Patient philanthropy is the idea (originated by the economics researcher Philip Trammell) that rather than donating now, you should invest money and donate it much later. Maybe you should even set up a foundation so that the money can be invested for a century or more before it’s donated. I can think of two strong arguments against patient philanthropy: the rational preference argument and the cost-effectiveness argument.
The rational preference argument
Let’s say I have $10 billion to donate.
Option A. I donate all $10 billion now through GiveDirectly. It is disbursed to poor people who invest it in the Vanguard FTSE Global All Cap Index Fund and earn a 7% compound annual growth rate or CAGR. In 2126, the poor people’s portfolios will have collectively grown to $8.68 trillion.
Option B. I invest all $10 billion in the Vanguard FTSE Global All Cap Index Fund for 100 years. In 2126, I have $8.68 trillion. I then disburse all the money to poor people through GiveDirectly.
Option B clearly provides no advantage to the poor people over Option A. On the other hand, it sure seems like Option A provides an advantage to the poor people over Option B.
If a philanthropist has $10 billion, I think they should prefer to arrange for Option A to happen rather than opt for Option B. But there may be other options that offer even more advantages to the poor people than Option A. So, they should seek out those options and choose an even better one, if they can.
To the extent Option B looks like it has higher impact, that’s just an artefact of how we might decide to do the accounting, rather than a true reflection of the causality involved or what’s morally best — or what the recipients of the aid would rationally prefer.
A potential reply is that, in Option A, the world’s poorest people can’t realistically invest the money rather than spend it on consumption (e.g., food, shelter, medicine, transportation, household goods). However, this reply does not overcome the argument. Spending the money on consumption probably benefits poor people more than investing it and it is probably what they rationally prefer. If this is in doubt, imagine the reverse: would the world’s poorest people rationally prefer for a foundation to expropriate, say, half of their wealth or income and to invest it on their behalf for, say, twenty years? Would that be a net benefit to them?
The cost-effectiveness argument
Let’s again imagine I have $10 billion to donate.
Option C. I donate all $10 billion now to GiveWell’s top charities. Per GiveWell’s estimate of $3,000 to $5,500 per life saved, I save at least 1,818,000 lives.
Option D. I wait 100 years to donate and, by the time I do, the world’s poorest countries have the per capita GDP that the United States does today. (For this to be true, the per capita GDP of these countries would need to end up at around 50% of what per capita GWP will be if it continues to grow by 2% a year for the next 100 years.) Although in 2126 I have $8.68 trillion, the cost to save a life in the world’s poorest countries is now $7,500,000, the same as what it costs to save a life in the United States today. So, with $8.68 trillion, I can only save 1,157,000 lives, which is 661,000 fewer (or 36% fewer) than if I had donated the money right away.
This comparison is highly sensitive to highly uncertain assumptions about the long-term future economic growth of the world’s poorest countries. It depends on those countries — mainly in sub-Saharan Africa — achieving some amount of catch-up growth, similar to what has occurred in several East Asian countries.
We should consider how and when to donate to promote catch-up growth in the poorest countries in light of the rational preference argument. Since Option A is preferable to Option B, donating now to promote economic growth in poor countries is preferable to delaying donations by 100 years.
Other arguments
Several other arguments may be equally important or more important. Some discount rate needs to be applied to the foundation’s money to account for the risk the foundation will cease to exist before it can execute its roadmap. (This could happen for operational, legal, political, or force majeure reasons.) Also, major advancements in science and technology over the intervening century may make the foundation’s plans obsolete, and may also make the remaining opportunities for philanthropic giving much less cost-effective than what was available earlier.
The philosopher David Thorstad notes that patient philanthropy is illegal in most Western democracies, which seems logical, since the laws against it put limits on the otherwise unlimited accumulation of wealth and power by foundations. The economist Thomas Piketty has not discussed patient philanthropy directly, but has described the long-term problems — namely, increasing wealth and income inequality — when the rate of return on capital persistently exceeds the rate of economic growth. Patient philanthropy relies on the rate of return on capital exceeding economic growth. Otherwise, there would be no advantage to investing funds long-term rather than disbursing them as soon as possible.
If the rate of return on capital didn’t exceed economic growth, patient philanthropy would imply a pessimistic outlook, since for opportunities for philanthropic giving to become more cost-effective in the future, it seems like the world would have to get worse over time. One alternative cited rationale for patient philanthropy is to save money that can be deployed in an emergency or when a highly cost-effective opportunity arises, but this isn’t sufficient justification for a patient philanthropic foundation to exist. Donors can invest their own money and deploy it when it is most appropriate. Other foundations that do active work and continually disburse funds can redirect their spending to respond to emergencies and new opportunities. (Other actors like governments may be able to fill that role as well.) There is no reason why putting money into a patient philanthropic foundation would be the only or best way to deploy funds in case of an emergency or a new opportunity.
There are also intuition-based arguments against patient philanthropy. For example, should the Against Malaria Foundation stop distributing bednets and put all of its funds into the Vanguard FTSE Global All Cap Index Fund for 100 years? Does that seem like it would be a net positive for the global poor?
A potential reply is that the current level of funding for the Against Malaria Foundation and other charities helping the global poor is at or above the optimal level. That is, no additional funding, beyond the current level, should go to the Against Malaria Foundation or similar charities. (All additional incremental funding earmarked to help the global poor should instead be invested by the prospective donors in index funds for many decades, or be donated to a patient philanthropic foundation that will invest the funds long-term.)
However, it is not clear how to empirically justify this reply. How is the optimal level empirically determined? How do we know the optimal level of funding for the Against Malaria Foundation and similar organizations is not zero, or 1% of their current funding, or 10%, or 50%? How do we know the optimal level is not 2x, or 10x, or 100x more? (If the optimal level of funding just happened to be the current level, that would be a strange coincidence.)
Conclusion
Investing in the stock market for 100 years before disbursing any funds seems to be almost certainly a worse way to help the global poor than donating to cost-effective charities in the short term. It’s not what the global poor would rationally prefer, it fails a plausible back-of-the-envelope cost-effectiveness calculation, and there are more arguments against it besides, such as illegality in most Western democracies (for good reason), the risk of a foundation failing to survive 100 years, and the possibility of transformative technologies accelerating the end of global poverty within the next century.
Epilogue
My meta-level takeaway is I continue to be skeptical of highly theoretical, abstract ideas that violate common sense and intuition. Inevitably, some such ideas will turn out to be right. However, most are wrong. This isn’t a reason to dismiss such ideas. It’s a reason to apply a high level of scrutiny and withhold judgment until things become clearer.
If you have an intuition that a logical-sounding yet strange idea is wrong but can’t immediately articulate an argument against it, your intuition is probably right. It may take a matter of minutes, hours, days, weeks, months, or years to come up with the argument. That middle period between hearing the idea and forming the argument is the most uncomfortable part. You may be tempted to chastise yourself for resisting an idea for no logical reason. You may feel frustrated you can’t yet turn your intuition into an argument.
The ability to stay in that state of discomfort, confusion, and uncertainty for as long as it takes is an important part of thinking. The natural temptation is to try to prematurely resolve the discomfort by either accepting the counterintuitive idea or resorting to implausible arguments for rejecting it — whatever happens to be on hand at the time. The patience to wait out that middle part has served me well again and again throughout my life.
There are many arguments one can make for spending more or less quickly, and that's fine, but since this post doesn’t respond to my own argument in any sense, I’ll just flag that you can find it here, if anyone’s still interested!
The core of the argument is in Section 2. The core assumption it relies on is that our beneficiaries have a positive rate of pure time preference and/or imperfect intergenerational altruism. So the argument is essentially a reply to the “rational preference” argument presented here: I’d say we should do what’s best for people and their descendants, which is to be more patient than they prefer. If it’s true that it’s cheaper to save a life in some country today than in 100 years, in present value terms, that is a case of the inefficiency discussed in Section 2.6.
The argument is entirely compatible with
I’m only giving this topic a very cursory treatment, so I apologize for that.
I wrote this post quickly without much effort or research, and it’s just intended as a casual forum post, not anything approaching the level of an academic paper.
I’m not sure whether you’re content to make a narrow, technical, abstract point — that’s fine if so, but not what I intended to discuss here — or whether you’re trying to make a full argument that patient philanthropy is something we should actually do in practice. The latter sort of argument (which is what I wanted to address in this post) opens up a lot of considerations that the former does not.
There are many things that can’t be meaningfully modelled with real data, such as:
What’s the probability that patient philanthropy will be outlawed even in countries like England if patient philanthropic foundations try to use it to accumulate as much wealth and power as simple extrapolation implies? (My guess: ~100%.)
What’s the probability that patient philanthropy, if it’s not outlawed, would eventually contribute significantly to repugnant, evil outcomes like illiberalism, authoritarianism, plutocracy, oligarchy, and so on? (My guess: ~100%. So, patient philanthropy should be considered a catastrophic risk in any countries where it is adopted.)
What’s the risk of patient philanthropic foundations based in Western, developed countries like England holding money on behalf of recipients in developing countries such as in sub-Saharan Africa doing a worse job than if those same foundations or some equivalent or counterpart or substitute institution or intervention were based in the recipient countries? And with majority control by people from the recipient countries? (My guess: the risk is high enough that it’s preferable to move the money from the donor countries to the recipient countries from the outset.)
How much do we value things like freedom, autonomy, equality, empowerment, democracy, non-paternalism, and so on? How much do we value them on consequentialist grounds? Do we value them at all on non-consequentialist grounds? How does the importance of these considerations compare to the importance of other measures of impact such as the cost per life saved or the cost per QALY or DALY or similar measures? (My opinion: even just on consequentialist grounds alone, there are incredibly strong reasons to value these things, such that narrow cost-effectiveness calculations of the GiveWell style can’t hope to capture the full picture of what’s important.)
Under what assumptions about the future does the case for patient philanthropy break down? E.g., what do you have to assume about AGI or transformative AI? What do you have to assume about economic development in poor countries? Etc. (And how should we handle the uncertainty around this?)
What difference do philosophical assumptions make, such as a more deterministic view of history versus a view that places much greater emphasis on the agency, responsibility, and power of individuals and organizations? (My hunch: the latter makes certain arguments one might make for doing patient philanthropy in practice less attractive.)
These questions might all be irrelevant to what you want to say about patient philanthropy, but I think they are the sort of questions we have to consider if we are wondering about whether to actually do patient philanthropy in practice.
I was more hopeful when I wrote this post that it would be possible to talk meaningfully about patient philanthropy in a more narrow, technical, abstract way, but after discussing it with Jason and others, I realize that the possibility space is far too large to do that — we end up essentially discussing anything that anyone imagines might plausibly happen in the distant future, as well as fundamental differences in worldviews — and it’s impossible to avoid messier, less elegant arguments, including highly uncertain speculation about future scenarios, and including arguments of a philosophical, moral, social, and political nature.
I want to clarify I wasn’t trying to respond directly to your work or do it justice; rather, I was trying to address a more general question about whether we should actually do patient philanthropy in practice, all things considered. I cited you as the originator of patient philanthropy because it’s important to cite where ideas come from, but I hope I didn’t give readers the impression I was trying to represent your work well or give it a fair shake. I was not really doing that, I was just using it as a jumping-off point for a broader discussion. I apologize if I didn’t make that clear enough in the post, and could maybe edit it if that needs to be made clearer.
I do my best at a lot of that speculating in the linked doc, which is why it’s so long, and end up thinking that those considerations probably don’t outweigh the (to my mind) central point about pure time preference and imperfect intergenerational altruism. But they might.
Thanks.
Unfortunately, patient philanthropy is the sort of topic where it seems like what a person thinks about it depends a lot on some combination of a) their intuitions about a few specific things and b) a few fundamental, worldview-level assumptions. I say "unfortunately" because this means disagreements are hard to meaningfully debate.
For instance, there are places where the argument either pro or con depends on what a particular number is, and since we don’t know what that number actually is and can’t find out, the best we can do is make something up. (For example, whether, in what way, and by how much foundations created today will decrease in efficacy over long timespans.)
Many people in the EA community are content to say, e.g., the chance of something is 0.5% rather than 0.05% or 0.005%, and rather than 5% or 50%, simply based on an intuition or intuitive judgment, and then make life-altering, aspirationally world-altering decisions based on that. My approach is more similar to the approach of mainstream academic publishing, in which if you can’t rigorously justify a number, you can’t use it in your argument — it isn’t admissible.
So, this is a deeper epistemological, philosophical, or methodological point.
One piece of evidence that supports my skepticism of numbers derived from intuition is a forecasting exercise where a minor difference in how the question was framed changed the number people gave by 5-6 orders of magnitude (750,000x). And that’s only one minor difference in framing. If different people disagree on multiple major, substantive considerations relevant to deriving a number, perhaps in some cases their numbers could differ by much more. If we can’t agree on whether a crucial number is a million times higher or lower, how constructive are such discussions going to be? Can we meaningfully say we are producing knowledge in such instances?
So, my preferred approach when an argument depends on an unknowable number is to stop the argument right there, or at least slow it down and proceed with caution. And the more of these numbers an argument depends on, the more I think the argument just can’t meaningfully support its conclusion, and, therefore, should not move us to think or act differently.