Philanthropic diversification

One choice a donor facesPhilanthropic diversification is whetherthe practice of allocating donations to donate tomultiple charities rather than the single charity with the highest expected value, or diversify their giving across a portfolio of different charities or focus areas.value.

There are prima facie strong reasons for a risk-neutral donor seeking to maximize the expected value of their donation to donate to only one charity. It may seem as though, if the donor believes their first dollar will do the most good if donated to some charity, they should also donate the second dollar to that charity, and so on until they run out of dollars to donate (Landsburg 1997).donate.^[1]

Fourth, when a donor gives a very large amount, or gives to a very small charity, the donation will experience significant diminishing marginal returns, to the point where it is no longer the option with the highest [expected value](Expected value)expected value.

BibliographyFurther reading

Landsburg, Steven E. (1997) Giving your all, Slate, January 11.
A simple argument for donating to only one charity.

Snowden, James (2019) Should we give to more than one charity? In Effective altruism: Philosophical issues, edited byin Hilary Greaves and& Theron Pummer,Pummer (eds.) Effective Altruism, Oxford: Oxford University Press.Press, pp. 69–79.

1. ^{^}

   Landsburg, Steven E. (1997) Giving your all, Slate, January 11.

diminishing returns | donation choice | EAeffective altruism funding | effective giving | philanthropic coordination | risk aversion | room for more funding

cooperation and coordination | diminishing returns | donation choice | EA funding | effective giving | philanthropic coordination | risk aversion | room for more funding

cooperation and coordination | diminishing returns | donation choice | EA funding | effective giving | philanthropic coordination | risk aversion | room for more funding

diminishing returns | donation choice | EA funding | effective giving | philanthropic coordination | risk aversion | room for more funding

Snowden, James (2019). Should we give to more than one charity? In Effective altruism: Philosophical issues, edited by Hilary Greaves and Theron Pummer, Oxford University Press.

Snowden, James (2019). Should we give to more than one charity? In Effective altruism: Philosophical issues, edited by Hilary Greaves and Theron Pummer, Oxford University Press.

Further readingBibliography

Landburg, Steven. 1997. Giving your all.
A simple argument for donating to only one charity.

Kuhn, Ben. 2014.Ben (2014) How many causes should you give to?, Ben Kuhn’s Blog, June.
An article considering the arguments for and against diversifying a charitable portfolio.

Landsburg, Steven E. (1997) Giving your all, Slate, January 11.
A simple argument for donating to only one charity.

However, there are a number of reasons why diversifying donations may sometimes be justified. 

First, new evidence may change a donor’s mind about the charity which can most effectively use their donation. 

Second, given uncertainty surrounding the effectiveness of charities, donating to multiple charities reduces the risk of a donor’s donations having little or no impact. Even risk-neutral donors can become demoralized upon finding out that their charitable donations had much less impact than initially expected. 

Third, being an active donor to multiple charities may make it easier to obtain more information on each of them. This is useful for prioritizing future donation decisions, and spreading the word to others. 

Fourth, when a donor gives a very large amount, or gives to a very small charity, the donation will experience significant diminishing marginal returns, to the point where it is no longer the option with the highest expected value[expected value](Expected value). 

diminishing returns | donation choice | EA funding | effective giving | philanthropic coordination | risk aversion