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Diversifying money on different charities

by Paul_Lang 5mo8th May 20198 comments


Assuming that I precisely know which charity does how much good, I thought for a long time that it is most efficient to spend all my charity budget on this single charity. However, last week I thought that utility can be expressed as a function of how much money every charity has. So rather then spending everything on one charity, I should allocate my money based on the gradient of the utility function in it's current state (provided the utility function is smooth around this state). I would appreciate some (hopefully mathematically not challenging) comment.


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2 Answers

Yes, charities are typically presumed to have diminishing marginal utility from money, so at some point you should stop funding one and start funding the next. However in practice charities have large budgets that don't respond much to individual donors, so the right answer can stay the same from your first dollar to your last. Therefore I don't think most of us have to worry about this. What kind of donations are you thinking of? If it's in the low five figures or less, then I would not think about it. Larger budgets can be a different story. Also depends on the size of charity, of course.

There is an EA Concepts article on that question. Also, James Snowden discusses it in a chapter of the book Effective Altruism: Philosophical Issues. (Not sure whether that chapter is openly accessible somewhere.)