ofer's Shortform

by ofer19th Feb 20202 comments
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[Certificates of Impact]

To implement certificates of impact we need to decide how we want projects to be evaluated. The following is a consideration that seems to me potentially important (and I haven't seen it mentioned yet):

If the evaluation of a project ignores substantial downside risks that the project once had but no longer has (because fortunately things turned out well), the certificate market might incentivize people to carry out risky net-negative projects: If things turn out great, the project's certificates will be worth a lot; and thus when the project is just started the future value of its certificates is large in expectation. (Impact certificates can never have a negative market price, even if the project's impact turns out to be horrible).

The 2020 annual letter of Bill and Melinda Gates is titled "Why we swing for the fences" and it seems to spotlight an approach that resembles OpenPhil's hits-based giving approach.

From the 2020 annual letter:

At its best, philanthropy takes risks that governments can’t and corporations won’t. Governments need to focus most of their resources on scaling proven solutions.


As always, Warren Buffett—a dear friend and longtime source of great advice—put it a little more colorfully. When he donated the bulk of his fortune to our foundation and joined us as a partner in its work, he urged us to “swing for the fences.”

That’s a phrase many Americans will recognize from baseball. When you swing for the fences, you’re putting every ounce of strength into hitting the ball as far as possible. You know that your bat might miss the ball entirely—but that if you succeed in making contact, the rewards can be huge.

That’s how we think about our philanthropy, too. The goal isn’t just incremental progress. It’s to put the full force of our efforts and resources behind the big bets that, if successful, will save and improve lives.


When Warren urged Melinda and me to swing for the fences all those years ago, he was talking about the areas our foundation worked on at the time, not climate change. But his advice applies here, too. The world can’t solve a problem like climate change without making big bets.