9 ms·

This seems more of a method for a group of people to profit from a non-profit than it does a new method of actually financing non-profits. The non-profit is sti

This seems more of a method for a group of people to profit from a non-profit than it does a new method of actually financing non-profits. The non-profit is still receiving a donation. Also, the thought of investors profiting $100K from "inmate hours worked" does not sit well with me. Are the inmates being paid a decent wage?

coffeemug 8y ago
> This seems more of a method for a group of people to profit from a non-profit than it does a new method of actually financing non-profits. It is both. If the method works, this group of people won't profit from non-profits in exchange for nothing -- they'll get paid for picking non-profits that accomplish their declared goals. Suppose $X is spent on non-profit donations, and Y% of non-profits don't meet their goals. Then only $X * (1 - Y) is deployed in a meaningful way, and $X * Y is wasted -- it's the hidden cost (Hc) of today's allocation mechanism. So long as the investors get paid less than Hc, contributing $X to the donor fund instead will result in a strictly better world. I think this is promising. I would definitely consider contributing to this fund.
- lixtra 8y ago
  Or shorter: You donate 1$. Of that only 0.9$ go to the cause and 0.10$ is used as premium to insure that goals are met. I don’t see how the insurers have any leverage to make the non-profits meet there goals. That means that they will probably only pick non-profits with a very good reputation. But then the donors could just give 100% to the non-profit.
  - walterbell 8y ago
    Yes, it’s not clear which org is responsible for performance management of each bond, e.g. such an org requires both individual talent/expertise and institutional memory. What incentive does the nonprofit have to meet the target goals, if they get paid in all scenarios? Here is a 2016 white paper on their process for setting up a fund, https://npxadvisors.com/wp-content/uploads/2016/06/NPX-Whitepaper-vFINAL.pdf https://npxadvisors.com/wp-content/uploads/2016/06/NPX-White...
    - imh 8y ago
      I'd guess that additional funding is harder if you don't meet goals. A lot of this seems to be pushing towards better measurements and priority alignment in the first place.
  - Vinnl 8y ago
    > I don’t see how the insurers have any leverage to make the non-profits meet there goals. That means that they will probably only pick non-profits with a very good reputation. But then the donors could just give 100% to the non-profit. Isn't it now the investors that will make sure non-profits reach their goals? They will theoretically only invest in things that they will expect to meet their goals, so that donors actually pay them back. So donors just have to decide which non-profit's goals they want to support, and then investors help them achieve those goals. So if I understand it correctly, the primary advantage of this method should be that it helps well-performing non-profits to raise funds. And if a non-profit is high-risk but also high-value (in terms of what donors consider important to the world), they will have to donate more for investors to actually invest - but at least they'll know that they will only have to pay that if the non-profit actually achieves its goals. Of course, the challenge then is how to properly set the goals and how to objectively measure whether they're achieved.
    - notahacker 8y ago
      > Isn't it now the investors that will make sure non-profits reach their goals? The big question then becomes why should a solely ROI-focused underwriter be better at this type of evaluation than a philanthropic foundation which (i) is actively interested in the goals (and probably also related goals/drawbacks not specified as metrics) to the extent of intending to lose money towards achieving them and (ii) likely to be a source of further funding, which means the nonprofit is more motivated both to engage with them and to actually hit the goals
      - zxcmx 8y ago
        As an investor, why would I invest in a non-profit with difficult-to-game metrics... Because juking the stats or a bit of weaselling in the way goals are stated is way easier and more reliable than building things or say, achieving actual health outcomes. I’m somewhat skeptical.
      - Vinnl 8y ago
        That is indeed a good question. That said, I don't think the underwriters should be ROI-focused - my interpretation is that current donors would be underwriters. This is a way for them to transfer the risk of what measures will result in what improvements to investors. Evaluation could be as broad as "polio should be eradicated". But yeah, there's a lot of questions left, and I don't feel like I have a good grasp on what this would entail and all its advantages either.
- deleted 8y ago
  [deleted]
- bradleyjg 8y ago
  I hope they are aware of, and have a plan to mitigate, Goodhart's law.
deleted 8y ago
[deleted]
Shikadi 8y ago
Prisoners can legally be slaves according to the 13th amendment of the Constitution. (I don't agree with it, just pointing it out)
- ensignavenger 8y ago
  The 8th Amendmend to the US Constitution prohibits cruel and unusual punishment, the 13th Amendment does not nullify that. Of course it is a matter of interpretation what constitutes slavery and wether or not it is cruel or unusual punishment.
  - Shikadi 8y ago
    Prisoners are regularly paid below minimum wage, so whether or not you or I consider it cruel or unusual, the judicial branch clearly doesn't
qop 8y ago
Do inmates deserve to make wages? They're not afforded the liberties of regular workers because they are criminals serving sentences.

coffeemug 8y ago

> This seems more of a method for a group of people to profit from a non-profit than it does a new method of actually financing non-profits. It is both. If the method works, this group of people won't profit from non-profits in exchange for nothing -- they'll get paid for picking non-profits that accomplish their declared goals. Suppose $X is spent on non-profit donations, and Y% of non-profits don't meet their goals. Then only $X * (1 - Y) is deployed in a meaningful way, and $X * Y is wasted -- it's the hidden cost (Hc) of today's allocation mechanism. So long as the investors get paid less than Hc, contributing $X to the donor fund instead will result in a strictly better world. I think this is promising. I would definitely consider contributing to this fund.

lixtra 8y ago
Or shorter: You donate 1$. Of that only 0.9$ go to the cause and 0.10$ is used as premium to insure that goals are met. I don’t see how the insurers have any leverage to make the non-profits meet there goals. That means that they will probably only pick non-profits with a very good reputation. But then the donors could just give 100% to the non-profit.
- walterbell 8y ago
  Yes, it’s not clear which org is responsible for performance management of each bond, e.g. such an org requires both individual talent/expertise and institutional memory. What incentive does the nonprofit have to meet the target goals, if they get paid in all scenarios? Here is a 2016 white paper on their process for setting up a fund, https://npxadvisors.com/wp-content/uploads/2016/06/NPX-Whitepaper-vFINAL.pdf https://npxadvisors.com/wp-content/uploads/2016/06/NPX-White...
  - imh 8y ago
    I'd guess that additional funding is harder if you don't meet goals. A lot of this seems to be pushing towards better measurements and priority alignment in the first place.
- Vinnl 8y ago
  > I don’t see how the insurers have any leverage to make the non-profits meet there goals. That means that they will probably only pick non-profits with a very good reputation. But then the donors could just give 100% to the non-profit. Isn't it now the investors that will make sure non-profits reach their goals? They will theoretically only invest in things that they will expect to meet their goals, so that donors actually pay them back. So donors just have to decide which non-profit's goals they want to support, and then investors help them achieve those goals. So if I understand it correctly, the primary advantage of this method should be that it helps well-performing non-profits to raise funds. And if a non-profit is high-risk but also high-value (in terms of what donors consider important to the world), they will have to donate more for investors to actually invest - but at least they'll know that they will only have to pay that if the non-profit actually achieves its goals. Of course, the challenge then is how to properly set the goals and how to objectively measure whether they're achieved.
  - notahacker 8y ago
    > Isn't it now the investors that will make sure non-profits reach their goals? The big question then becomes why should a solely ROI-focused underwriter be better at this type of evaluation than a philanthropic foundation which (i) is actively interested in the goals (and probably also related goals/drawbacks not specified as metrics) to the extent of intending to lose money towards achieving them and (ii) likely to be a source of further funding, which means the nonprofit is more motivated both to engage with them and to actually hit the goals
    - zxcmx 8y ago
      As an investor, why would I invest in a non-profit with difficult-to-game metrics... Because juking the stats or a bit of weaselling in the way goals are stated is way easier and more reliable than building things or say, achieving actual health outcomes. I’m somewhat skeptical.
    - Vinnl 8y ago
      That is indeed a good question. That said, I don't think the underwriters should be ROI-focused - my interpretation is that current donors would be underwriters. This is a way for them to transfer the risk of what measures will result in what improvements to investors. Evaluation could be as broad as "polio should be eradicated". But yeah, there's a lot of questions left, and I don't feel like I have a good grasp on what this would entail and all its advantages either.
deleted 8y ago
[deleted]
bradleyjg 8y ago
I hope they are aware of, and have a plan to mitigate, Goodhart's law.

deleted 8y ago

[deleted]

Shikadi 8y ago

Prisoners can legally be slaves according to the 13th amendment of the Constitution. (I don't agree with it, just pointing it out)

ensignavenger 8y ago
The 8th Amendmend to the US Constitution prohibits cruel and unusual punishment, the 13th Amendment does not nullify that. Of course it is a matter of interpretation what constitutes slavery and wether or not it is cruel or unusual punishment.
- Shikadi 8y ago
  Prisoners are regularly paid below minimum wage, so whether or not you or I consider it cruel or unusual, the judicial branch clearly doesn't

qop 8y ago

Do inmates deserve to make wages? They're not afforded the liberties of regular workers because they are criminals serving sentences.