It is both. If the method works, this group of people won't profit from non-profits in exchange for nothing -- they'll get paid for picking non-profits that accomplish their declared goals.
Suppose $X is spent on non-profit donations, and Y% of non-profits don't meet their goals. Then only $X * (1 - Y) is deployed in a meaningful way, and $X * Y is wasted -- it's the hidden cost (Hc) of today's allocation mechanism. So long as the investors get paid less than Hc, contributing $X to the donor fund instead will result in a strictly better world.
I think this is promising. I would definitely consider contributing to this fund.
I don’t see how the insurers have any leverage to make the non-profits meet there goals. That means that they will probably only pick non-profits with a very good reputation. But then the donors could just give 100% to the non-profit.
Here is a 2016 white paper on their process for setting up a fund, https://npxadvisors.com/wp-content/uploads/2016/06/NPX-White...
Isn't it now the investors that will make sure non-profits reach their goals? They will theoretically only invest in things that they will expect to meet their goals, so that donors actually pay them back. So donors just have to decide which non-profit's goals they want to support, and then investors help them achieve those goals.
So if I understand it correctly, the primary advantage of this method should be that it helps well-performing non-profits to raise funds. And if a non-profit is high-risk but also high-value (in terms of what donors consider important to the world), they will have to donate more for investors to actually invest - but at least they'll know that they will only have to pay that if the non-profit actually achieves its goals.
Of course, the challenge then is how to properly set the goals and how to objectively measure whether they're achieved.
The big question then becomes why should a solely ROI-focused underwriter be better at this type of evaluation than a philanthropic foundation which (i) is actively interested in the goals (and probably also related goals/drawbacks not specified as metrics) to the extent of intending to lose money towards achieving them and (ii) likely to be a source of further funding, which means the nonprofit is more motivated both to engage with them and to actually hit the goals
Because juking the stats or a bit of weaselling in the way goals are stated is way easier and more reliable than building things or say, achieving actual health outcomes.
I’m somewhat skeptical.
But yeah, there's a lot of questions left, and I don't feel like I have a good grasp on what this would entail and all its advantages either.
They're not afforded the liberties of regular workers because they are criminals serving sentences.