Why not take a grant?

There’s no such thing as free money / ranting on granting

1. Grants can lock you in prematurely

When you take a grant you psychologically commit to doing the thing you said you'd do, sometimes too early. You might still need time to traverse the idea maze — but to get a grant, you’re often forced into articulating a vision of what you’d do with that funding

Unrestricted funding is a bit better, but even if the grant is explicitly unrestricted, you’ll likely feel honor-bound to do things that the grant-giver would approve of.

2. “Grantmaker capture” — your grantmaker will shape your values

“Audience capture” describes the phenomenon where bloggers, influencers etc are slowly manipulated into different people as a result of the audience they try and cater to.

I think there’s a lesser (but real) version of this, where by taking on money from a particular grantmaker, you end up adjusting you (or your org’s) values to appeal to that grantmaker.

3. Grants give you worse feedback/impose less discipline than the free market

When you make something to sell to customers, you’re playing the game on a fundamental, base level: is your product any good?

When you make something to “sell” to a grantmaker, you’re playing one level higher: does your grantmaker think that your thing is good for <the world/the future/some other value system>?

Feedback and discipline are good — they encourage you to improve, and become more sustainable

Taking one grant puts you down the path of needing to take more

4. You take on reputational risks

People care about where you get your money:

In politics, “who gave you money” is a mandatory disclaimer to put on all your ads
In nonprofits, the IRS asks you to disclose all folks who gave you >$5k, each year
In startups, your list of angels or VCs is a quick proxy for how impressive you are

I don’t think it’s a bad idea to accept money from an unimpressive/unknown funder — money is money! — but it is something to think twice about.

(Obligatory note: sometimes FTX happens. TBH I think this wasn’t actually bad)

Grants implicitly nudge you to inflate your costs

Because costs are how you justify your asks, and costs are easier to measure than value delivered. This is pernicious, as value created is what should matter in an endeavor.

Alternatives to grants

Ask your users to pay you. E.g. FAR labs & Lighthaven ask the people using the space (event operators, or users) to pay for the service. This grounds the value of your work; and builds useful muscles for operating in regular capitalist spaces.

Even if you’re serving charities — if those charities can’t raise enough money to pay for your service, it’s a sign that their work isn’t very good.

Purchase agreements. For example, Operation Warp Speed was not a blanket grant to vaccine manufacturers, rather it was am up front commitment to pay for vaccines if they could be delivered.
Investment (impact certs, ISAs). Upside: investors care more about value delivered, have financial alignment. Downside: some pressure to stay in the investment ecosystem
Loans. Loans are great for temporary liquidity problems (eg I need money now to pay a contractor or cover my rent; and can pay you back when my grantmaker finally responds)