Alternatives to donor lotteries

by HaydnBelfield6 min read14th Feb 202115 comments

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For the past several years, the EA community has run donor lotteries, in which the allocator of a pool of donations is decided quasi-randomly, with additional weight towards those who have contributed the most. This post reframes that system as ‘donation-weighted quasi-random donor pooling’ and proposes alternative systems, which might have some advantages:

  • Alternative 1: Voting donor pooling
  • Alternative 2: Random donor pooling
  • Alternative 3: Threshold random donor pooling
  • Alternative 4: Reverse-donation-weighted
  • Alternative 5: Demographic-weighted
  • Alternative 6: Location-weighted
  • Alternative 7: Cause area donor pooling

(Note I am not familiar with the laws around donor lotteries in e.g. the US or UK, so am unsure which of these alternatives would be legal/practical – these are theoretical alternatives.)

 

Donor pooling

In donor pooling, instead of each donor allocating their donation individually, donors ‘pool’ their donation, then adopt some decision procedure to determine who will ‘allocate’ (distribute, grant, disperse, etc) the pool.

The person picked to allocate the funds is commonly described as the ‘winner’. I will instead use the more neutral term ‘allocator’. There certainly are advantages to being selected the allocator, mainly the opportunity to allocate more funds to your priorities than you would otherwise have been able to do so. However, there are also disadvantages, such as taking on responsibility for your group, and the time cost those who have become allocators have typically spent.

Donor pooling has several advantages. First, it saves everyone’s time. There are also gains from specialisation – 1 allocator spending 50 hours researching the best opportunity will likely produce better results than 50 donors spending 1 hour. Second, there are opportunities that are only available to an allocator with a large pool. Charities are more willing to provide information and spend time on discussions.

One way to donor pool is in a pool with a predetermined allocator(s). In the EA community, the EA Funds (amongst others) play this role. One can choose to pool with an allocator based on their track record or philosophy of allocation. Allocators can specialise and build up experience, perhaps making them better allocators. Those well-suited to make money and donate might not be the same people as those well-suited to allocate. However, the allocator need not be predetermined.

Alternative 1: Voting donor pooling

Donors vote on who should be selected allocator. Those eligible to be selected could be restricted to pool donors. Eligibility could be broader, either from a list of people who have indicated willingness to be an allocator, or asking someone to be an allocator ‘cold’ – e.g. without indicating willingness beforehand. A variety of voting procedures are possible: consensus, majority, or plurality; single vote, single transferable vote, ranked voting, or approval voting; with or without weighting.

 

Randomness

The ‘donor lottery’ differs from funds or voting by incorporating more randomness. One is less sure who will be selected as allocator. More randomness in allocators is likely to mean more randomness in what gets funded.

Randomness has several advantages. First, it can expand the search strategy for good donation targets. There is an ‘explore/exploit’ trade-off in donations. Exploit gives to options we know are good. Explore tries new options, which may prove to be better than existing ones but risk being worse. Randomness moves us more towards ‘explore’, expanding the search space. This is especially useful if we have not explored the space fully and believe there is high ‘value of information’.

Second, randomness is valuable to the extent that it is difficult to predict which charitable interventions will ‘pay off’. In such a situation, it could make sense to spread one’s bets as widely as possible, rather than clustering on options we (perhaps mistakenly) think have higher probability of good outcomes. This is similar to OpenPhil's Hits-based Giving

Third, randomness can reduce groupthink. Small groups can have biases in what they fund, due to having similar information available, or a bias towards the familiar. If they make mistakes and fund something inefficient, it can take longer for them to correct.

Fourth, groupthink may also be tied to elitism, which incorporating randomness can therefore help address. Typical allocators might not just give to the same, small group of charities – they might do so because that group is better connected. Rather than pooling with a typical allocator who might allocate to groups they already know or are well-represented, randomness can get around that form of bias, and grant opportunities to newer, smaller, or less-well connected charities.

Fifth, randomness could affect the recruitment of allocators e.g. at EA funds or foundations. At the moment, these allocators are recruited through hiring rounds or informal routes (e.g. interpersonal networks), both of which might privilege some allocators, and therefore some views. Being randomly selected could give someone a chance to ‘prove themselves’, which could result in better donation decisions for the ultimate beneficiaries.

For more on the benefits of randomness (especially in scientific funding), see the work of my colleague Dr Shahar Avin (1, 2, 3, 4, 5, 6).

The purest form of randomness would be:

Alternative 2: Random donor pooling

Donors contribute to a donor pool (the pool could either have a cap or not). The person who will allocate that donor pool is chosen at random from every donor.

This suffers the major disadvantage of ‘bad actors’ contributing a trivial amount ($1) for the chance of being chosen as the allocator. Instead, we might consider:

Alternative 3: Threshold random donor pooling

This introduces a threshold. This could be in the donation – one has to donate e.g. a minimum of $100 to even enter the pool. It could instead be in the selection – one has to donate a minimum of $500 to be eligible to be selected as the allocator. The second is slightly preferable, as someone might want to contribute but not be eligible for selection.

 

Weighting

One can move from a random process to a quasi-random process by giving additional weight (in the probability of selection) to various factors.

The current ‘donation-weighted’ system gives more likelihood of being selected to those who have contributed the most. The analogy is to lotteries, where if one buys more tickets one has a (slightly) larger chance of ‘winning’. This may incentivise donors to contribute more to the pool. It might also seem ‘fairer’ in some sense to the donor. Finally it has some nice implications for expected value calculations (where e.g. allocating $1,000 directly is equivalent to pooling and having a 10% likelihood of allocating $10,000).

However, it also has disadvantages. It reflects pre-existing income and wealth (and therefore power) inequalities. One might find that inherently uncomfortable, however one should also note that this system removes many of the advantages of randomness. Randomness expands the search space by increasing the chances of people not typically selected to allocate large pots of money; conversely, donation-weighting shrinks the search space by decreasing the chances of new allocators. The views of the rich on which is the most effective place to donate to are well-represented in overall donation. Donation-weighting moves us away from an ‘explore’ strategy. If people are already rich and donating considerably, they may already be susceptible to groupthink, perhaps in a way that reinforces elitism. Finally, donation-weighting reduces the recruitment potential of a randomly selected allocator ‘proving themselves’.

There are several alternatives to donation-weighting.

Alternative 4: Reverse-donation-weighted

This reverse-weights donations. This system would give more likelihood of being selected to those who have contributed the least, above some threshold to prevent free riding. A donor’s incentive to give more than the threshold would be due to the gains that donor felt would come from pooling and randomisation. The advantage of this system is to expand the search space by increasing the chances of those who do not typically allocate large sums, increasing the range of views represented in allocation decisions.

 

Weighting with more information 

Asking for more information from donors in the pool allows one to weight in favour of characteristics that are underrepresented in donor circles, or that one wants more representation of. Again, I am not familiar with the laws around donor lotteries in e.g. the US or UK, so am unsure which of these alternatives would be legal/practical – they are theoretical alternatives.

Alternative 5: Demographic-weighted

This allocates additional weight to various demographics of the donors, such as gender, sexuality or ethnic identity. In the US or UK, some demographics are overrepresented in the allocation of the overall ‘pot’ of donations formed by all charitable giving. The demographics of allocators are skewed whiter, male and straight – reflecting overall distribution of resources and power. This is also true (to some extent) of the EA community, and possibly of the donor pools of the ‘donor lottery’.

One might be concerned that this is shrinking the search space and/or inefficiently biasing the allocation of donations, to the detriment of the ultimate beneficiaries. One could therefore weight towards underrepresented demographics, to increase the chance of donors with those characteristics being selected. Like Reverse-donation-weighted, the incentive to give for a donor whose demographic characteristics were not weighted towards would be the gains that donor felt would come from pooling, randomisation, and underrepresented voices.

Alternative 6: Location-weighted

This weights donors’ locations, with some locations increasing the chance of being selected. This could be weighted towards donors located in ‘EA hubs’ (such as the Bay Area or Oxford) as donors in those locations might be aware of non-public donation opportunities. More likely, it could be weighted away from those locations, due to concerns about group-think, elitism or expanding the search space. To extend this second alternative, it could be weighted towards donors in the Global South, as this could bring perspectives into allocation that are currently less well-represented in the EA community.

 

Finally, the current system does not restrict based on cause-area. This means a donor pool in which, for example, 90% of the donors (or donations) intend to support one cause-area, might face an outcome where an allocator is chosen from the other 10% with a different cause-area. In a simple risk-neutral expected-value calculation, this should not matter (10% of 10,000 = 1,000). But it might matter if the donors were cautious (risk-sensitive) or impatient (time-sensitive - e.g. if there was a particular window open now that would not be open in a year or two) – or simply not all perfect rational maximising Homo economicus.  

Alternative 7: Cause area donor pooling

Some quasi-random allocator-selection, but pools have designated cause-areas. For example, a longtermist pool, an animal welfare pool, a global development pool. Donors know that the pool they are contributing to will be spent in the cause area they wish to support.

 

Conclusion

This post is intended to reframe donor lotteries and prompt discussion about alternatives to the current model. It is not intended to advocate for any particular alternative. If I had to choose, my personal preference would probably be threshold random donor pooling in a cause-area, to increase the benefits of randomness while keeping the assurance of allocation within a cause area. I am skeptical that the incentive effects of donation-weighting are worth the costs in reducing randomisation. If one forgoes many of the benefits of randomisation, why not just donate to a pool with a predetermined allocator?

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I think your analysis of the alternatives is mostly from the perspective of "what will lead to optimal allocation of resources at the group level?"

But the strongest case for donor lotteries, in my view, isn't in these terms at all. Rather, it's that entering a lottery is often a dominant action from the perspective of the individual donor (if most other things they would consider giving to don't exhibit noticeably diminishing returns over the amount they are attempting to get in the lottery). The winner of a lottery need not be the allocator for the money; they can instead e.g. decide to take longer thinking about whom they want to delegate allocation power to (I actually think this might often be the "technically correct" move; I don't know how often lottery winners act this way). This dominance argument would go through for a much smaller proportion of possible donors for your alternatives. I'm interested if you see another reason that people would donate to these?

Thanks for your comment. I'm not entirely sure I understand what you mean by dominant action, so if you don't mind saying more about that I'd appreciate it.

My confusion is something like: there's no new money out there! Its a group of donors deciding to give individually or give collectively. So the perspective of "what will lead to optimal allocation of resources at the group level?" is the right one. Even if people are taking individual actions comparing 'donate to x directly' or 'donate to a lottery, then to x', those individual decision create a collective institution, for which the question of group optimality is relevant. Also, the EA community (+CEA) is not just endorsing this system, its providing a lot of logistical support. So the question of what its effects are and how we should be structuring it are key ones.

On another note, I don't know enough about game theory to phrase this intuition correctly, but something seems off about the suggestion that its dominant for each of the donors. E.g. if there are 10 donors in a pool, only one of them is going to be selected. They can't all 'win'. Feels a bit like defect being dominant in a prisoner's dilemma. But again, could be misunderstanding.

My understanding is that past people selected to allocate the pool haven't tended to delegate that allocation power. And indeed if you're strongly expecting to do so, why not just give the allocation power to that person beforehand, either over your individual donation (e.g. through an EA fund) or over a pool. Why go through the lottery stage?

By dominant action I mean "is ~at least as good as other actions on ~every dimension, and better on at least one dimension".

My confusion is something like: there's no new money out there! Its a group of donors deciding to give individually or give collectively. So the perspective of "what will lead to optimal allocation of resources at the group level?" is the right one.

I don't think donor lotteries are primarily about collective giving. As a donor lottery entrant, I'd be just as happy giving $5k for a 5% chance of controlling a $100k pot of pooled winnings as entering a regular lottery where I could give $5k for a 5% chance of winning $100k (which I would then donate)*. In either case I think I'll do more than 20x as much good with $100k than $5k (mostly since I can spend longer thinking and investigating), so it's worthwhile in expectation.

* Except that I usually don't have good access to that kind of lottery (maybe there would also be tax implications, although perhaps it's fine if the money is all being donated). So the other donors are a logistical convenience, but not an integral part of the idea.

My understanding is that past people selected to allocate the pool haven't tended to delegate that allocation power. And indeed if you're strongly expecting to do so, why not just give the allocation power to that person beforehand, either over your individual donation (e.g. through an EA fund) or over a pool. Why go through the lottery stage?

I don't know that they should strongly expect to do so. But in any case the reason for going through the lottery stage is simple: maybe you'd want to take 50 hours thinking about whether to delegate and to whom, and vetting possible people to delegate to. That time might not be worth spending for a $5k donation, but become worth spending for a $100k donation. (Additionally the person you want to delegate to might be more likely to take the duty seriously for a larger amount of money.)

I'm sure you would be just as happy entering a regular lottery - you're one of the few people that could approach the ideal  I mentioned of the "perfect rational maximising Homo economicus"!  

For us lesser mortals though, there are two reasons we might be queasy about entering a regular lottery. First if we're cautious/risk-sensitive - if we have a bias towards our donations being likely to do good. We might not feel comfortable being risk-neutral and just doing the expected value calculation. Second, if we're impatient/time-sensitive - for example if we believe there's a particular window for donations open now that would not be open if we waited several years to win the lottery.

That's about approaching it as a regular lottery. But again I really don't think we should be approaching these systems as matters just for individual donors. We've moved so far away from the "just maximise the impact of your own particular donation" perspective in other parts of EA! Its not just a matter for individuals - we as a community, through institutions like CEA, are supporting (logistically and through approval/sanction) some particular donor pooling systems and not others. It's worth considering what dynamics we could be reinforcing, whether alternatives might be better.

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On the benefits of pooling, I quite agree about the time:donation size ratio.

As I said: "Donor pooling has several advantages. First, it saves everyone’s time. There are also gains from specialisation – 1 allocator spending 50 hours researching the best opportunity will likely produce better results than 50 donors spending 1 hour. Second, there are opportunities that are only available to an allocator with a large pool. Charities are more willing to provide information and spend time on discussions."

If you've got a $5k donation, its not worth spending as much time on - so maybe you should just donate to a  donor pool is in a pool with a predetermined allocator(s) e.g. the EA Funds. If you've pooled your donations with others and have $100k, it is worth spending more time on the allocator and allocation decision. But then why not 1) have an internal discussion/consensus/vote on who should be allocator or 2) randomise who gets to take the "delegate or allocate" decision? Why adopt this weird halfway house where people who have donated more to the pot have a greater chance of being selected - thereby sacrificing many of the benefits of discussion on the one hand, or randomisation on the other?

I guess I wouldn't recommend the donor lottery to people who wouldn't be happy entering a regular lottery for their charitable giving (but I would usually recommend them to be happy with that regular lottery!).

Btw, I'm now understanding your suggestions as not really alternatives to the donor lottery, since I don't think you buy into its premises, but alternatives to e.g. EA Funds.

(In support of the premise of respecting individual autonomy about where to allocate money: I think that making requests to pool money in a way that rich donors expect to lose control would risk making EA pattern match at a surface level to a scam, and might drive people away. For a more extreme version of this, imagine someone claiming that as soon as you've decided to donate some money you should send it all to the One True EA Collective fund, so that it can be fairly distributed, and it would be a weird propagation of wealth to allow rich people to take any time to think about where to give their money; whether or not you think an optimal taxation system would equalise wealth much more, I think it's fairly clear that the extreme bid that everyone pool donations would be destructive because it would put off donors.

I guess I wouldn't recommend the donor lottery to people who wouldn't be happy entering a regular lottery for their charitable giving

Strong +1.

If I won a donor lottery, I would consider myself to have no obligation whatsoever towards the other lottery participants, and I think many other lottery participants feel the same way. So it's potentially quite bad if some participants are thinking of me  as an "allocator" of their money. To the extent there is ambiguity in the current setup, it seems important to try to eliminate that.

Interesting! I would feel I had been quasirandomly selected to allocate our shared pool of donations - and would definitely feel some obligation/responsibility.

As evidence that other people feel the same way, I would point to the extensive research and write-ups that previously selected allocators have done. A key explanation for why they've done that is a sense of obligation/responsibility for the group.

I don't think the research is much evidence here. The whole point of the donor lottery is that the winner can justify doing a lot more research. This would be the case even if they hated the other entrants. 

You're right that they wouldn't necessarily have to share that research, but many people enjoy posting on the forum anyway. Previously Jonas has been at pains to clarify that such reports are not required.

Your policy seems reasonable. Although I wonder if the analogy with a regular lottery  might risk confusing people. When one thinks of "entering a regular lottery for charitable giving", one might think of additional money - money that counterfactually wouldn't have gone to charity. But that's not true of donor lotteries - there is no additional money.

On your second point: "making requests to pool money in a way that rich donors expect to lose control" describes the EA Funds, which I don't think are a scam. In fact, the EA funds pool money in such a way that donors are certain to lose control.

I disagree with the implication that so few people are interested in the dominance consideration. At least among my social network, both EA and not, people are really interested in the donor lottery, and I present it in that framing. The idea of trying to maximize one's impact with one's donation is inherently a bit against people's natural instincts, but somehow EA has taken off anyway.

That aside however, I really like some of the ideas here, and wouldn't be surprised if there were something compelling in between "random lottery" and "static fund managers". 

At the moment we offer several options for donors who wish to take advantage of more research than they can justify doing themselves:

  1. EA Funds, where they money will be allocated basically on semi-professional allocators who have been chosen (ideally) for their knowledge and competence.
  2. Donor lotteries, where the expected money you donate is conserved, but your counterfactual research time is concentrated.
  3. Give Directly, to give power to the poorest people in the world and take advantage of their local knowledge of their needs and opportunities.

Many of your suggestions seems essentially like a mixture of these three, but without really the advantages of either. For example, Random Donor Pooling (2) or Reverse-Donation-Weighted is basically like the EA funds except with a less rigourous hiring procedure. Unless you think the EA Funds search for qualified candidates adds negative value I'm not sure why this would be desirable. Alternatively, it's basically like the donor lottery, except it punishes you for donating larger amounts of money; I don't think many people would want to donate more than the minimum if it means reducing their expected influence in favour of not-obviously-more-qualified people. Or it's like GiveDirectly, except you're empowering smaller donors who are still relatively quite well off. Taken all together, I'm not sure why someone would prefer one of these alternatively-weighted lotteries over some combination of these already-existing options.

I also disagree with your suggestion that biasing donor lotteries towards smaller donors would necessarily widen the search space:

Randomness expands the search space by increasing the chances of people not typically selected to allocate large pots of money

The search space covers the various possibilities that you are examining. For a typical well-informed EA this might include a few dozen charities in global health, animal rights and existential risk reduction. If we select some unusual person, who spends all their time researching charities to promote local museums in rural Ireland, this doesn't really expand our search space unless that person also researchers the standard charities in as much as depth as a typical EA donor would. Otherwise we've just replaced it with a different search space, one I suspect most EAs would consider inferior.

Worse, it seems quite plausible that if EAs donated a lot of money to a pot whose direction would be determined on a per-capita basis (rather than proportionally) that some other community would decide to 'raid' it by having a lot of people donate the minimum amount and then divert the money to their own ends.

Hey thanks for the comment!

As mentioned, I'm offering a bunch of alternatives - not all of which I support - to help us examine our current system. 'Reverse-donation-weighted' in particular is more of a prompt to "why do we think donation-weighting is normal or unproblematic - what might we be missing out on or reinforcing with donation-weighting?" 

Note that the current 'donor lottery' is a form of random donor pooling - but with donation-weighting. I see donation weighting as a weird halfway house between EA Funds and (threshold) Random Pooling. With donation-weighting you don't get the hiring process or expertise of EA Funds, and you get way fewer of the benefits of randomisation than (threshold) Random Pooling.

The alternative I'm most sympathetic to (threshold random donor pooling in a cause-area) isn't affected by your second and third points. The allocator wouldn't be some rural-museums-obsessive, it would be a "typical well-informed EA" - and because its within a cause area we could be even more sure it won't be spent on e.g. a rural museum. Threshold random donor pooling in a cause-area would expand the search space within global health, or within animal rights, etc. And finally, the threshold would prevent raids.

I really enjoyed this post. It has lots of interesting ideas and was very easy to read. Thanks for writing it!

Thank you, very kind!

Building on your suggestions here, I would be interested in donating to a global development-focused EA Fund staffed by allocators raised or currently living in the Global South. I definitely buy the idea that allocators with networks in the Global South could have access to some interesting opportunities that allocators in EA Hubs don't have.