I live for a high disagree-to-upvote ratio
I liked Bob Jacob’s essay Is Effective Altruism neocolonial?.
Aid dependency is a really interesting problem, where charities can become victims of their own success. I think we should be very thoughtful about counterfactual government funding—even when, due to natural government inefficiencies, it might be less cost-effective.
One place I think EAs can do a lot of good is in charity entrepreneurship. There are often good emerging ideas that need a strong evidence base before governments will adopt them, but a shortage of ambitious people willing to take these risks. At Kaya Guides, we see our role as pioneering a novel treatment method, and then working with governments to implement. Even if we don’t do this ourselves, our counterfactual impact will always have been to create an evidence base that encourages others to do so!
Thanks for the feedback! I’m not really smart enough to figure something like that out tbh, and by the point I’d seen that my realistic options were within an order of magnitude of each other (and both high-risk with high overlap) I was pretty satisfied that my decision was likely gonna hinge on something else.
Maybe your adjustment would take it outside that range but I think at the point of extreme success these charities would be selling impact at competitive rates (so funders would be getting marginal value out of them), and more than likely going to counterfactual funders (ex. government). Maybe this is truer in GHD and especially mental health than in animal welfare, which seems more concentrated. But yeah, at this point I was pretty satisfied that Kaya Guides had minimal risk of substantial funding displacement in a success scenario (I can’t be too specific about this in public), so I picked it.
(Maybe again—I’m just highlighting my specific scenario, there’s definitely an attempt to generalise here but I didn’t think too hard through it)
I looked at a handful of mental health startups to inform my guesses on impact. I looked the most deeply into BetterHelp, but you can clearly see through their numbers that their prices have almost doubled in 5 years (and steadily, too, this wasn’t a COVID thing). From the research I did, my sense was that it wasn’t getting passed back onto their counsellors, nor fuelling an increase in growth spending. There’s no way it got twice as expensive to deliver therapy.
I think if we had to point to a single mechanism, once you run out of user growth—as BetterHelp have—your investors push you to find an equilibrium price. That price is necessarily going to be higher than the price that guarantees the broadest impact, and likely to be higher than the price for the most (breadth x depth) impact.
My best guess is regional pricing can act as a crude form of means-testing, but this probably comes with a perverse incentive to ignore the cheaper regions (as BetterHelp have—almost all of their users are in the U.S.).
(All of that goes out the window if you don’t go direct to consumers—I think deeper forms of healthtech might be quite value-aligned!)
I actually made this exact decision, just in the opposite direction! Last year, I had a pending offer from AIM’s Founding to Give programme, and another to be CTO at Kaya Guides (my current role).
For AIM incubatees, using historical data, I calculated that:
For FTG incubatees, I borrowed from AIM’s own BOTEC, but substituted more real-world data when I had it to model distributions. This models:
A healthtech startup might also have significant positive impact through its work, so I decided to model that in too. It increased the potential value by about 5× on average.
Mutliplying through, the summary statistics I came up with for each option (in value-equivalent US dollars):
CE incubatee
FTG incubatee
FTG incubatee (healthtech)
For Kaya Guides specifically, I also added a counterfactual impact factor that bumped it up a little bit, because I think we have an unusually unique opportunity to pioneer a new intervention globally.
Here’s the notebook I used to calculate all this. Maybe I should write this up as a full post someday.
I spoke to a great deal of people, and one thing that came up repeatedly is that if you’re in the for-profit game to have a direct impact, you should probably forget about it. Opinions differ a lot here, but I’ve seen the inside of a handful of tech companies—and many more products from the outside—and I do generally believe that at the point you’re big enough to have a significant impact, it’s quite likely that your investors will pressure you to squeeze money out of it in a way that will likely ruin said impact. This is especially true if you’re relying on some of your impact coming from donated exit money, which will, in all likelihood, reduce your control over the company.
The rest of my decision here is personal, but I’m still not fully sold on Earning to Give. I tried it earlier in my career, and I found that the toll of not doing direct work was so mentally debilitating that I wasn’t able to effectively work that hard. I think that being a highly successful startup founder is probably really hard, and I’m evidently not constitutionally motivated enough to just make money.
Broadly, I would see the decision like this: I think founding a startup and founding a charity have highly transferrable skillsets, but require extremely different personalities and constitutions. For me, then, this narrowed the FTG paths I would be effective at to just healthtech, which had a much lower ceiling. Frankly, my model for healthtech wasn’t meaningfully larger than my model for Kaya Guides, and at this point, I just went with my gut feeling.
(I know this comment is a bit structurally messy but I hope it elucidates something of value and provides some harder numbers to Nick’s intuitions)
Per Bloomberg, the Trump administration is considering restricting the equivalency determination for 501(c)3s as early as Tuesday. The equivalency determination allows for 501(c)3s to regrant money to foreign, non-tax-exempt organisations while maintaining tax-exempt status, so long as an attorney or tax practitioner claims the organisation is equivalent to a local tax-exempt one.
I’m not an expert on this, but it sounds really bad. I guess it remains to be seen if they go through with it.
Regardless, the administration is allegedly also preparing to directly strip environmental and political (i.e. groups he doesn’t like, not necessarily just any policy org) non-profits of their tax exempt status. In the past week, he’s also floated trying to rescind the tax exempt status of Harvard. From what I understand, such an Executive Order is illegal under U.S. law (to whatever extent that matters anymore), unless Trump instructs the State Department to designate them foreign terrorist organisations, at which point all their funds are frozen too.
These are dark times. Stay safe 🖤
All of the headlines are trying to run with the narrative that this is due to Trump pressure, but I can’t see a clear mechanism for this. Does anyone have a good read on why he’s changed his mind? (Recent events feel like: Buffet moving his money to his kids’ foundations & retiring from BH, divorce)