Nan Ransohoff estimates that AI founders will soon be donating tens of billions of dollars every year. She argues for thousands of new non-profit organisations to absorb this money. But building a parallel charity ecosystem risks ignoring how technology actually scales. Instead, we could deploy this wealth to induce the existing private market to build public goods.
The people building AI companies control some of the most valuable equity in the world. Many of these founders intend to give part of their fortunes away to good causes. Ransohoff estimates this incoming wave of American philanthropy could bring up to 100 billion dollars annually into the social sector. To put that in perspective, total charitable giving in the US currently sits at around $600bn a year. Ransohoff suggests that the existing grant system lacks the operational capacity to manage incoming capital of this size.
Her solution is to replicate the venture capital model using charities. She wants to recruit elite founders and managerial talent to build new non-profit research institutes. Seemingly, the logic is that progress requires setting up an entirely new philanthropic infrastructure because the current market fails to sufficiently solve hard problems.
The traditional government grant system works against ambitious innovators.
Limits of charities
Creating thousands of new charities is arguably an inefficient way to scale technologies. The researcher Samuel Roland notes the danger in attempting to deploy tens of billions of dollars a year purely through non-profits. Investing huge sums of money into these structures will likely severely impact their efficiency. Non-profits inherently lack the market instincts that allow traditional start-up companies to either succeed or close down.
Investors like Blake Byers and Charlie Petty offer an obvious alternative: philanthropists who want to scale solutions globally should fund for-profit companies. Capital markets vastly exceed philanthropic funds. If an engineer invents a new medical device inside a non-profit lab, private capital is eventually needed to manufacture the device and distribute it across the world. Charities lack the scale to build global supply chains or manage heavy manufacturing facilities.
Friction in traditional funding
However, simply handing this new wealth over to the existing venture capital ecosystem might also fail. Private markets routinely ignore difficult problems. Venture capitalists want quick returns; they avoid certain technologies with long development timelines or uncertain customer bases. They often overlook neglected diseases because the patients who need the treatments have limited purchasing power.
The traditional government grant system also works against ambitious innovators. When funders hand over money to established experts upfront, they pay for effort rather than results. Grant committees rely on peer-review panels that can lead to predictable, safe outcomes. If a committee threatens to cut a scientist's funding because an early experiment fails, that scientist will likely drop the risky idea and stick to a safe trajectory. This system pushes great thinkers to pursue incremental ideas rather than radical breakthroughs.
Guaranteeing the final purchase
This new generation of tech philanthropists can help fix these failures by demanding strict metrics for success. The writer Justin Curl notes that VCs can easily evaluate tech startups based on financial performance. Evaluating a philanthropic startup is less straightforward; hence, Curl argues that funders can fix this measurement problem by offering massive cash rewards for verified outcomes. For example, a funder could offer a billion dollars to the first team that removes a specific volume of lead from water.
Philanthropists can consider tools like an Advance Market Commitment (AMC), which guarantees a purchase price for a solution that does not exist yet. This guaranteed contract gives private companies a financial reason to start building a machine or a drug that helps underserved consumers. In 2007, a group of governments and philanthropists pledged $1.5 billion to accelerate the development of pneumococcal vaccines for poor countries. Their promise to buy the vaccine guaranteed enough future demand to encourage pharmaceutical companies to act.
More recently, the Frontier initiative applied this exact model to carbon removal. Buyers pledged to purchase carbon removal services at a high premium to help new climate technology suppliers bring down costs. Donors can replicate this model across other neglected fields to force highly valuable solutions into reality.
Philanthropists can also use patent buyouts to generate public goods. A philanthropic fund can assess the social value of a new medicine, purchase the patent from the innovator at a fair price, and place the intellectual property into the public domain. This mechanism rewards the innovator while allowing generic manufacturers to distribute the drug cheaply.
When public investment is matched by private donation, the financial resource available to a community increases significantly.
Subsidising industrial capacity
The sheer scale of wealth that could come out of AI tech firms opens up a range of different paths. Nobel laureate Michael Kremer has highlighted that for many technologically "close" targets, the main barrier isn’t discovery - it’s the significant capital expenditure required to support manufacturing capacity.
Building a factory to mass-produce a new vaccine is a huge financial risk. Firms will underinvest in this infrastructure if they are unsure about who will buy the final product, or if they fear that governments will intervene to artificially lower prices. With an annual budget of $50bn, this new wave of philanthropists can absorb this specific risk. They can issue a procurement guarantee to buy out the entire production run of a new factory at a premium price.
Moving money into the regions
The new generation of donors will need to be better at getting this funding directly into regional communities. Tech capital typically concentrates in a few major cities; London currently receives more than a third of all funding from major foundations in the UK. If philanthropic funds from the AI boom end up largely in established tech hubs, the benefits and spillovers will accrue to communities that are already better off.
The UK government recently published a plan to direct philanthropic capital into disadvantaged communities through place-based giving. This strategy connects donors directly with regional initiatives and local institutions like universities or manufacturing centres. Place-based philanthropy allocates resources to specific towns to address systemic local issues.
Programmes like the Steve Morgan Foundation's work in the Liverpool City Region show how philanthropic capital can successfully partner with local authorities to improve outcomes for children and families. The Rigby Foundation has similarly partnered with the West Midlands Combined Authority to boost youth employment.
When public investment is matched by private donation, the financial resource available to a community increases significantly. We can combine this matched place-based funding with open innovation competitions.Instead of building new research institutes in major capital cities, funders can launch regional challenge prizes. They can ask local innovators to solve problems specific to their own towns, using the prize money to build local capacity and infrastructure - like the approach recently adopted in the West Yorkshire Mayor’s big ideas challenge.
Society already has large systems for building new technology. The normal economy has the supply chains and the innovation talent needed to change the world. The problem is that the financial incentives we have too often point in the wrong direction. These new donors have the capital to redirect those incentives. They can buy the solutions that the regular economy ignores.
