often exceeds the predefined budget.
To mitigate this, the common solutions that have been used are to scale down all calculated matches to fit the matching fund.
Approach 1: Scaling Factor
Scaling Factor - Available Matching Pool/Calculated Match - 100,000/145000 = 0.6896.
Therefore, each project will be scaled down via Calculated Match * Scaling Factor.
With that, the updated calculation will turn to:
Project A - $46,341.1
Project B - $35,466.12
Project C - $18,184.75
After scaling down the matching fund proportionally, it’s very likely that the allocated amount matches the original pool of $100,000.
Approach 2: Predefined Matching Pool
Capping the total match at the available pool and distributing it via a proportional allocational method rather than an iterative model, as there could be a problem with proportionality by favoring projects that receive their funds early on.
The idea is partially formalized in the original QF paper through the concept of Capital-Constrained Quadratic Funding (CQF), which introduces budget limits to the mechanism. However, CQF is only a partial solution.
It can become inefficient in small populations or scenarios with highly diverse preferences. In such cases, the matching may fail to reflect true community values because the breadth of support, a critical input in QF, is either too narrow or too fragmented to generate meaningful differentiation between projects.
The size and engagement of the population are thus crucial for QF (and CQF) to function effectively. Without a sufficiently large and active contributor base, the matching outcomes can appear arbitrary or skewed, reducing the impact and legitimacy of the funding process.
Approach 3: Transaction Fee
If the system can charge a small transaction fee on donations could bolster the matching pool. Not sure if this can work, but a possible way to explore
Collusion
Collusion has been a major concern. Individuals can coordinate and manipulate the system for their benefit, especially when they can create multiple/fake identities to increase the match for their contributions. Even small-scale collusion can significantly increase the funding for their preferred public good.
For ex, if one person contributes $2 and another person contributes $1, the match under QF would be $3, but if they split the $2 contribution into two $1 contributions, the total match doubles to $4.
GitCoin addresses this issue by implementing a Pairwise Funding mechanism. This mechanism can detect and mitigate collusion by reducing matching funds with highly coordinated donor behavior. With a flagging mechanism, they encourage the community to leverage collective oversight.
But, there could be possibilities for false flagging in competitive scenarios. Optimality Gap Metric is another concept that identifies outcomes that are suspiciously optimized for matching funds. It is used to flag anomalies at scale.
Incomplete Information
There may be assumptions that individuals possess complete information about the contributions of others. Check out the paper written by Luis V.M. Freitas and Wilfredo L. Maldanado, which discusses inefficiency in the mechanism due to incomplete information.
In real-world scenarios, an ideal setting where every individual has complete information is unrealistic. People’s decisions on how much to contribute are based on their expectations of others’ contributions, often leading to under-contributions.
The paper also conducted a study on the variability of population size and the variance of expected contribution to the public good. The results indicate that efficiency can either increase or decrease as the population grows, depending on the value of this parameter. The mechanism becomes asymptotically efficient when efficiency increases.
The inefficiency caused by incomplete information is a critical concern. In real-world scenarios, the more accurate information one possesses, the better the outcomes. paper written by Luis V.M. Freitas and Wilfredo L. Maldanado, which talks about inefficiency in the mechanism due to incomplete information.
In real-world scenarios, there cannot be an ideal setting where every individual has complete information. People’s decisions on how much to contribute are based on expectations of others’ contributions, which often results in under-contributions.
The paper also did a study on the variability of population size and the variance of expected contribution to the public good. The results are — efficiency can increase or decrease as population grows, depending on the value of this parameter. The mechanism becomes asymptotically efficient, where efficiency increases.
The inefficiency under incomplete information is a critical concern. In real-world scenarios, the more accurate information one possesses, the better the outcome results.
Quadratic Voting (QV) can become more beneficial in addressing this efficiency. Participants’ votes get allocated proportionally to the square of their vote weight, enabling them to prioritize issues that matter most to them without needing complete information about others’ preferences.
QV can reduce dependency on assumptions about others’ preferences, leading to more accurate aggregation of individual preferences.
Even under complete information in QF, people know exactly how much others value a public good and adjust their contributions accordingly. However, individuals can misinterpret, creating an issue of tactic collusion, which occurs when someone over-contributes to encourage others to do the same. A multi-round (dynamic) version can address this to an extent, but it cannot be solved.
On the other hand, if not QV, how would the integration of QF and Futarchy look? I did write about Futarchy last year, do check it out if interested.
Futarchy is a form of governance where policy decisions are made based on prediction markets. The idea is to “vote on value, but bet on beliefs.” The market predicts which policy will best achieve a chosen metric (like GDP, public health, etc.).
If I combine both these systems:
QF determines what to fund, based on collective preferences.
Futarchy determines how to fund or implement those things, based on predicted outcomes.
Here are a few models that come to mind by mixing these mechanisms:
Model 1: Futarchy-Governed QF Pools
The community uses QF to decide which public goods or projects should receive funding. However, prediction markets are used to set the parameters of the QF system itself, such as matching pool size, eligibility criteria, identity verification methods, and anti-sybil mechanisms.
Markets predict which configuration will lead to better public outcomes (ex-, higher user satisfaction, adoption, health, etc)
Model 2: QF-Funded Futarchy Policies
A community identifies a set of public goods or challenges. They use QF to fund the creation of prediction markets or research into potential policies to solve these problems. Then futarchy takes over to determine which policy to implement-based on predicted outcome.
Model 3: Parallel Systems with Cross-Feedback
QF supports experimental community projects (ex-, new apps, co-ops, infrastructure).
Futarchy runs alongside, predicting which funded projects will yield the best impact, and guides future QF rounds by highlighting patterns. The systems influence each other over time via feedback loops.
Integrating QF with Futarchy promises a governance system that is both community-driven and outcome-optimized, but it faces significant challenges. Technical hurdles like sybil resistance, low-liquidity prediction markets, and oracle reliability complicate implementation.
The cognitive load for users is high, requiring understanding of both complex funding mechanisms and predictive decision-making. Additionally, issues of legitimacy, metric selection, and market manipulation pose serious risks to fairness and effectiveness.
Keeping the challenges aside, there are projects that have been leveraging and experimenting quadratic funding mechanism for public goods.
These projects are very interesting, especially the potential outcomes of Giveth, Endaoment, and Supermodular, Octant, Cubik, with innovative approaches and solutions. Some people argue that other mechanisms are better than QF, like Score Voting, Approval Voting, Liquid Democracy, and Storable Votes.
Quadratic Funding offers a unique mechanism to public goods provision, incentivizing more democratic, broad-based contributions to projects.
Score Voting and Approval Voting seem like a good option for selecting, but I have doubts about their scalability or application for funding models.
Liquid Democracy offers flexibility in voting delegation but doesn’t address resource allocation, making it a right-fit for governance rather than funding.
Storable Votes adds depth, which makes it relevant for vote allocation rather than funding or contributions to public goods.
Closing Thoughts
The possibility of transforming traditional fundraising via blockchian technology can open new avenues for non-profit organizations to create multiple or regenrating revenue streams making them sustainable non-profit organization or if i can call — profitable non-profit organizations by leveraging quadratic funding model, tokenization and creative side of NFTs, creating an exciting and gamified mechanism for donors and organizations to participate in crypto payments and DeFi investment tools.
The current developments of crypto in charity sector seems to be evolving at a lower pace compared to other sectors like DeFi, DePIN, AI agents and consumer-related applications.
Why is this the right time to build? or to experiment?
According to The Giving Block, with data taken from Endaoment, Fidelity Charitable, Forbes, and Crystal Blockchain, they estimate more than $2B in crypto donations have been made to charitable causes. The performance of the crypto market is often correlated to the donations made in that cycle. With a positive momentum in 2024 and especially in 2025, I think it’s the right time to build and experiment with new fundraising models in the charity sector.
Why should you care?
We spend trillions of dollars every year on public goods, which go untracked, leaving us in a state hoping that it has the intended positive impact.
Tracking the social work and donations in a transparent way
Evaluate the impact of these social causes
Reward the exceptionally impactful ones
Doing the above results in providing incentives for creators, enabling feedback, and attracts more talent to the public goods sector.
Ideas
Let me share some of my experimental ideas to utilize QF or other mechanisms for fundraising public goods:
Dynamic Impact-Weighted QF
Combining QF with dynamic impact-weighting to incentivize both the size of donations and the actual impact generated.
Instead of matching donations using QF, what if we create a scoring system that rates each project based on pre-determined impact criteria (ex-, environmental impact, inclusiveness, or operational efficiency).
These ratings would adjust the matching funds according to the impact potential of each project. This can allow donors to fund projects based not just on popularity but also on the long-term impact — social outcome.
Quadratic Staking and Matching Pools
A hybrid of QF and staking mechanisms, allowing donors to lock funds into a staking pool where their donations’ impact is amplified over time.
Donors could stake their funds in a public goods pool (for 6 or 9 months). The longer their donation is locked, the more matching funds they receive through QF. This has the possibility to create incentives for longer-term engagement and supports projects that can show sustained impact. The staking time period will be critical for this model.
Gamified Donations
Introducing gamified tiers of donations that reward increasing levels of commitment with tokens. Donors can earn different donation badges or tokens based on their engagement and contribution size, where they can sell off their tokens or boost specific projects for matching funds.
This works similarly to ranked projects with a QF system but adds an element of gamification in boosting specific projects’ chances of receiving matching funds.
Tokenized Matching Pools
Creating a tokenized, cause-specific matching pools that focus on highly targeted public goods (ex-, climate change, education, and health).
Organizing donations into separate cause-based pools, where each pool has its own matching fund pool, with QF applied to donations within that specific pool. This may allow more focused funding, leading to more efficient and concentrated impact.
Models like reputation systems or vouching mechanisms and public goods auctions, adding gamified elements, could enhance engagement, increase sustainability, and encourage donors to support more for public goods in the crypto x charity sector.
There are many whitespace opportunities to explore and experiment on in this space. I would love to hear your thoughts on the innovative possibilities around fundraising with crypto and get your feedback on this article. Let me know your thoughts in the comments section.
References
Nonprofit Explorer - Isha Foundation
PWC - Redefining Charitable Giving in the Digital Age
The Giving Block - 2024 Annual Report on Crypto Philantrophy
Blockchain and Philantrophy - Peter Vogel, Malgorzata Kurak and Johannes Huebner
A Flexible Design for Funding Public Goods
GitCoin: Quadratic Funding and Problem Faced