😱 What's going on with climate philanthropy?

GiveWell, Stripe, and the Big Surprise

We are Cass and Eugene, two former Google software engineers who left Google in July 2020 to work on climate together. This episode is written by Cass.

When Eugene and I left Google to work on climate, we heard from many in the space that climate funding was misallocated. We heard from Google scientists who wished that more money would go into climate R&D. We heard about the four valleys of death of climate funding. Could we help?

At the beginning we were inspired by the success stories of GiveWell and Stripe.

Our naive beginnings


GiveWell was started by two former hedge fund analysts in 2007. GiveWell applied hedge fund rigor to analyzing nonprofits and openly shared their findings online — maintaining full transparency around the pros and cons of each opportunity. It could be argued that GiveWell mobilized the Effective Altruism (EA) movement of many thousands of regular people who care about maximizing the impact per dollar donated. GiveWell's research also attracted the attention of large philanthropic donors, who seeded the GiveWell founders with over a hundred million dollars to start a sister nonprofit.


In 2019, Stripe committed to purchasing at least $1M/year of negative CO2 emissions at any price, released a call for proposals, and subsequently open sourced the applications they received. By explaining their rationale and making their process transparent, with only a $1M/year commitment, Stripe was able to make negative emissions much more mainstream.

Could we make a platform where climate philanthropy would be vetted in the open? Would this have the nice effects we saw in the GiveWell and Stripe case studies? We shopped this idea around with philanthropists, investors, and climate industry veterans, and got some feedback. Here is what we learned.

A primer on climate philanthropy

Philanthropy comes in the form of family offices, foundations, and high net worth individuals. There are also coalitions and syndicates of philanthropists who share opportunities among each other.

Ideally, philanthropy would result in charitable funding of the most impactful climate solutions, faster and more flexibly than the government can fund them, and would be done transparently, setting an example for others in all sectors to follow.

Unfortunately, some aspects of the mechanics and incentives of the space make the situation less than ideal on several dimensions.


  • Because much of the money goes into influencing policy, which is better done behind the scenes, there is no publicly available map of who is donating where in climate philanthropy.

  • Donors are sometimes secretive about their donations because they don't want people to ask them for money.

  • Donors also want to avoid embarrassment in case the donation goes wrong.

  • Unlike most organizations vetted by GiveWell, companies working on climate solutions usually have trade secrets and it would be hard to do a convincing assessment in the open without revealing them.


  • A foundation's philanthropic charter may be narrow in scope, and things outside the charter are rejected outright.

  • Only a handful of the largest philanthropic foundations can afford to employ experts able to do due diligence on sophisticated climate proposals.

  • People who work at foundations may not feel empowered to make big bets, so they act in highly risk averse ways for the sake of their job.


  • We originally assumed philanthropic dollars would be fast, relative to government funding, but unfortunately traditional philanthropy is slow. We are told it may require dozens of meetings over the course of years in order to build the relationship.

Amount of funding:

  • Philanthropic organizations usually allocate about 95% of their funds to the "endowment", which is invested at market returns to make the organization sustainable, and only the remaining 5% or so goes to charitable giving. Thus, the size of a fund is very different from the amounts of grants it can make.

  • The size of global philanthropy is really small relative to alternative sources of funding like government grants.

  • Global philanthropic spend for climate is approximately $1.1B each year according to the "Funding trends: climate change mitigation philanthropy" report by ClimateWorks. For example, as you can see, only $25M went to carbon removal — tiny compared to the capital required to scale current solutions proportionately to the scale of the problem.

The big surprise

But the biggest surprise was that a number of "philanthropic dollars" in climate are often seeking "market rate" or "just below market rate" returns! It wasn't always this way, and isn't a norm in other sectors of philanthropy. Imagine Bill Gates saying that he needs to see financial returns for distributing malaria nets, or he's not going to do it.

(Hint: Gates doesn't do that)

So why do philanthropic dollars in climate have so many strings attached?

  • There's the idea of opportunity cost. If the money could otherwise be making "market rate return", then the idea of accepting something less than market rate is charity.

  • There's the belief that climate startups should make money and grow, and that growth is necessary for impact. So donors seek "self-sustaining" organizations.

  • Making returns on philanthropic "investments" allows the fund to re-invest in additional philanthropic opportunities.

  • Unconfirmed speculation: Some investors were burned in the first clean tech bubble, so perhaps clean tech companies started pitching their companies to philanthropy?

We aren't quite sure of the actual reason, because all but the last reason listed above could apply to any philanthropic endeavor, not just ones in climate. But if philanthropic dollars are acting like venture capital (VC) dollars, where does that leave us? According to a report by the Rocky Mountain Institute (h/t Olya Irzak), that leaves us with these red and yellow gaps in the funding space that VCs do not want to fill.

Some good news

We don't mean to be all gloom and doom though. There were some bright spots in climate philanthropy that we encountered. Can we help scale up what is working?

PRIME Coalition

PRIME Coalition is a non-profit that advises philanthropists on how to do strategic giving in climate. Everyone we encountered spoke very highly of them. If you are interested, there is a great My Climate Journey podcast with PRIME's Sarah Kearney.

PRIME helped repurpose the Program-related Investments (PRI) tax loophole that was originally used for low income housing projects, so that risky R&D could be tax-deductible. PRIME also worked to create "recoverable grants" — grants where if the climate company who received the grant does well financially, the money is returned to the philanthropist so that the money can be given out to others. Finally, PRIME has published their methodology for assessing impact of early-stage climate ventures that has become a standard tool among investors.

Social Impact Bonds / Pay for Success

Traditional grantmaking involves writing a check and hoping for the best. There is a new financial construct called Social Impact Bonds (h/t Paloma Baena for this recommendation), also known as Pay for Success (PFS) in the U.S., where philanthropists or governments only have to pay if the intervention is a success according to certain metrics of the outcome. The amount they pay is proportional to the degree of success that the intervention achieves.

How does this work? It involves three parties: philanthropists, intervention provider, and private investors. The private investors provide the upfront money for administering the intervention, and pick a provider (or providers) that they think are capable of providing the best intervention. If the intervention achieves its target metrics, the philanthropist pays the investor for the outcome. If the intervention is unsuccessful, the investor loses their money.

This is a pretty clever system because:

  • Having performance-based outcome metrics may lead to better results.

  • Having investors and competition for administering the intervention allows for free market solutions to be found.

  • Intervention providers have more flexibility in how they administer the intervention because they are not tied to the process they commit to in traditional grant agreements.

  • Philanthropists only pay for success and may be able to confidently commit more money.

However, we are told by our friend Simon Shacter, the problem with PFS is that because there are three parties involved, it takes years to get the terms of these deals signed. Is there a way that we can help make PFS contracts more mainstream?

Some new ideas

These are the ideas that we are excited about pushing forward on.

Resurface deals that don't fit the VC model with philanthropy

We spoke to a climate VC who feels bad about turning away good climate companies that don't fit into the VC mold. The investment horizon may be too long, or maybe the market size is not VC scale.

We have teamed up with our friends Olya Irzak and Jeremy Brewer to create diamondlist.co where we intend to resurface the climate deals that aren't VC-compatible with philanthropists. Happy to report that we have lined up a philanthropic funder who wants to use our results to guide their grant-making process.

As per Olya's idea, we based the overall process off the Hollywood model for finding the best unproduced scripts — ask people in the know for nominations and tally them up :) If you are a climate investor, we would love to have your recommendations.

Get philanthropy to serve as climate customers

In talking with Christian Anderson, formerly of Stripe's climate initiative, he pointed out that what worked well in the Stripe case was that Stripe stepped up to be these companies' first customer. Christian believes that in doing this, they sent a market signal that private-sector companies will buy these, and thereby create an actual market. Being the first customer is also high-impact because you keep climate companies accountable and influence the direction in which they develop. Corporate and private philanthropists should step up as customers in the climate battle.

We have heard this from a very hot climate startup as well. When reaching out to corporates as potential customers, they often get solicited by the investment team. Oftentimes, what climate companies need is more customers — not investors.

Can we change the social norms around climate philanthropy?

If the social norm is around climate philanthropy is "market rate returns" — this makes it harder for pure charitable giving to occur. Can we change the social norm around climate philanthropy to make it "normal" to pitch in for the climate crisis, to make it "normal" for everyone to do their part, to make it "normal" to take action.

One idea I find interesting is that the names of philanthropists and their associated companies are often already in the public consciousness. If the public sees these societal leaders really pitching in for the climate crisis, and tying their name to the cause (e.g. a philanthropist mused about having a Kim Kardashian of climate) it could help shift the public sentiment.

Other Eugene & Cass news

We spent a month contracting at Pachama, a climate startup selling better forestry carbon offsets. Eugene wrote up that story which includes one of Pachama's secrets of success ;) Thank you, Pachama family, for a meaningful and inspiring month.

We found seven amazing people to join us on the organizing core team of workonclimate.org, and together we have grown the community to 500+ people in a few months. Our mission is to help people make the transition into climate work. There are some very interesting conversations and people floating around, so join us on Slack if you haven't yet!

The programs that we have set up as part of workonclimate.org:

  • Climate Fellows: We matchmake climate nonprofits and startups with people looking to try part-time climate work. We've got an awesome cohort of Fellows. If you know any organizations with contract or volunteer work for skilled fellows, please have them apply on the site and we will reach out!

  • Climate CTO: We matchmake climate startups looking for a CTO. Are you interested in being a CTO? Are you looking for a CTO? Sign up and we would love to match you!

  • Climate office hours: Drop in and chat with real (not us!) climate experts in office hours. No preparation necessary. Thank you to the nine amazing experts who volunteer their time with this program.

  • Learning groups: Join a learning group on climate psychology, climate finance, ocean carbon sequestration, regenerative agriculture, or climate justice. Meet other people interested in the same thing and work towards a tangle goal.

Eugene has singlehandedly convinced Predictive Analytics World (PAW), a major event on industry applications of machine learning, to launch PAW Climate - the world's first conference on industry applications of ML in climate tech. He is chairing the track together with David Rolnick of climatechange.ai and they are looking for speaker applications.

Cass has been experimenting with spinning up quick websites with friends for good causes including memeforamerica.org and storiesofkindness.org.

Thanks for reading all the way down here! If you have any suggestions, leads, or ideas for us, those are always appreciated! 🙂

Three quick plugs:

  • We are helping Justus Baumann fundraise $300K for the Future Matters Project. The Future Matters Project works at the juicy intersection of climate, policy, activism, and psychology. Justus uses psychology research and social science techniques to scale strategic climate movements. Eugene and I found Justus’ knowledge and unique approach so impressive that we each personally wrote Justus thousand dollar checks after our first meeting. If you are looking to make a climate donation aligned with the effective altruism movement, let us know and we would be happy to introduce you to Justus.

  • Some of our friends are climate investors (both angel and VC scale) with excellent track records. If you have money that you are looking to invest in making climate impact, we would be happy to make an intro.

  • We will be incorporating workonclimate.org as a 501(c)(3). We expect our first year operating costs, filing fees, and liability insurance to run around $5-10K. If you want to help others transition their careers, we would love to have your support!

Happy early Thanksgiving! We are grateful for this community on the climate journey together.

— Cass and Eugene

For more regular updates, follow us at @CassandraXia and @jkff and @workonclimate