Hi Tony.Sena, thank you for your interest in SoGive’s work.
Thank you for raising your questions about transparency. I think it’s important that sources of funding are made as accountable as possible, so thank you for this.
It is not obvious to me that this type of transparency is a good idea, and I would certainly want us to have more rigorous justification for it before we go down this route.
(To be clear, some types of transparency are great.)
Members of the EA community might have an interest in the things you allude to, namely:
Is it right that this should be monitored by the community, or put into the public domain?
Let me illustrate with two examples:
Example 1: Bob works for an investment bank and trades derivatives. He believes he earns more than he needs and donates a substantial sum each year. He is open about his philanthropy and feels good about it.
Example 2: Charlotte inherited a large sum of money from a family business. The business works in areas which she doesn’t agree with ethically. She has spent a lot of time wondering what she should do about the money she has. Is it wrong for her to donate it, given the money’s lugubrious origins? Is it any better for her to just keep the money? After much worrying, she has decided to donate the money, but would prefer not to draw attention to herself – she doesn’t feel good about the money and doesn’t want to be associated with it.
At the moment, I believe that the funds for SoGive grants would likely have provenances that most members of the EA community would not object to. (E.g. I don’t think most EAs would object to a donor who looked like Bob)
However I have gotten to know many donors over the years, and if someone who looked like Charlotte came along, I would like us to have a strong rationale for our actions before we discouraged her from contributing funding to SoGive Grants.
In particular, I would not want us to implement a precedent for making donors’ identities public unless we had heard the relevant perspectives.
This includes the perspective of recipient organisations.
Just because EA has billions of dollars now, it doesn’t mean that all EA organisations are awash with money. As Joey’s extremely helpful article pointed out, there may be some organisations who are doing excellent, high-impact work, but who are still struggling for funding.
If I were to guess, I don’t think our applicants would want us to scare off the Charlottes of this world.
Thank you also for the interesting example in India, written, interestingly, by someone who shares my first name.
It is true that, as that article illustrated, some recipient/”beneficiary” organisations are pushing back against the power involved in philanthropy.
However it’s also true that the organisations in most need of funding are also the least able to push back against this power. Which suggests that the more in need of funding they are, the less valuable they would find this transparency.
There are a number of practical implications which we would need to consider
To be clear, these comments are not intended to definitely prove that your demand for transparency is misplaced, rather to demonstrate that it’s not obvious, and so we shouldn't rush in without a stronger rationale than we currently have.
Heartily agree with this.
For the pilot of SoGive Grants, we plan to
(1) Provide feedback as much as we can (the only reason we haven't promised to give feedback to everyone is that this is a pilot and we don't know whether that's feasible for us)
(2) The application form is almost a copy and paste of the EA Funds application form, to make life easier for those who are applying to both
(BTW applications are still open and close on 22nd May)
I also want to echo pretty much every bullet point that Luke made about the value of feedback, which I think are excellent points.
Thanks for this. Your main concern is a very reasonable one.
To my mind, there is (at the moment) no clear path to get investors to adopt UO, and most of them have not heard of it before. There are some asset owners who have adopted it, but they are very much the exception, not the rule.
While these challenges definitely do reduce the probability of success of this project, it also increases the impact.
I also agree that pricing externalities well is really hard.
Things that help here are:
As I've alluded to in another comment, I think you're missing part of the model. If you incorporate UO considerations, you would have two further perspectives to incorporate:
It is not immediately clear to me which of these would win. To a first-order approximation, it may appear that the two effects are roughly offsetting, since the cartel likely moves money from the rest of the economy to the cartel members in what might simplistically be treated as a zero sum game. To add more detail to the model, it would be worth considering that the cartel essentially constitutes a form of rent-seeking, which is generally considered by economists to be bad for the economy, which suggests that item 2 likely outweighs item 1 (i.e. maybe makes the Universal Owner less keen to take part in a cartel). I won't keep on adding more and more details to the putative model.
I think the bottom line here is that companies currently have incentives to collude, and those incentives may still survive under a Universal Ownership system.
Your point about the mechanism of that collusion is a good one. Regulations currently anticipate ways to forbid anti-competitive behaviour, and likely don't already anticipate a UO-driven mechanism, so the regulations would have to evolve. It's worth bearing in mind that if this concept does reach the companies themselves (not just investors) then it will take many years, and so there will be plenty of time for this regulatory adaptation to occur.
I fear there may be a misunderstanding here, let me try to explain this more clearly.
Public markets investors largely are invested in the company's customers.
There are two cases:
If the customers are corporate bodies, then a universal owner almost certainly is directly invested in them.
If the customers are individuals, then a universal owner is invested in them in a natural language sense, rather than a finance sense. I.e. they don't own a legal stake in the person, but they are invested in them in the sense that they have incentives to see them being better off.
Let's illustrate with the McDonald's example
Imagine that McDonald's decided to conspire to ensure that they somehow got the same number of meals sold, but everyone had to pay more (e.g. by some sort of collusion with other food/restaurant providers).
Then everyone outside of the restaurant/food sector would be worse off (this is the heart of your concern).
If they are worse off, they have less savings (bad for the banking sector) and spend less on trinkets/holidays/other things (bad for the trinkets/holidays/other things sectors).
In other words, benefiting McDonald's at the expense of the wallets of the general public is bad for the wider economy.
The upshot: the impact on the wider economy may make Universal Owners less likely to want to form cartels
If I think of myself as being purely an investor in McDonald's (i.e. no UO thinking):
If I employ UO thinking, then there's two factors:
Is item 2 big enough to outweigh item 1? I don't know -- I haven't done the modelling. But what I can say is:
Cartels are an example here, and could be substituted with anything that has the property that collusion between companies leads to benefits to them at the expense of the economy as a whole
having a group of people with their fingers in every pie is bad because it will lead to anti-consumer anti-competitive corporate governance interventions.
It's not clear to me that this is true.
If an investor has a finger in every pie, then it will mean that they are invested in a company and also that company's competitors...
... but this doesn't seem that important -- they had an incentive to create cartels, Universal Owner or no.
What it does mean is that they are also invested in the company's consumers -- i.e. if one company acts to harm all consumers, this too will harm the wider economy and hence (for a universal owner) the wider portfolio.
So if anything, it seems that the opposite is true.
Thank you for this -- I have discussed this with many people and not heard this competition critique before, and I'm always glad to encounter a novel critique.
I'm not sure I understand it though.
Are you saying that if Universal Ownership took hold, companies would collude to raise prices (or otherwise damage customers for their own benefit)?
I'm not clear on why Universal Ownership makes a difference here -- it's already in companies' interests to form cartels, and there's already regulation to stop it.
Thanks very much MaxRa.
Thank you for the feedback.
For this post I sought help with the title. The advice I was given was:
Someone suggested that wording to me and but it was I who opted to use it. So if the title is a mistake, it's my mistake.
I was unsure about this, thanks for clarifying