Recently someone made a post expressing their unease with EA's recent wealth. I feel uncomfortable too. The primary reason I feel uncomfortable is that a dozen people are responsible for granting out hundreds of millions of dollars, and that as smart and hardworking as these people are, they will have many blindspots. I believe there are other forms of grantmaking structures that should supplement our current model of centralised grantmaking, as it would reduce the blindspots and get us closer to optimal allocation of resources.
In this post I will argue:
- That we should expect centralised grantmaking to lead to suboptimal allocation of capital.
- That there exists other grantmaking structures that will get us closer to the best possible allocation.
Issues with centralised funding
Similarly to the USSR's economic department that struggled with determining the correct price of every good, I believe EA grantmaking departments will struggle for similar reasons. Grantmakers have imperfect information! No matter how smart the grantmaker, they can't possibly know everything.
To overcome their lack of omniscience grantmakers must rely on heuristics such as:
- Is there someone in my network who can vouch for this person/team?
- Do they have impressive backgrounds?
- Does their theory of change align with my own?
These heuristics can be perfectly valid for grantmakers to use, and result in the best allocation they can achieve given their limited information. But the heuristics are biased and result in sub-optimal allocation to what could theoretically be achieved with perfect information.
For example, people who have spent significant time in EA hubs are more likely to be vouched for by someone in the grantmakers network. Having attended an ivy league university is a great signal that someone is talented, but there is a lot of talent that did not.
My issue is not that grantmakers use these proxies. My issue is that if all of our grantmaking uses the same proxies, then there will be a great deal of talented people with great projects that should have been funded but were overseen. I'm not sure about this, but I imagine that some complaints about EA's perceived elitism stem from this. EA grantmakers are largely cut from the same cloth, live in the same places, and have similar networks. Two anti-virus systems that detect the same 90% of viruses is no more useful than a single anti-virus system, two systems that are uncorrelated will instead detect 99% of all viruses. Similarly we should strive for our grantmakers's biases to be uncorrelated if we want the best allocation of our capital.
In the long run, overreliance on these proxies can also lead to bad incentives and increased participation in zero-sum games such as pursuing expensive degrees to signal talent.
We shouldn't expect for our current centralised grantmaking to be optimal in theory, and I don't think it is in practice either. But fortunately I think there's plenty we can do to improve it.
What we can do to improve grantmaking
The issue with centralised grantmaking is that it operates off imperfect information. To improve grantmaking we need to take steps to introduce more information into the system. I don't want to propose anything particularly radical. The system we have in place is working well, even if it has its flaws. But I do think we should be looking into ways to supplement our current centralised funding with other forms of grantmaking that have other strengths and weaknesses.
Each new type of grantmaking and grantmaker will spot talent that other grantmaking programs would have overseen. Combined they create a more accurate and robust ecosystem of funding.
FTX Future fund's regranting programme is a great example of the type of supplementing grantmaking structure I think we should be experimenting with. I feel slightly queasy that their system to decide new grantmakers may perpetuate the biases of the current grantmakers. But I don't want to let perfect be the enemy of the good, and their grantmaker programme is yet another reason I'm so excited about the FTX future fund.
Below are a few off-the-cuff ideas that could supplement our current centralised structure:
- Quadratic funding
- Grantmaker rotation system
- regranting programmes
- Incubator programs to discover projects and talent worth funding
- More grantmakers
Hundreds of people spent considerable time writing applications to FTX Future fund's first round of funding. It seems inefficient to me that there aren't more sources of funding looking over these applications and funding the projects they think look the most promising.
Given that many are receiving answers from their FTX Grant, I think the timing of this post is unfortunate. I worry that our judgement will be clouded by emotions over whether we received a grant, and if we didn't whether we approved of the reasoning and so fourth. My goal is not to criticise our current grantmakers. I think they are doing an excellent job considering their constraints. My goal is instead to point out that it's absurd to expect them to be superhuman and somehow correctly identify every project worth funding!
No grantmaker is superhuman, but we should strive for a grantmaking ecosystem that is.