# Catalytic funding needs to launch into an existing ecosystem to be effective There’s a lot of focus in philanthropy on “catalytic funding” — relatively small checks written to new organizations or individuals. Indeed, many philanthropists explicitly judge proposals based on whether or not their money will be the catalytic dollar — the difference between a thing happening or not happening. ([[Philanthropists want to be the catalytic dollar]]). However, catalytic funding is only effective if that individual or organization can leverage the work supported by the catalytic funding in an existing ecosystem: a researcher getting an academic position, a brilliant young person starting a company, a company getting a series A, etc. Many of us like the idea of creating new institutional structures and career paths. but these are not well served by the focus on catalytic funding. I would love to find a better way of enabling these deviations from the norm. Let’s focus on fellowships for a moment. Fellowships are a popular form of catalytic funding that focuses on individuals. The basic idea with most fellowships is that you fund someone to change their trajectory, spend time doing something they wouldn’t otherwise be able to, and/or have the bandwidth to start something.[^1] Fellowships are great! They have led to some incredible things — [[Etherium]], [[Figma]], [[Chris Olah]]’s career, ==other things started from fellowships==. However, every fellowship ends. Like all catalytic funding, fellowships come with a looming question: What comes afterwards? The answer is straightforward if the sort of work the person does during their fellowship opens doors into existing institutional structures: research that lands someone in grad school or a professorship, product work that forms the core of a new company, skills development that opens the door to a job, etc. However, if the fellow is doing something sufficiently different (which is the sort of thing that many enterprising grant-givers want to enable) there is no default institutional home for them to be catalyzed into. Catalysts speed up chemical reactions by lowering the activation energy for reactants to go from one state to another state. However, without additional energy they only work when the energy of the final state is lower than the energy of the initial state. Extending the chemistry metaphor: existing institutions create these energy wells for people and organizations. [[Institutions create potential wells]]. Without that lower energy state for something to transition into, catalytic funding isn’t enough — the system needs additional “energy.”   This insufficiency feels especially acute for catalytic funding that is more-or-less explicitly intended to let someone take the first steps towards creating a new kind of institution. Everybody knows the eventual goal will require many more resources and that there is no default place to get them, but for the most part the catalytic funding doesn’t come with any ongoing commitment to help the fellow acquire those resources. “I did some catalyzing, now it’s someone else’s problem.” The world is littered with the corpses of institutions that got a little money to get going, but weren’t able to get enough resources to do enough to show whether they would have worked. Of course catalytic funding often doesn’t even happen in the first place if there isn’t a clear exit strategy! In venture capital, seed funders are hesitant to fund a company if they don’t think the company can raise a next round before they’re out of runway. [[Philanthropists want things to become sustainable]] and are hesitant to fund something that doesn’t have a clear pathway to sustainability. This desire for philanthropic dollars to catalyze something sustainable is in part why so much money goes towards influencing government and existing institutions. [[Shadows of the Future]] loom over every catalytically funded person or organization. People and organizations know that if they aren’t embedded in a legitimate institutional structure by the time funding runs out, their lives will become *much* harder. As a result, you see many (subconscious or conscious) pivots towards existing institutions, despite the initial ambitions of the original catalytic funding: individuals frame themselves as experts in the current thing, targeting jobs, founding startups, or academia while originally weird ambitious organizations suddenly look like high-growth startups or think tanks. There are some people who manage string together a series of fellowships into a career and some organizations that survive by stringing together grants and contracts. Both of these situations are characterized by constrained growth. That’s fine if an individual’s impact can happen through individual endeavors like writing or solo research (or a company can be effective by hopping from project to project), but a lot of impact requires more resources to coordinate people and acquire capital (equipment etc.) ### Related * [[New institutions need far-seeing support]] * [[§Misalignment between funders and nonprofits in research]] * [[Grants only go so far]] * [[Motivation is not context-free]] * [[Shadows of the Future]] * [[Vision is not enough]] * You can also think of this in terms of capital flows: the less well-developed the capital flows are in an area, the less catalytic funding can do. [^1]: Grants to individuals that are too small to do much more than pay the bills are effectively fellowships. I would put most [[Emergent Ventures]] grants in this category.