Allocation of discretionary funds from Q1 2019

byGiveWell5d14th Jun 2019No comments

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In the first quarter of 2019, donors gave a combined $4.7 million for granting to recommended charities at our discretion.

We really appreciate the generosity of our supporters in making it possible for us to regularly allocate funding to the top charity or charities that we believe can best use additional funding. Thank you!

In this post, we discuss our decision to allocate this $4.7 million to the Against Malaria Foundation (AMF), as well as the process we followed to arrive at this decision.

We continue to recommend that donors giving to GiveWell choose the option on our donation form for “grants to recommended charities at GiveWell’s discretion” so that we can direct the funding to the top charity or charities with the most pressing funding needs. For donors who prefer to give to a specific charity, we note that if we had additional funds to allocate at this time, we would very likely allocate them to AMF, which we believe could use additional funding for highly cost-effective work, even after receiving the $4.7 million in funding mentioned above.

Our bottom line

As we did last quarter, we focused our efforts on deciding between allocating funding to Malaria Consortium vs. AMF. We currently believe that AMF has a more time sensitive funding need than Malaria Consortium, and our best guess is that it will have equivalent impact per dollar to Malaria Consortium. This led us to allocate funding to AMF.

What changed since last quarter?

In March 2019, we modeled AMF as somewhat more cost-effective than Malaria Consortium’s seasonal malaria chemoprevention (SMC) program, believed that both organizations had time-sensitive funding opportunities, but believed that Malaria Consortium would have more overall impact per dollar, when taking into account unmodeled qualitative factors (see “Principle 2” here). For this round of grantmaking, we updated slightly positively on AMF’s cost-effectiveness and believed that AMF had a time-sensitive funding opportunity while Malaria Consortium did not. These factors were sufficient to tip the balance in favor of allocating this funding to AMF.

What AMF will do with additional funding

AMF expects to allocate all funding that it receives in the near future toward distributing insecticide-treated nets in the Democratic Republic of Congo (DRC) in 2020.

The vast majority of the funding AMF currently has on hand is set aside for distributions in a series of other countries (we are aware of which countries but have been asked not to name them while discussions are continuing) in 2020, and in DRC in 2019 and 2020; this funding totals $57 million. It has made verbal agreements with those countries for those distributions, but has not yet signed contracts to commit the funding. There is a chance that one or more of these agreements will fall through, which could change when or how AMF uses the additional funding it receives now; we think the risk is real but that AMF’s other options (particularly to put more funding into DRC distributions in 2020-2021) are good and so we don’t see this as a major concern. According to AMF, agreements that have reached this stage with countries AMF has worked with before (as it has with each of these four countries) have not fallen through in the past. AMF also has an additional $5.5 million in uncommitted funds on hand, which it plans to allocate to DRC for 2020 distributions.

AMF estimates it could use up to an additional $12.0 million in DRC in 2020, after the $4.7 million we are granting to it, and up to an additional $36.8 million in DRC in 2021.

Our process

Our process for making this granting decision was less intensive than the process we used for the funds we received in the last quarter of 2018. We focused on making some updates to the information we had relied on last quarter, including:

  1. Estimating Malaria Consortium’s room for more funding for SMC, in light of its receiving the $10.1 million in discretionary funds we granted last quarter.
  2. Speaking with AMF and Malaria Consortium to discuss how additional funds would be used. We did not speak with other top charities for updates, as we believed, based on our work in late 2018 and earlier this year, that either Malaria Consortium or AMF could most cost-effectively use additional funding.
  3. Updating our estimates of the cost-effectiveness of additional funds to AMF and Malaria Consortium. We applied the same changes as are discussed in the first footnote in this blog post to the latest version of our published cost-effectiveness model, which was updated in March to correct for an error in our model of insecticide-treated nets. These updates to the published model have not been published or vetted, and so are more likely to contain errors than our published cost-effectiveness model. We took this shortcut at this time to enable us to pursue other research work and because modest changes in the cost-effectiveness analysis (as a result of minor errors) would not have changed our conclusion here. We thoroughly revisit our comparisons between top charities once per year for our annual recommendations refresh in November; we are also developing a process to make it easier to update our published model throughout the year to reflect new information about how top charities would spend additional funding. The difference between our unvetted best guess and our published estimate for AMF is largely due to modeling the majority of marginal funding as going to DRC (which has a higher malaria burden that most of the other countries where AMF operates).

We ultimately relied on the same six principles as are described in this blog post.

Updates since March 2019

We wrote in March 2019 about our decision to allocate the funding we received in the fourth quarter of 2018 to Malaria Consortium’s SMC program. Below, we discuss updates to our understanding of the value of allocating marginal funds to AMF and Malaria Consortium’s SMC program since March 2019.

AMF

We identified and corrected an error in our cost-effectiveness analysis of insecticide-treated nets, which increased the estimated cost-effectiveness of AMF. As a result of this update, our (unvetted and unpublished) best guess is that marginal funding to AMF is approximately 40% more cost-effective than marginal funding to Malaria Consortium’s SMC program; in March, our best guess was that marginal funding to AMF was approximately 20% more cost-effective.

Malaria Consortium’s SMC program

Our understanding is that additional funding received at this point in time would be unlikely to influence Malaria Consortium’s spending on 2019 and 2020 programs, and that decisions regarding 2021 spending will likely be made in early 2020, after we have made our (larger) year-end funding recommendations.

This is a change from the previous quarter: due to our allocation of $10.1 million to Malaria Consortium last quarter, Malaria Consortium currently has enough funding to fund its work on SMC through 2020, even if it were to expand to the maximum scale it is considering reaching in 2020. (Our calculations, which were reviewed by Malaria Consortium, are available here.)

We expect that Malaria Consortium will have a large funding gap for SMC work in 2021, and we may fill some of that funding gap later in 2019.

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