Cross-posted from my blog.
Contrary to my carefully crafted brand as a weak nerd, I go to a local CrossFit gym a few times a week. Every year, the gym raises funds for a scholarship for teens from lower-income families to attend their summer camp program. I don’t know how many Crossfit-interested low-income teens there are in my small town, but I’ll guess there are perhaps 2 of them who would benefit from the scholarship. After all, CrossFit is pretty niche, and the town is small.
Helping youngsters get swole in the Pacific Northwest is not exactly as cost-effective as preventing malaria in Malawi. But I notice I feel drawn to supporting the scholarship anyway. Every time it pops in my head I think, “My money could fully solve this problem”. The camp only costs a few hundred dollars per kid and if there are just 2 kids who need support, I could give $500 and there would no longer be teenagers in my town who want to go to a CrossFit summer camp but can’t. Thanks to me, the hero, this problem would be entirely solved. 100%.
That is not how most nonprofit work feels to me.
You are only ever making small dents in important problems
I want to work on big problems. Global poverty. Malaria. Everyone not suddenly dying. But if I’m honest, what I really want is to solve those problems. Me, personally, solve them. This is a continued source of frustration and sadness because I absolutely cannot solve those problems.
Consider what else my $500 CrossFit scholarship might do:
* I want to save lives, and USAID suddenly stops giving $7 billion a year to PEPFAR. So I give $500 to the Rapid Response Fund. My donation solves 0.000001% of the problem and I feel like I have failed.
* I want to solve climate change, and getting to net zero will require stopping or removing emissions of 1,500 billion tons of carbon dioxide. I give $500 to a policy nonprofit that reduces emissions, in expectation, by 50 tons. My donation solves 0.000000003% of the problem and I feel like I have f
Consider hardcore volunteers as well; some EAs unironically volunteer 30 or 40 hours a week while working part-time to support themselves. I did that for 3.5H years or so.
This is something we'd like to expand to, but it's much harder to define "EA volunteer" than "donor to effective charities". Once donor assistance is running smoothly, we'll likely give volunteer assistance a try.
I really like this org. When I play board games, I play faster when I know I'm allowed to take moves back. Similarly I can imagine that if I know I can get money back if I am in hardship, I can imagine I might give more.
Conceivably in a better world, many people might have "charity accounts" where the difference between some baseline and the invested money goes to charity but you can pull it out at any time. Many people wouldn't and so orgs would get the interest as donations.
Yeah, huge fan of this concept; I'm eager to see that people are trying it out!
A few random questions:
(Totally agree with leaving it undefined during the trial phase, and can see arguments for leaving it undefined in an operational phase too. On the other hand, I think transparency is particularly important for charities whose most direct benefit is to EA or EA-adjacent people, and given Basefund's purpose that transparency probably needs to be at a policy level rather than an individual-application level).
Could you explain the rationale for possibly extending the eligibility period backward to 2012? If the theory of change is to encourage people to donate boldly because they can get a partial refund if they experience future financial trouble, it seems that theory would only work prospectively.
One policy quirk to consider in the future: Should an intervening bankruptcy filing disqualify a significant payout?
There are some potential scenarios in which the effect would -- in my view -- be inequitable toward the donor's creditors. It doesn't seem appropriate to me to give a payout to someone based on pre-petition donations if they saddled their creditors with pre-petition losses.
Because the potential payout would fully be within Basefund's control, that asset could potentially evade the equitable principles of the Bankruptcy Code. This would be particularly problematic if the donor were insolvent when the donation was made, but the creditors couldn't recover the donation under fraudulent conveyance law because of 11 USC § 548(a)(2)'s protection for certain charitable contributions by individuals.
(The link to the form produces a 404 error on mobile for me.)
Thanks for letting us know, fixed!
Two comments on the form:
Website says only donations made in 2022/2023 can be considered, but form asks about those made after Jan 1 2021. Is this intentional data collection about an ineligible year, or an out of date form?
I'd encourage a more secure means of collecting banking info than what appears to be unencrypted email.
The form was indeed outdated, and I agree that moving away from email would be a good thing.
As a charity operator, I love this idea.
Also I would hope (although I think it's unlikely) that if donors feel upon hard times then they felt they could ask us as OneDay health for their money back - this would be a rare scenario and we would be very happy to return it!
I wonder if there could be a way for charities to specifically sign up to a refund agreement through something like basefund, and then basefund could almost be an "underwriter" for situations where the charity couldn't manage paying the money back.
Maybe this is impractical but it makes some sense to me at this point.
Are you legally able to do this? I thought that once a donation had been made you were obliged to use it to advance your charitable objectives, and giving money to donors in the US does not seem likely to promote health in rural Uganda.
One should check applicable law before returning a donation, which could vary from jurisdiction to jurisdiction. This article by a CPA suggests that "if a donor asks for a smaller donation back, it’s usually best to return it. Larger donations may be harder to return. In this circumstance, talk to your legal and financial advisors — and possibly your state’s not-for-profit agency." The rationale isn't stated, but I suspect the business-judgment rule might apply here. In other words, it may be possible for the charity to decide that furtherance of good donor relations justifies refunds under certain circumstances as a means of achieving the charity's objectives.
Thanks!
Thanks you might well right, I never would have figured something like this! Us doctors arent always the great at legal stuff!
Seems awfully sad to me though. Donations are done volunteraly and generously, so it seems a bit sad not to be able to give them back in a very rare case. I can't imagine anyone would ever sue a charity for this.
I think the main issue isn't the charity being sued, but loss of 501c3 status?
Here's an example of a situation the IRS might be worried about: I give $100k to charity in 2023, the charity gives me a "no goods and services" receipt, and I deduct $100k from my income in figuring taxes, and I save, say $30k. Then in 2024 I tell the charity "I'm sorry, I lost my job, I'm in danger of losing my house, and I need the money back". They give me the money back, and I don't tell the IRS.
Or problems with the state charity regulator.
My checklist would probably go something like this:
Yeah thanks, given all these concerns, I think my idea is bad unfortunately. Seemed nice at first but not practical.