The Broken System
Six trillion dollars flows through US nonprofits annually, including donations to churches. The philanthropic sector is enormous — and enormously inefficient.
Writing a grant to the Ford Foundation requires that you already have significant resources. You need a director of development who knows the process. It takes forever. Then you spend years providing quarterly updates that satisfy the foundation's bureaucratic requirements but do nothing for your actual mission. The grants come with strings attached that distort your work toward the funder's priorities rather than the beneficiaries' needs.
Government grants are worse. Local government spending on commons work is riddled with corruption and administrative overhead. The people who most need funding — small organizations doing vital work — are the least equipped to navigate the application process.
The current system means you need a lot of money just to be able to hire a director of development who knows how to write that grant. The overhead of the philanthropic apparatus consumes resources that should be reaching the people and projects doing the actual work.
The Network-Based Alternative
The alternative is coalitional funding: instead of one entity evaluating and funding projects, you build a coalition where everyone's dollar goes further because it's matched by everyone else's dollar.
The core innovation is network-based vetting combined with syndicated funding. Here's how it works:
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Decentralized due diligence. Instead of relying solely on internal evaluators, you ask the community: What is wrong with this product hypothesis? How could it fail? What would it take to make it right? You use your own vetting, but you also use the network's collective intelligence to stress-test proposals.
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Transparent assessment. All vetting is publicly visible. Everyone can see why a project was rated highly or poorly. The community learns together. Good projects get funded faster because everyone can see the case. Bad projects stop "stealing people's money" because their weaknesses are exposed.
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Blended capital. Not everything is venture, and not everything is philanthropy. Some projects are public goods that will never generate revenue — they need donations. Some are revenue-generating businesses — they need investment. Some are hybrids that need philanthropic kickstart funding before becoming self-sustaining. A coalitional funding system handles all three through a single vetting process.
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Syndicated rounds. Once a project is vetted, you syndicate the funding round. You contribute your own capital, but you also bring in other funders — foundations, impact investors, community members. Your dollar goes further because it's part of a coalition.
Three Dimensions of Due Diligence
Traditional venture capital evaluates two dimensions: Will this product work? Can this team deliver? They don't care about the third dimension — whether the product is good for the world.
For commons-oriented capital coordination, you need all three:
- Product due diligence. Is the product hypothesis sound? Will this approach actually solve the problem it claims to solve?
- Theory of change due diligence. If the product succeeds, will it actually produce the intended benefit? Or will it get co-opted, producing acceleration rather than defense? A technology designed to protect privacy might end up being repurposed for surveillance — this must be assessed.
- Business/team due diligence. Does the team have the talent? Is the business model viable? Can it sustain itself?
Making this three-dimensional assessment framework public and participatory creates a powerful flywheel: the more people who engage with the vetting process, the better the vetting becomes, and the more capital flows to the best projects.
Local Quadratic Funding
One of the most promising applications of coalitional funding is hyperlocal: community funds where residents can quadratically fund local businesses and projects.
Imagine entering your zip code and seeing all the local entrepreneurs seeking funding — a new childcare service, a dance venue, a farm-to-table restaurant, a maker studio. Small contributions from many community members get amplified through quadratic matching, so a dollar from a neighbor becomes $25 for the project.
This was prototyped during COVID in downtown Boulder, where quadratic funding helped businesses that had lost 99% of their foot traffic. The psychology works: "Give a dollar and the project gets $25 — it just gets people off their ass to give."
At the local level, this solves problems that global philanthropy cannot. You know who to trust and who not to. The web of reputation creates a natural defense against fraud. And the projects being funded are the ones that actually make your neighborhood better — not the ones that write the best grant applications.
From Extraction to Circulation
The deepest shift in coalitional funding is from extraction to circulation. Traditional venture capital extracts: invest once, extract returns forever. Traditional philanthropy extracts: fund with strings attached, demand compliance reports, impose donor priorities.
Coalitional funding circulates: capital flows to where the network identifies real need, returns flow back to reinvest, and the overhead of intermediation is minimized because the vetting is distributed and the allocation is transparent.
Revenue-based finance — where investors are paid back a fixed multiple from revenue, then their claim ends — replaces the parasitic forever-extraction model. Local investment — where community members fund the businesses they actually use — replaces the disconnected global allocation model.
The technology exists. Quadratic funding works. On-chain transparency works. Network-based reputation works. What remains is the organizational will to assemble these pieces into a coherent alternative to the broken philanthropic status quo — and the narrative power to make that alternative legible to the people and foundations with capital to deploy.
