The EA movement has a lot of money. Why is it so hard to launch good projects?
We can shed light on this by comparing EA grantmakers with for-profit firms. They have a list of investment projects. Each offers an expected rate of return: in dollars for for-profit firms, and in altruistic utilons for EA funders. Firms and EA Funders will invest their capital in projects offering return superior to the hurdle rate or cost of capital.
The hurdle rate for a for-profit firm is the expected rate of return on an investment in the stock market. If the best investment project available offers a 9% rate of return, but the stock market offers a 10% rate of return, then the firm will not invest in the project. Instead, they should return it to shareholders as a dividend. Otherwise, they will underperform the market, and shareholders will sell the stock.
For EA funders, the investment decision is a little tricker.
First, they are constrained by their mission. For example, the mission of EA Infrastructure Fund reads, in part:
While the other three Funds support direct work on various causes, this Fund supports work that could multiply the impact of direct work, including projects that provide intellectual infrastructure for the effective altruism community, run events, disseminate information, or fundraise for effective charities.
Money is fungible. In theory, so are utilons. But if you donate to EA Infrastructure Fund, they are not going to use it to fund direct work, and they are not going to return it to you as a dividend if they can't find a use for it.
So they have to find mission-aligned projects. They could simply give out grants in descending order from highest-value/most-mission-aligned to least. This might result in throwing away cash on risky/low-value projects that aren't aligned with their mission. Past a certain point, that seems unwise.
So they need to set a hurdle rate, similar to the one that for-profit firms must consider. A minimum threshold of value, security (non-riskiness), and mission alignment. They need to set the bar and hold it firmly in place.
Determining where to set the bar is another challenge. If they set it too low, they'll throw away money. If they set it too high, they'll have money sitting around with nothing to do. This isn't necessarily bad, though. They can save it for the future, in hopes that more high-quality projects will appear later.
It might seem like they could just use that extra money to invest in developing more high-quality projects. Perhaps they could create a school or workshop to help low-quality projects turn into high-quality projects.
However, that in itself is a project. If they had a great idea for how to go about it, a strong team committed to the idea, and access to whatever outside resources they needed to make it a success, then it might be a high-quality project and surpass the investment bar. If not, though, they would reject that idea along with the rest. They money would sit around unspent.
What makes a project high-quality isn't just the idea itself. "A project to generate higher-quality EA projects" is the barest whisp of an idea. The concept needs to be much more specific, with a fairly detailed plan, a team of demonstrated excellence and clear ability to succeed fairly well organized and committed to it. That's not something you typically put together with one blog post.
So EA funders shouldn't lower the bar just because they can't find adequate outlets for their money right now. That would mean they never set a bar in the first place. There's also not an obvious way of finding more high-quality projects. Finally, there's no guarantee that the influx of wealth into the movement will last. Saving that money for the right opportunity, even if it doesn't exist yet, may very well be the right move.
In fact, difficulty in finding investment opportunities that clear the bar is probably caused by the fact that EA is targeting neglected areas. The fact that we look for neglected causes means that there are fewer competent teams and sharp ideas in the space. It should be hard to find projects that clear the hurdle rate.
Newer EAs with projects that get rejected, even as funders have more money than they can spend, might feel particularly disappointed by this outcome. The problem, it may seem, wasn't that there wasn't enough money to go 'round. It was that they weren't deemed worthy of a vote of confidence even when there was plenty.
Having been rejected for an EA grant myself, I say in solidarity: this isn't a referendum on your abilities, idea, or potential. It may be that you and your idea really are capable of making a significant impact. But because funders don't know you, they might regard investing in you and your project as risky. It takes time to prove yourself and be seen as a more certain bet. This has little to do with your innate potential, and a lot to do with the fact that everyone, EA funders included, live in a big confusing world and are struggling to figure out what to do.
On the bright side, it suggests an opportunity.
If the challenge for most new EAs is skilling up, demonstrating their abilities and gaining experience, then you don't have to do that through EA. In fact, if you can go get somebody else to invest in your skilling-up process, then in a way, you're diverting money and mentorship into EA. The movement doesn't have to invest in training neophytes into the highly capable people it needs. Instead, the neophytes can go make a difference in the world beyond EA, then return to the movement ready to make a big EA impact with the skills and resources they've gained along the way. EA is a career endpoint.
Value drift is a real concern with this strategy. So is lock-in. But I think that it's better to risk it than to bang your head against the wall indefinitely, when the kinds of bottlenecks EA funders say they're facing (see comments) include:
- "Mentoring/pro-active outreach" (Denise Melchin of Meta Fund)
- "An inchoate combination of something like "a person has a vague idea they need help sharpening, they need some advice about structuring the project, they need help finding a team, the case is hard to understand and think about."" (Claire Zabel of Open Philanthropy)
- "Domain experts, and sometimes macrostrategy experts... people with final authority..." (Jan Kulveit of FHI)
Don't try to wake up and save the world. Don't be bycatch. Take 15 years and become a domain expert. Take a career and become a macrostrategy expert. Mentor. Run small and non-EA projects. Circle back to EA periodically with your newfound skills and see what a difference you can make then. There is absolutely no way we can have a longtermist movement if we can't be longtermist about our own lives and careers. But if we can, then we can.
Note: Vaidehi Agarwalla and Arjun Khandelwal have done some great work in reframing the EA's journey as a nonlinear individual journey. I encourage you to check it out!