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2024-06-04
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It's no secret that I have a hard time trusting the intentions of influential fediverse folks who cheer on Meta and Threads as they expand into the space. Every so often I like to check in on what they're saying and doing, if only to get insight as to how they approach things at an ideological level.
So when I noticed that Evan Prodromou, co-editor of ActivityPub (and vocal advocate for Meta's adoption of the protocol), has had a full-time position at a non-profit called the OpenEarth Foundation since May 2022, I was curious to know what it was all about. Plus, based on the name, I genuinely worried that I might have misjudged him. So I decided to take a look - and risk feeling the discomfort you get when you realize you've been (loudly) wrong about someone. Because hey, humble pie is ultimately nutritious, even if it's kind of hard to swallow.
But after digging deeper and deeper into this organization, I've come to see the OpenEarth Foundation's approach to environmental issues as being at best misguided and ineffective, and at worst, actively harmful, not only when it comes to climate change mitigation efforts, but also to social progress more generally. I don't say this lightly, and I've spent a lot of time second-guessing myself before ultimately arriving at this conclusion.
Anyway, let's get into it. Here's Part 1 - Funding. Part 2 will look at OpenEarth's programs and underlying ideology - I'll post that next week.
Basic web searches for the 501(c)3 non-profit don't turn up a whole lot beyond the various pages on OpenEarth's own website, OpenEarth.org[1], which was as good a place as anyto start digging. It's a site clearly designed to evoke a feeling of planetary scale, with its blue and green palette, huge graphics and text, and enough JavaScript to really command the attention of the fan in my laptop.
As I scroll, I see words and phrases like open source, radical collaboration, interoperability.
Scrolling again.
Programs called CityCatalyst, OpenClimate, CarbonPricing.
Scrolling some more:
AI, Blockchain, IoT.
On the 'about' page, there are logos of orgs they've collaborated with, and I recognize some of the cryptocurrency-related names: Chainlink, Stellar, Hyperledger, Klima. Ah, ok. I feel like maybe I can see where this is headed, but details are scant, so I still have loads of questions. Chief among them: who's funding all this?
Grants
It's taken some digging, but I'm pretty sure I've found where most of the money has come from. First of all, there's the grants, which come from pretty boring mega-funds that seem to throw money at anyone that uses enough of the right buzzwords in their pitch: The Carnegie Corporation lists a $500K grant[2] to OpenEarth in 2021, and Crunchbase shows a $350K grant in late 2023 from the Patrick J. McGovern Foundation.[3] The Hewlett Foundation has awarded two grants: $100K in 2022, and $500K in 2023.[4] Also in 2023, the Tipping Point Fund - which moves money around on behalf of heavyweights like the Omidyar Network, as well as the Rockefeller, Ford, and Visa Foundations - announced a $240K contribution to OpenEarth.[5]
Those are the more traditional sources of funding. On the more 'disruptive' end of the spectrum, a 2022 OpenEarth blog post mentions grants from Chainlink (cryptocurrency 'oracle' company) and Regen Network (carbon credits on the blockchain) of unspecified size. But the bulk of the contributions to the OpenEarth Foundation came from an even more non-traditional source.
If it seems odd that in March 2021, a charity ostensibly devoted to fighting climate change would be raising money by auctioning NFTs on the Ethereum blockchain, well, good news - we agree.
(It's *fine* though: even though the minting process resulted in an estimated 1 ton in carbon emissions[7], each of the eight images were digitally linked to a portion of 500 CO2 tons in carbon offsets purchased to make the auction "carbon negative.") [footnote 1]
The idea for CarbonDrop didn't come from within the OpenEarth organization, however. It was the brainchild of Jehan Chu, someone with a pretty interesting resume. Starting out as a front-end developer, the charismatic Chu quickly found a role as an art dealer with Sotheby's, after helping to build their online auction platform. Following several years with Sotheby's - during which time he rose all the way to Head of Client Development in Asia - he started up a boutique firm, the Hong Kong based art advisory service Vermillion Art Collections, which he ran from 2008 to 2016.
Not only was this a period of explosive growth in the Chinese art market, but also capital flight[8], and the wealthiest people in mainland China were funneling their money out of the country via Hong Kong. [footnote 2]
It was also during this time that Chu discovered Bitcoin. He organized the Ethereum HK meetup, and the Hyperledger HK meetup, and, right as China began aggressively clamping down on capital flight, went "full time in crypto" in 2016, going on to found crypto VC firm Kenetic Capital in 2017 ... and a year after that, the Social Alpha Foundation, the organization that ended up helping out with CarbonDrop. [footnote 3]
Social Alpha Foundation bills itself as "a not-for-profit grant-making platform that focuses on supporting Blockchain education and outreach to empower communities to utilize Blockchain technology for social good." On the other hand, their board boasts members with current and former jobs at Morgan Stanley, Deutsche Bank, Lehman Brothers, and Goldman Sachs - and their largest single donor is Matthew Roszak, a Bitcoin billionaire and VC who, back in 2006, was busted by the SEC for an insider trading scheme involving a propane tank exchange company called Blue Rhino. So, forgive me if I'm a tad skeptical when it comes to the Social Alpha Foundation's commitment to tackling social issues.
One thing's for certain, though: Jehan Chu managed to convince some pretty high-profile artists to donate their work to the auction. Such as Beeple - who, just a few days before, had made international headlines when Christie's sold an NFT of his work for a mind-numbing $69 million.[9] Then there's Refik Anadol, an bona fide art-world star whose work with AI has been described as everything from "mesmerizing" and "captivating" to being "a glorified lava lamp".[10]
Anyway, whatever your opinion on the art itself, I think we can agree that Justin Sun - who, two years and two days after this auction, would be charged by the SEC for market manipulation[11], including over 600,000 instances of wash-trading - probably didn't lay down a cool $6 million for the CarbonDrop Beeple NFT[12] based on its aesthetic merit.
All told, the CarbonDrop NFT auction brought in over *$6.6 million* for the OpenEarth Foundation.
To build upon the massive success of CarbonDrop, a second NFT auction was held in late 2021. This time around, instead of being held on the Winkelvoss brothers' Nifty Gateway platform, some of the artworks were auctioned on the well-established SuperRare, and others on DoinGud.com, a brand new NFT platform. [footnote 4] DoinGud had launched with VC backing from firms including Jehan Chu's Kenetic, as well as Alameda Research, the crypto trading outfit founded by Sam Bankman-Fried, widely known as the curly-haired CEO of FTX who's currently serving a 25-year prison sentence for multi-billion-dollar financial crimes.
'OceanDrop' consisted of 23 NFTs, including contributions from artists such as Rebecca Rose ft. Swaggy Wolfdog DJ Swagrman, as well as Nicole Buffett (grand-daughter of Warren). Partnerships rolled in: Offsetra (carbon offsets), KlimaDAO (blockchain-based carbon offsets), Creol (defunct; carbon offsets), RNDR (distributed GPU rendering on the blockchain). [footnote 5]
With no disrespect to DJ Swagrman or the other artists whose work was being auctioned, I have to wonder if the comparative lack of star power this time around led to the somewhat lukewarm response from NFT collectors. Regardless, it's nice to see that the people involved in the event were in a collaborative mood, with the bid history on SuperRare showing early bids from OpenEarth's Executive Director Martin Wainstein; we can also see that Nicole Buffett placed offers on a couple items, including one on her own work. Even Jehan Chu also got into the mix, and ended up winning at least one of the NFTs. In total the auction raised $130K - nothing to sneeze at, but surely a much lower figure than they'd expected.
The OpenEarth Foundation's founder and director, Martin Wainstein, is a big believer in the power of markets, as well as emerging technologies such as AI and blockchain, to be forces for positive social and environmental change. Meanwhile, the charity's yearly Form 990 tax filings[13] provide a good example of how relying on volatile and unpredictable capital markets can quickly destabilize things.
At the end of 2021, the OpenEarth Foundation held cash & assets worth $6.4 million, $5.5 million of which was tucked away in a quasi-endowment fund by the board of directors. Unfortunately, in 2022 their revenue from grants & donations was far lower (just under $300K, less than 5% of the previous year's total), and this meant that OpenEarth quickly ended up 'invading the corpus' to pay for operating expenses - and because of the stock market downturn, this meant they were selling at a bad time, and ended up losing $720,000 on the securities they sold during the year. Plus there were all the *unrealized* losses on the balance sheet, which was another big hit, to the tune of nearly $850,000.
By the end of 2022, the quasi-endowment held just over half of what it did at the beginning of the year.
There's also a bit of an easter egg for the crypto critics tucked away in 2022's Form 990: Section VIII, Line 7c(ii) shows a total loss of $52,624 for "other assets". What could this be? Well luckily, the last line of Schedule O provides the explanation: "THE ORGANIZATION RECORDED A LOSS ON IMPAIRMENT OF ITS INVESTMENT IN TERRA LUNA DUE TO THE CRASH IN MAY 2022". Which makes me think that the nearly $600,000 in "other securities" that OpenEarth held at the beginning of 2022 - worth just under a third of that by December 31st - were also crypto tokens. Sadly, we don't know precisely which cryptocurrencies they are, because their EOY holdings are *just barely* below the threshold (5% of total asset holdings) at which OpenEarth would be required to list them:
$179,971 / $3,615,693 = 4.98%.
I'd imagine that if the market wiped $1.5 million off my fledgling charity's books, I'd want to reconsider whether or not markets are the best tool for driving sustainable environmental and social progress
I also suspect that if people around me were raising similar objections to my ideas over and over, that I'd listen to them at least a little bit, and take some time to interrogate my own thinking.
Perhaps losing north of 50 grand on a crypto scheme would make me wonder how wise it is to be putting ten percent of my charity's money into that market.
Anyway, see you in the next post, where we'll start off by taking a look at the founder of the OpenEarth Foundation, Martin Wainstein, who clearly has far more courage in his convictions than I do!
[15] (direct link to pdf on Google drive)