This article was first published by Philanthropy Europe https://philea.eu/opinions/a-new-approach-to-philanthropy-creating-a-wellbeing-economy/
The world is changing rapidly. In the West the social welfare and philanthropic systems are struggling to give long term support to those who have not benefited from the capitalist system (i.e. the marginalised, vulnerable, colonised). Many believe a fundamentally new approach is needed.
Financial and material capital are scalable, they can be quantified, transferred and accumulated. This scalability is due, in part, to the abstract nature of money, which allows it to flow across borders, industries and systems with few physical or social limitations. This strength has driven “economy of scale” centralisation at unprecedented levels resulting in a massive shift in power towards bigger organisations within the public and private sectors. In just a few generations, disadvantaged individuals and communities have become more disempowered as the power and money has centralised and financial inequality grows.
Empowering communities
Raghuram Rajan, in his book The Third Pillar, explores the huge negative impact of community disempowerment and argues for decentralising power back to local communities in order to balance the dominance of markets and states. In the social welfare and philanthropy sectors many are also questioning the status quo and advocating for shifting power back to the community. For example:
Where Strategic Philanthropy Went Wrong suggests “empowerment philanthropy” which supports people in finding their own solutions and fostering self-determination.
Lankelly Chase plans to redistribute its assets over five years, acknowledging that traditional philanthropy is entangled with colonial capitalism and perpetuates harm.
Philanthropy 4.0: Giving in Times of Disruption promotes trust-based relationships between donors and change-makers to activate collective agency.
Why don’t they ask us? critiques interventions that have failed to uplift the most deprived communities, advocating for a “doing with” rather than “doing to” approach in economic development.
While there is growing support for community empowerment approaches, and evidence to support it works, the challenge remains: how to do it at scale? First we need to look at some fundamentals.
Rethinking capital: Beyond the financial
Western society’s obsession with financial capital has overshadowed other forms of capital that contribute to human wellbeing. These include intellectual, cultural, social, living, experiential, and spiritual capital – assets that many indigenous and non-Western cultures tend to value more highly. These diverse forms of capital reinforce local communities, fostering resilience, sustainability and wellbeing. Success is not just financial but also measured by the richness of life, relationships, and culture.
Nobel prize winning economist Elinor Ostrom understood the power of localism decades ago with her work on governing the commons:
“There is no reason to believe that the bureaucrats and politicians, no matter how well meaning, are better at solving the problems than the people on the spot, who have the strongest incentive to get the solution right.” Elinor Ostrom
So at the heart of today’s societal challenges is a conflict between a technology-driven capitalist system that seeks to maximise financial and material capital through centralisation, and the human need for wellbeing, best supported by alternative forms of capital best nurtured in decentralised, hyper-local communities.
Decentralised technology: A new lens
The world of decentralised technology (often referred to as Web3) offers a new paradigm for addressing some of the systemic challenges we face. Decentralised, in this context, simply means having distributed control and decision-making across multiple independent entities.
Web3, unlike earlier iterations of the web, allows for ownership and value transfer without intermediaries. In the current Web2 world, intermediary organisations (e.g., banks, tech giants, or governments) control valuable resources like money, identity, and social reputation. Web3 changes this by creating ways to decentralise control to individuals and communities, offering transparency, and allowing users to truly own their assets.
Bitcoin, the first major example of a Web3 system, operates on transparent rules determined by the community (and anybody can join this community – it’s permissionless). This decentralised structure makes it resistant to censorship, hacking, or manipulation by any person, or entity.
From this new paradigm, new organisational structures and governance models, Decentralised Autonomous Organisations or DAOs, are being built to facilitate genuine community-driven, democratic decision-making.
Hyper-local DAOs: Empowering grassroots communities
This decentralised governance approach can be applied to local communities through hyper-local DAOs: informal groups of people, working together to achieve community goals. These groups (think of them as microco-ops) could focus on local initiatives, for example a group of parents addressing teenage mental health in their community, or people in a street wanting to create a community garden.
Imagine if there were easy to use tools and support to allow a group, of say 30 people in a street, to create a DAO (i.e., control a treasury and democratically decide how to allocate resources). This DAO would create and publish a “Constitution” that describes the purpose of the entity and rules for spending its treasury. Philanthropic funders could agree to the Constitution and “stream” money directly into the DAO, with future funding decisions adjusted based on real-time impact feedback. If this group became empowered, might we see that giving the group relatively small amounts of financial capital could have a disproportionately high positive impact by helping to unlock alternative forms of capital?
Once trust is established in this model, additional tools could be developed to help nurture all forms of capital to support a wellbeing commons. For example these could include local currencies, savings pools, volunteer coordination systems, or even collective ownership of revenue-generating assets like land or solar energy infrastructure. In time, a group could become less reliant on outside funders, building self-sufficiency and resilience.
A Wellbeing Economy
Scaling this approach could be transformative. If thousands or millions of such community groups were established, large funders could efficiently support grassroots initiatives at scale. A two-sided marketplace could be created connecting community groups doing good and funders of all sizes – “giving” could be democratised. This could create a powerful decentralised network of grassroots changemakers capable of resisting the centralising forces of capitalism.
At scale, this would essentially create a “wellbeing economy,” one that prioritises localism and human flourishing over individualism and the centralisation of financial capital. By valuing all forms of capital and empowering communities to take control of their own futures, we could begin to reverse the trends of inequality, environmental degradation, and mental health decline. In this model, philanthropy would shift from a top-down approach to one that empowers communities. Decentralised technologies offer the tools to make this vision a reality, creating a world where wellbeing, sustainability, and community resilience are the cornerstones of our economic and social systems.