A $15,000 basic income lottery promised free money for a year — then the checks stopped coming

But just over a year since that lottery was held, the winner has only received five out of the 12 checks that were promised, and there is no sign a second lottery will happen anytime soon.

Modeled after a German lottery by the same name ("Mein Grundeinkommen"), the drawing and subsequent cash prize were intended to highlight a niche but trendy model of wealth distribution known as basic income.

People receiving basic income get regular checks — in most scenarios, from the government — to cover expenses like food, clothing, and home repairs. In My Basic Income's case, the group crowdfunded the basic income via Indiegogo, with 201 backers raising a collective $15,585.

"I had put down that I'd save it for a rainy day," said Ed, the 79-year-old retired farmer who won and asked Business Insider that his last name be withheld. "But it just didn't turn out that way."

The failure highlights the challenges of giving people free cash — both in terms of managing the funds and paying them out — even if in theory the idea seems like a simple fix for poverty. It also shines a light on the difficulties of bringing basic income to an industrialized country, where payment methods may be more complex than in the developing world.

My Basic Incomes beginnings

My Basic Income's lottery was spearheaded by digital marketer Cameron Ottens and artist Gregory Tippett, who met in mid-November 2015 at a San Francisco basic income hack-a-thon. Michael Bohmeyer — the leader of Mein Grundeinkommen, which has awarded 20 basic incomes via a lottery system since 2014 — took the team under his wing.

Ed said he came across the project because he and his wife Joyce subscribe to a newsletter alerting them to various contests that award cash and prizes. "I forgot all about it," he said of the My Basic Income lottery. That was in early 2016, many months before the drawing in May.

"My first reaction was 'This is a scam of some kind,'" he recalled. "But the more it went on the more I became convinced it really was legitimate. I remembered signing up for the contest. Then I got excited about it."

A missing rainy day fund

Ed's first check arrived six months after the lottery was held, in December 2016. The next three checks arrived on time, this time from Ottens' personal bank account. The fifth showed up two months later, in late May. A sixth check, sent in June, bounced, leaving seven checks outstanding. The total amount missing: $8,750.

Ottens, who was in charge of disbursing the funds, told Business Insider that a combination of ill-preparedness and sudden family emergencies caused the prolonged delays.

"I really needed it," Ed told Business Insider of the $15,000. "And I was very thankful for it, but then it never came."

In June 2016, soon after he learning he'd won, Ed spoke on the phone with Ottens and Tippett. He said he was skeptical going into the agreement, which he learned would come with a formal contract, but the two men eventually earned his trust. Neither mentioned the possibility that the checks would take so long to arrive.

Over the next several months, Ed wrote numerous emails to Ottens, asking and sometimes "begging," he said, for Ottens to send the money. He recalled Ottens saying there were some behind-the-scenes complications with the attorney that caused the delay. Ottens recalled running into some trouble with the bank he'd chosen to disburse the funds.

Ottens' solution was to starting writing checks from his personal bank account. He would then reimburse himself with the money from the basic income account. He said he's never used the money on anything except Ed's basic income.

Learning from past mistakes

Jim Pugh, a basic income expert and cofounder of the Universal Income Project, said Ed's case is a reminder that giving people cash to alleviate their financial woes can still come with a host of logistical challenges — even on a small scale. Advocacy groups should take the time to learn what they'll be up against if they decide to launch experiments on their own, he said.

A handful of groups have already taken a stab at it. Various groups have launched experiments that are in the Netherlands, Canada, Kenya, Finland, and Oakland, California. Each of them seeks to learn what, exactly, happens when people receive a steady income just for being alive.

Do they gamble or do drugs? Do they go back to school and start businesses?

"As much as we talk about simplicity of cash, providing payments to people regularly is not an easy thing," Pugh told Business Insider. "I think it's unfortunate that the folks at My Basic Income weren't able to either figure that out or work with other folks who had more experience to make sure that was happening."

Pugh added the bungled payments should also serve as a reminder of how young the US basic income movement really is. Researchers are only just now figuring out what unique challenges an American experiment brings, compared to ones in developing countries, Pugh said.

In Kenya, for example, the charity GiveDirectly is running a trial version of basic income with around 200 recipients. Later this year, it will launch a 12-year experiment involving 6,000 people. GiveDirectly sends people their cash via mobile phones. This wouldn't happen in wealthier countries, Pugh said, because people have different kinds of bank accounts that all have their own transfer rules.

That makes transfers more difficult."There's actually more complications around that, somewhat paradoxically, than in developing nations," he said.

Ottens, meanwhile, said he'd still like to fund a second My Basic Income. "art of the funds could come from donations the organization has received since the lottery.

But the challenge he said he's realized through the experience is that running a full-time project while holding down a full-time job is no easy task.