We've talked a lot about innovations that can positively affect the lives of many underserved communities. These projects are critical to improving the lives of these people, but as always there's a bottleneck: money. How will these projects get funded? What creative ways can we come up with to fund new innovations?
Venture firms like Good Capital and Echoing Green try to fund socially innovative projects but there isn't enough money to go around. Creating a nonprofit can provide more access to financial resources but a new interesting idea has surfaced that is getting recognition: investing in an individual in exchange for a portion of their lifetime earnings!
This paradigm shift will definitely cause innovators to think about what they're willing to give up(or gain) by trading future earnings to fund current projects. Is it fair or ethical to accept money now for future earnings? Who will decide how much those earnings will be and how much they are worth now?
This type of financing is similar to NPV projects where we try and calculate the future earnings of a project, discount it back to present value at some rate, and then subtract the startup costs to decide whether or not the project is profitable. Only in this case the project is the person. Would you be willing to trade a portion of your future earnings to fund a current project? How much earning potential do you have and how much would you be willing to sell?
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