[Epistemic Status: Fairly confident under the assumptions provided below]

TL;DR: Many individual EA donors should **not** donate throughout the year (e.g., at each paycheck). Instead, they should probably regularly invest those funds (e.g., in an index fund) and donate the money therein to a matched Facebook fundraiser on Giving Tuesday. The expected value of a counterfactually matched donation outweighs the discounting of future donations, even if saved for a whole year. This implies many EAs are making a mistake by donating throughout the year instead of saving all donations for Giving Tuesday.

# How Much to Discount?

I assume that the proper discounting rate for present-vs.-future donations is 16%/yr., as that was the median response in the latest 80,000 Hours survey. In reality, this is probably too high. If so, my conclusions are even stronger.

EAs can hedge against this by investing donations in an index fund.* I use and recommend Vanguard as a brokerage firm because they have no transaction fees for buying and selling nearly all U.S. exchange-traded funds. I also recommend using Vanguard ETFs and mutual funds because they essentially operate at cost. For the sake of this analysis, I assume you invest money you would otherwise presently donate in their international small-cap index ETF, VSS.† VSS has historically earned annual returns of 9.86%.

Of course, if you think that giving later is generally better, then this whole post is moot. See this post for sources on this question.

# Probability of Matching on Giving Tuesday '19

For my analysis, I assumed (conservatively, I think) that a donor has a 30% chance of getting her donation matched by Facebook on 2019. This year, 65% of donations were matched. However, my subjective probability of getting a donation matched on GT 2019 is substantially lower due to:

1. Uncertainty about whether Facebook will run another Giving Tuesday;

2. If so, what the details will be (e.g., individual matching limitations);

3. Increased competition for matched donations;

4. Regression to the mean.

Note that my conclusion holds even if this probability is as low as 11%.

# EAs Should Invest-to-Give, Then Donate on Giving Tuesday

Under the above assumptions about discounting and matching, according to my calculations, EAs should:

1. Invest their donation money all year in an index fund;

2. Donate all that money in matched EA fundraiser on Giving Tuesday. Join this Facebook group to coordinate for this.

This holds even for money a year in advance, which, using the above numbers, has an expected value of 118% its nominal value using this strategy.

# Caveats

Obviously this only applies to donors who can donate through the Facebook Giving Tuesday platform. Join the aforementioned Facebook group for more discussion of this.

If you disagree with my numerical assumptions—or have special considerations not captured above—I encourage you to download my spreadsheet and adjust them on your own.

*If you are risk-averse in your donations, then you should choose a lower-risk, lower-yield option for your savings. Brendon Wong lists recommendations for such savings amounts here, and reasons one might want to be somewhat risk-averse in donations here. Even if you assume 2% annual yields, it makes sense to save all year then give on GT.

† I originally recommended a large-cap ETF. However, small cap ETFs generally get better returns on investment (with higher associated risk). So, in the interest of promoting and endorsing risk neutrality, I'm recommending VSS.