Rippleworks Foundation

The organization has been accused of being a “corporate and executive tax shelter” after Ripple Labs donated more than $174 million to the foundation in 2018. It was also accused of failing to disburse grants to charities. ³

Background

The Rippleworks Foundation (also known as the Ripple Foundation for Financial Innovation or Rippleworks) is a left-of-center private grantmaking foundation that focuses on dispensing grants to high-impact social venture organizations. The organization was founded in 2015 by Chris Larsen and Doug Galen, the founders of E-Loan, one of the first online lending organizations. The venture-centric foundation was officially launched in April 2015 and was one of the first foundations endowed by cryptocurrency via the backing of Larsen, who is also the co-founder of the direct money transfer software organization Ripple Labs, which created the XRP cryptocurrency. ^{1 2}

Rippleworks launched its first five projects in 2015 with support from the Omidyar Network, an LLC created by eBay founder Pierre Omidyar and his wife Pam Omidyar to make philanthropic “impact investments.” The organization has been criticized for its secrecy and for funneling money through tax havens such as the Cayman Islands. ^{1 4}

Financials

The Rippleworks Foundation’s revenue mostly comes in the form of contributions, gifts, and grants, as well as the sale of assets. The organization received just under $180 million in contributions, gifts, and grants in 2018 and approximately $120 million from the sale of assets during that year. Rippleworks’ total revenue amounted to just under $300 million in 2018. The organization’s total expenses for the year were just over $26 million, and CEO Doug Galen received $665,000 in executive compensation. ⁵

Rippleworks’ revenue dropped significantly in 2019, totaling just under $91 million with $94,000 coming from grants, and $89 million from the sale of assets. The organization’s total expenses amounted to $23 million, $20 million of which fell under “charitable disbursements,” and $659,861 as executive compensation for Galen. ⁶

The organization’s revenue fell again to just under $32 million in 2020, $1 million of which came from dividends, $933,594 from interest, and just under $30 million from the sale of assets. Rippleworks’ expenses amounted to $20 million, of which $10 million was spent via charitable disbursements and $720,583 was paid to Galen as executive compensation. ⁶

Funding

The Rippleworks Foundation has received large sums of money from various organizations, including Chris Larsen‘s Ripple Labs. ⁷

The foundation received a contribution of more than $174 million from Ripple Labs in 2018. The blockchain analysis firm Messari Pro Research alleged that Ripple Labs used the donation as a tax write-off. ^{3 5}

According to the founder of Messari, Ryan Selkis, the Ripple executives were using the Rippleworks Foundation as a corporate and executive tax shelter that had failed to dispense grants to charities. Selkis stated that in 2018 that the foundation “granted exactly $0 to other charities out of a staggering $1.2 billion” the organization holds in assets. Selkis also noted that the foundation paid its CEO, Doug Galen, $665,000 as a salary, while “investing $30 million in Michael Arrington’s XRP Capital. Arrington, of course, is a personal friend of Ripple CEO Brad Garlinghouse.” ³

Grantmaking

The Rippleworks Foundation, alongside Ripple Labs co-founder Chris Larsen, donated $25 million in XRP cryptocurrency tokens to the San Francisco State University in April 2019. Ripple Labs has partnered with several universities including Cornell University, Georgetown University, and the Institute for Fintech Research at Tsinghua University in China. ⁸

The Rippleworks Foundation granted a total of $2 million in 2021 to Integrate Health, a healthcare organization. It also granted more than $1 million to BRAC USA, the U.S. national organization of BRAC, an international non-profit. Rippleworks is also listed as granted more than $25,000 to the Peninsula Family Service in 2019 and is also listed as a donor of the East Palo Alto Academy Foundation. ^{9 10 11 12}

The Audacious Project is a project of the TED Foundation which funds organizations intended to catalyze positive large-scale social impacts. Many of the groups it funds have left-of-center policy goals, particularly related to environmentalism and social justice. From its founding in 2018 to 2020, the Audacious Project spent almost $2 billion. The Rippleworks Foundation is listed as a partner of the Audacious Project. ^{13 14}

People

Chris Larsen is the co-founder of the Rippleworks Foundation, and Ripple Labs. Larsen was the biggest individual backer of former San Francisco District Attorney Chesa Boudin’s unsuccessful campaign to defeat a recall effort. Larsen donated $100,000 to the Friends of Chesa Boudin Opposing the Recall committee that opposed the effort. ¹⁵

In December 2020, the Securities and Exchange Commission (SEC) filed a civil complaint alleging that Larsen and Ripple Labs failed to register a $1.3 billion securities offering for cryptocurrency sponsored by his company. Regulators stated that Larsen had an unfair advantage over retail investors because he failed to register the securities offering. Larsen has denied wrongdoing and has not been charged criminally. ¹⁵