Impact Certificates: the Ultimate Guide (Part 1)
The web3 primitive that will shape charity for the 21st century
Impact certificates are the new web3 way to donate. They will replace traditional donations as the default way to give.
Impact certificates will create dollar-for-dollar donation accountability; bring charity entrepreneurship on par with Silicon Valley; transform donations from sacrifice to superpower; distribute power from the philanthropic elite to the masses; and create market incentives to solve difficult social challenges.
Impact certificates are a primitive, or building block, enabling new types of projects, fundraising models, and donor experiences. Impact certificates will not only shape charity but also experiences across apps, retail, live events, theme parks, social media, and video games.
Impact certificates will even kickstart a new web3 charity sector to replace the 100-year-old, $500-billion-per-year nonprofit industry.
But first, impact certificates must defeat three bosses—economic, cultural, and technological. Success will require a deep understanding of this new primitive and a concerted effort to implement it.
This Ultimate Guide is for impact entrepreneurs, crypto donors, regens, and all other Charity Cybernauts who want to take on this mission.
This is part one of a four-part series. In part one we explore the 1000x benefits of impact certificates. Part two describes how impact certificates radically reshape our societal practice of charity. Part three covers critical challenges to impact certificate adoption. And part four expands on underexplored concepts from parts 1-3.
What are impact certificates
An impact certificate is an NFT that represents a unique, verifiable project output.
An output is a project deliverable such as a planted tree, a bag of collected trash, or a rescued kitten.
Donors will receive a unique impact certificate for their donation. Pay $1 and receive a tree impact certificate. Impact certificates can also be given for free, for example, to compensate volunteers.
Impact certificates will be the new products, or the atomic units of value, of the social sector.
Some also use “impact certificate” to refer to outcomes. For this guide, I mean outputs when discussing impact certificates, not outcomes. I’ll examine the critical differences between outputs and outcomes in part 3.
Benefits
Impact certificates unlock incredible benefits for donors and organizations.
Donor benefits
Accountability
Traditional donations lack accountability. At a business, a customer pays a specific price and receives a specific product or service. At a nonprofit, there is no connection between donation and impact. Donors have little idea what their individual donation pays for.
Nonprofits do provide “transparency” reports. But as we’ll cover in part 4, this information ranges from unuseful to purposely deceptive.
As a result, donors can’t select and donate to top-performing organizations. This means (in the US alone) donors give 300 billion dollars each year to the nonprofits with the best reputations and marketing—not those with the best impact.
Impact certificates will show donors exactly what their donation pays for. Donors will be able to price compare and support the best charities. Charities will have to innovate, drive efficiency, and increase their impact to earn donations.
Note: “best performing” won’t only mean the charity that cranks out the cheapest results. Quality will affect price, just as with normal goods. Donors will pay more to restore old-growth, biodiverse forests than for industrial monoculture tree farms.
Social
Today only wealthy donors earn recognition. Because donations are not tied to impact, we can only praise the total donation $ amount. And it requires 0.01% wealth to earn a mention in the media or get a name on a wall.
Impact certificates bring meaning to donations of any size. A $1 donation is no longer just a $1; it is a planted tree, a bag of collected trash, or a life-saving meal for a starving stray puppy. No donation is too small to show off.
Impact certificates easily plug into any website or app. Donors will be able to display them on dating profiles, online resumes, social media, and their own customizable web pages and apps.
Charity will become mass multiplayer. Donors will follow other donors for advice and inspiration. They will form communities, pool resources, and vote on projects to support. Ideas will cross-pollinate at the speed of cyberspace. Similar to how TikTokers remix each other’s videos, impact entrepreneurs will remix each other’s projects and impact certificates.
External rewards
Any business, organization, or individual will be able to reward an impact certificate holder.
Video games will give free skins. Disneyland will give front-of-the-line passes. Six-year-old Jessica will send a heartfelt thank you message.
Rewards are a decentralized, market-based voting system. Rewarding an impact certificate is a “vote” for its project. These decentralized rewards dilute the power of the philanthropic elite. Today causes favored by the elite earn more publicity and revenue. Rewards will give the entire planet a say in which projects are best.
Rewards benefit the common donor. Today the wealthy enjoy exclusive gala invites, names on buildings, and other exclusive perks, while the rest of us get automated thank-you emails. Rewards enable all of us to receive benefits and feel appreciated for our donations.
Rewards create leverage. A video game skin and a hotel room that would otherwise go empty both have a near-zero marginal cost to give away. But these rewards are valuable to donors and can induce donations 10 to 1,000 times larger than their cost.
We can imagine a future where a donation is just as good—or better—than buying a product for oneself. The best impact certificates will unlock unique experiences, grant coveted social status, and grant access to exclusive clubs that no amount of money can buy.
Organization rewards
Organizations will also directly reward their impact certificate donors. Given external rewards, organization rewards should be unique. They should unlock benefits that only that specific organization can grant.
Impact certificates can enable backstage access to organization meetings, meet and greets, the ability to vote on organization priorities, or thank-yous from staff.
Organizations can imbue symbolic meaning to their impact certificates. Donors will not just be financial contributors, they will be “ancient forest protectors” or “sun goddess warriors.” Rich visuals and narrative worldbuilding will bring these metaphors to life.
The impact certificates themselves will also reward donors. Imagine tree NFTs that produce carbon tokens for their owners. Or sad shelter dog NFTs that become happy once the dog has been adopted IRL.
Organizations that weave impact certificate design, worldbuilding, and rewards will create a transcendent donor experience.
Organization benefits
Impact certificates will fundamentally improve how charities operate.
Entrepreneurship
The nonprofit sector does not have products or prices. Organizations must therefore compete based on marketing and reputation. This puts startup organizations at a near-impossible disadvantage to the 100-year-old, globally recognized, multi-billion dollar incumbents.
Impact certificates are products with prices. This enables startup charities to compete based on verified impact, price, and donor experience. (And, these are real prices, not made-up impact-per-dollar estimates, which I’ll discuss in part 4.)
Impact certificates also enable charity entrepreneurs to skip the burdensome 501c3 process and launch with the speed of a tech startup.
Startup businesses can throw up a website, only worrying about legal if their idea gains traction. However, nonprofits must file paperwork on day 1 as traditional donations offer little accountability and donors need nonprofit status for reassurance.
Nonprofit founders must pay hundreds to thousands in fees, hire accountants and lawyers, file paperwork, create bylaws, and assemble boards—all before working on programs or fundraising.
The best charity founders are those with direct experience with the issues. But these founders are more likely to be from the inner city or the developing world and lack the resources to navigate the legal process. We’re left with global mega NGOs who lack local knowledge and sometimes do more harm than good.
Impact certificates let startup organizations verify their work directly to each donor, making legal status unnecessary for legitimacy. And impact certificate rewards will be better than a tax deduction, again making status unnecessary.
Ease of startup combined with experienced local impact entrepreneurs and competition based on real performance will create a charity startup renaissance.
Operational freedom
Impact certificates free organizations from donor micromanagement.
In theory, traditional donations allow nonprofits to spend freely as money is not tied to any specific outcome. However, the unaccountable nature of traditional donations causes donors to mistrust nonprofits and request burdensome transparency practices.
Donors demand low overhead, scrutinize executive pay, consider marketing dishonest, and force line-item budgets to the penny. Small nonprofits end up with computers 10 years out of date or barely enough money to pay staff salaries due to excessive funding constraints.
In contrast, the typical customer pays little attention to what goes on under the hood at their favorite businesses because they can see and judge tangible projects. Impact certificates will free donors to do the same, allowing charities to operate without restriction.
Business models
Nonprofits don't have business models. They have various fundraising tactics but lack cohesion between fundraising, programs, and donor experience.
Consider how social media products and business models work together. Users generate data for advertisers. Infinite scrolls and algorithms grab attention and boost ad impressions. And ads keep the service free, maximizing the user base and data.
Nonprofits lack this cohesion. Most organizations create their programs and then slap on a donate button and a bake sale. There is no weaving of business and product.
Impact certificates enable true business models. Impact certificates are products that can be packaged in different pricing strategies and value offerings.
Imagine the possibilities for a web3 animal shelter:
Upselling: after the donor buys a dog impact certificate that covers basic needs they can pay for additional impact certificates representing premium food, dog toys, or extra walks.
Subscription: buy a dog rescue impact certificate every month and save 20% off the one-time purchase price.
Loss leaders: the shelter sells its cat rescue impact certificates below cost, which attracts donors to also spend money on higher-margin dog, pig, and bird rescue impact certificates.
Razor and blades: buy a dog impact certificate at an initially low price (razor). Then pay monthly for food and care impact certificates in order to keep it (blades).
Mystery box: buy a random dog rescue impact certificate. Potential to receive either a common breed or super rare.
Battle pass: buy a pass that lets you complete the organization’s volunteer tasks (e.g. share with ten friends or take 10 dogs for a walk) to unlock increasingly better impact certificates. (Gamers will understand this one.)
These examples might make some people squeamish. Turning dogs (or people) into NFTs and mystery boxes? I’ll discuss ethics in part 3.
What makes these business models possible is that impact certificates verifiably represent unique real dogs and real actions. Donors can confirm that no one else owns their dog NFT. They can see proof the extra walks are taking place.
Contrast this with nonprofit claims that you can “adopt a rhino,” or “sponsor a child.” There is no way for donors to verify they saved a unique rhino or child. And there is almost always fine print stating these claims are “symbolic” (aka bull****). So the “adoption business model” isn’t a business model at all. It’s just deceptive marketing.
And, lastly, the examples above are all skeuomorphic. They imitate web2 and physical world business models. Impact certificates will create web3 native business models that unlock and align value in ways we can only begin to imagine.
Thanks for reading!
In part 2 I’ll explore how impact certificates will change our attitudes and practice of charity.