[ Question ]

How should large donors coordinate with small donors?

byWei_Dai2mo8th Jan 20194 comments

50


I'm surprised at how little discussion there has been on the question of how large donors such as Good Ventures should coordinate with small individual donors, given the seemingly obvious high value of information in such an investigation. For example, Good Ventures currently has a "splitting" policy where they only fund 50% of a charity's room for funding in order to leave opportunities for small donors to do their part. But it seems fairly likely that either "splitting" is wrong, or 50% is not the optimal ratio. In one of the few places where this has apparently been discussed, Holden Karnofsky wrote (in reply to Ben Hoffman):

if you take into account the difference in scale between Good Ventures and other GiveWell donors, Good Ventures’s ‘fair share’ seems more likely to be in excess of 80%, than a 50-50 split.

We expected individual giving to grow over time, and thought that it would grow less if we had a policy of fully funding top charities. Calculating “fair share” based on current giving alone, as opposed to giving capacity construed more broadly and over a longer-term, would have created the kinds of problematic incentives we wrote that we were worried about. 50% is within range of what I’d guess would be a long-term fair share.

It seems likely that individual giving will grow over time, but shouldn't we expect more large donors to join EA as well in the future? Are we sure 50% is more fair in the long run than 80%?

It does seem likely that individual giving would grow less if big donors fully funded top charities, but it also seems likely that individuals doing direct work in EA would grow more if big donors fully funded top charities. It seems far from obvious which effect is more important.

An advantage of big donors funding their top charities fully or at a higher ratio is that small donors would have more incentives to do more independent thinking and essentially act as "scouts" for the big donors to help look for more or better opportunities for effective giving, or to actively create new opportunities. Those who aren't inclined to do that and would rather follow the big donors could still contribute to the 20% share or donate to a fund controlled by the same program officers as the large donors. (ETA: In other words, the current policy makes it much harder than it perhaps should to start up and get funding for a new effective charity, because the top charities that OpenPhil / Good Ventures have identified but not fully funded are unnecessarily sucking up most of the donations from individual donors who might otherwise fund these riskier new opportunities.)

A downside of this (which has been previously mentioned) is that it might create too much of a dependency for the charity on the big donor. I think this can be mitigated if the big donor commits to giving early warning to any charity that it wants to defund, and/or to an extended drawdown schedule that leaves enough time for the charity to find other sources of funding. If the big donor is funding top charities at 80 or 100%, there could be a lot of small EA donors trying to find giving opportunities, who would jump in if that charity is really still cost-effective.

In summary, I'm not trying to argue conclusively for a particular alternative to Good Venture's current policy, but just pointing out that given what's at stake, there seems to be more than enough uncertainty here to merit a much more thorough investigation. (ETA: To be clear I don’t think that person should be me because my comparative advantage probably lies elsewhere.)