Blog post

Introducing Effective Altruism Funds

12 min read
22 Mar 2017

An explanation of EA Funds and why it may be a more effective donation option for many individuals.

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You may have seen recently that the Centre for Effective Altruism (which runs Giving What We Can) has launched Effective Altruism Funds. We think this could be a more effective option for many individual donors, so we are now recommending this to our members. We have also added it to our donate and top charities pages.

Visit Effective Altruism Funds

How does Effective Altruism Funds work?

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Effective Altruism Funds allows individuals to pool their donations with others from across the community to help individual give more effectively. Donors can contribute to four different funds that represent areas that are important (affect a lot of people or animals), tractable (have good evidence of what works best) and neglected (not enough people are supporting that area). Each Fund is managed by an expert (currently including staff from GiveWell and the Open Philanthropy Project) who we believe has extensive knowledge of that area.

Currently, the four funds are: Global Development Fund managed by Elie Hassenfeld from GiveWell Animal Welfare Fund managed by Lewis Bollard from the Open Philanthropy Project Long-Term Future Fund managed by Nick Beckstead from the Open Philanthropy Project Effective Altruism Community Fund managed by Nick Beckstead from the Open Philanthropy Project

Given the success of Effective Altruism Funds so far we may expand the funds to cover other important and effective areas if there is sufficient interest. If you have an idea for a fund or a Fund Manager, please fill out this short survey.

What might Effective Altruism Funds be more effective than your alternatives?

Below are four arguments for why Effective Altruism Funds might be higher impact than the alternatives available to many donors.

1. Donations to EA Funds may be at least as good as the Open Philanthropy Project’s last dollar

Donations to Effective Altruism Funds could be at least as good as the Open Philanthropy Project’s last dollar in the following three ways:

a) Providing a funding stream for more unusual, risky or time-sensitive projects, particularly where the Open Philanthropy Project might have brand-risk concerns

While the Open Philanthropy Project’s program officers have considerable freedom in their grant making, there may be additional giving opportunities that are not a good fit for the Open Philanthropy Project. Effective Altruism Funds gives Fund Managers a pool of funding they can make grants from with more brand separation from Open Phil, possibly allowing them to take greater risks. Fund Managers might also encounter giving opportunities that are particularly time-sensitive, or very small, where the need to go through management is prohibitive.

b) Providing additional funding to organisations where the Open Philanthropy Project already provides a high proportion of total funding.

The Open Philanthropy Project currently tries to set an upper limit on the proportion of a charity’s budget they will provide so that no charity becomes overly dependent on money from them. If Effective Altruism Funds generates recurring donations from a large number of donors then the Fund Managers may be able to use this money to fully fund an organisation already identified because they will be using funding from a broad range of donors rather than just relying on funding from the Open Philanthropy Project. This would save the charity from spending additional time raising funds from many small donors individually while still providing a diverse range of funders. We are not confident that this does not leave charities still too reliant on the Open Philanthropy Project however so this reason in favour of the funds holds less weight and is something we will review.

c) Trading off against the Open Philanthropy Project is a very good worst-case-scenario

It could be that Fund Managers are unable to find any more promising opportunities, and donations through Effective Altruism Funds and so money from the funds just swapped with money that would have been donated by the Open Philanthropy Project anyway. However, this might not necessarily be a bad thing. If this happened it would mean that your donation is at least as good as the Open Philanthropy Project’s last dollar. As Carl explains:

In principle one could donate to the donor-advised fund (DAF) of Open Phil, directly increasing its ultimate donation capacity. At the moment, this doesn't seem to be set up, but one could instead donate to something that Open Phil is donating to (inframarginal), and request that it 'funge' you by reducing its own donation to that charity by the corresponding amount, increasing the reserves of Good Ventures and other Open Phil backers accordingly. So the marginal Open Phil/Good Ventures dollar sets a minimum standard for risk-neutral donors: if you don't expect to do better than Open Phil, just arrange to get 'funged'.

To determine whether trading off with Open Phil is better or worse than the alternative we need to know how good Open Phil’s last dollar would be.

Open Phil’s current view on the value of their last dollar is:

”... On balance, our very tentative, unstable guess is that the “last dollar” has higher expected value than gifts to GiveWell’s top charities today.”

Thus, it seems quite plausible (although uncertain) that trading off with the Open Philanthropy Project is higher impact than the current alternative of donating to GiveWell-recommended charities.

2. Donating via Effective Altruism Funds may provide more value through specialisation and comparative advantage

Effective Altruism Funds allows individual donors to pool their donations with others who share their worldview and values, then delegate some of the research and decision-making to people who are likely to be best at this. To make an effective donation, currently individual donors must try to answer all of the following questions, given their values:

  1. Which problem areas are most important?
  2. Which interventions are likely to make progress in solving the problem?
  3. Which charities executing those interventions are most effective?
  4. Which charities have a funding gap that is unlikely to be filled elsewhere?

Time spent answering these questions is time not spent doing other worthwhile activities. Donating to Effective Altruism Funds means you can spend time deciding which cause areas you value (the main question where differences in world-view or personal values may lead to the biggest differences in donation targets) but delegate the other decisions to an expert.

This is particularly important as questions (3) and (4) require timely information and knowledge of other funders’ intentions. Program Officers at major foundations have a particular comparative advantage at answering (2) and (3) since they spend virtually all of their working time thinking about how to allocate money to achieve the most good in any given cause area. These people are also particularly well suited to answer (4) as they have up-to-the-minute information about the largest funder in the space.

3. Strong track record for finding high-leverage giving opportunities: the EA Giving Group DAF

The Long-Term Future and Effective Altruism Community funds are currently managed by Nick Beckstead, a Program Officer at the Open Philanthropy Project who has helped advise a large private donor on donation opportunities for several years. The fund Nick manages was an early funder of CSER, FLI, Charity Entrepreneurship and Founder’s Pledge.

We think this represents a strong track record although the Open Philanthropy Project’s recent involvement in these areas may make it harder to find unfunded, promising opportunities in these areas in the future.

4.Possible long-term benefits of Effective Altruism Funds

As well as the increasing the effectiveness of individuals’ donations in the short term, we believe that the existence of, and further development of Effective Altruism Funds, might have significant longer-term benefits including:

a) Exploration of new funding opportunities Long term Effective Altruism Funds might increase the incentives for researchers to explore new areas for potential donations. This would be both because the Effective Altruism Funds would cause money to be available for allocation based on the research and because in the future we hope to encourage new Fund Managers to create new funds with different focus areas than the current options.

b) Acting as a training ground for new Effective Altruism researchers A future version of Effective Altruism Funds might also have a lower barrier to entry than, say, getting a job as a Program Officer at the Open Philanthropy Project. This would allow more people to try out in-depth charity research to see if they should specialize in it. It also provides a clear feedback mechanism for this kind of research, namely, whether the Effective Altruism community chooses to donate to your fund.

c) Moral trade and donor lotteries As Will MacAskill notes in this post, it might be possible in the future to use the Effective Altruism Funds infrastructure to initiate a number of interesting, related projects. Two examples are moral trades and coordinating donor lotteries.

There are likely other interesting experiments that can be conducted with the donation infrastructure required for Effective Altruism Funds if it grows in size.

Why not donate directly to top charities?

We’ve chosen the Fund Managers based on their expertise and track record of making good grant decisions based on hours of research. With more money at their disposal than the average individual donors we expect them to be able to find some of the best giving opportunities available at the time they regrant their fund. This could be funding a particularly timely and promising-seeming project in their fund area or even supporting a promising new charity (one that might become a top charity in the future) to get started.

If no such new opportunities are available when the Fund Managers go to donate their fund then they will give the money to top charities like those recommended by GiveWell and Animal Charity Evaluators. This means that the “worst” thing that your donation could go to is some of the best charities out there and it could fund something even better.

By combining our donations we also give top charities a more steady income stream, especially if a lot of people set up recurring donations. Charities can easily see what is in the funds and speak to a few Fund Managers about their potential donations rather than trying to second guess a huge community of people.

Outside of global development and animal welfare, there are currently no evaluators helping donors find top charities to support. We hope that Effective Altruism Funds will help fill that gap for Giving What We Can members who wish to donate to other effective areas to fulfil their pledge.

Why might you choose not to donate to Effective Altruism Funds?

The Centre for Effective Altruism and Giving What We Can aim to increase donations to the most effective charities. To that end, we only want people to use Effective Altruism Funds if doing so is their best option for doing the most good. We believe it may not be the best option for some people, especially those moving large amounts of money and spending considerable time determining where to allocate their donations.

Some of the things you might want to consider before switching to using Effective Altruism Funds include:

1. Your views on the initial Fund Managers

We set up Effective Altruism Funds using Fund Managers from Open Philanthropy Project while we test to see how popular this platform would be because the Open Philanthropy Project is already one of the largest funders in these areas and they are recognised experts. This does mean however that a lot of donation decisions are currently concentrated in the hands of a small group of individuals. In the future, we aim to create a wider variety of funds with a wider variety of Fund Managers but this is something to bear in mind for now.

2. Specific value disagreements with Fund Managers

Some donors may choose to donate elsewhere if they find that they have specific disagreements with the worldviews of the Fund Managers. For example, you might have different views on the best ways to reduce the number of animals suffering in factory farming (say promoting a vegan lifestyle versus working with corporations to encourage their use of free range animal products) than the Fund Manager.

If you look at the fund pages for each fund you can see past donations made by the Fund Managers in order to get an idea of whether or not you share their values.

3. Insider information you may have

You might think that you will make a better donation decision than the Fund Managers if you have better information than them in specific cases. For example, you might have inside information on a particular cause or organisation or an unusually strong personal network that has enough knowledge and diversity of views to provide you with an advantage.

4. How much risk you are happy with

One thing to consider when making any donation is how risk-averse you are. Think about whether you would prefer your donation to have a 100% chance of saving one life or a 0.1% chance of saving 10,000 lives (which is the equivalent of saving 10 lives in expectation).

As discussed in the section on why this might be higher impact than donating to top charities, our Fund Managers are looking for promising new charities that may not yet have the robust evidence behind them that, for example, GiveWell’s top charity list requires. This more high-risk, high-reward approach means even the Global Development Fund (typically a low-risk area with strong evidence behind the interventions) has some level of risk to it. The other cause areas supported by our current funds involve more risk but could do a lot of good in expectation.

If you are not comfortable with your donation being riskier and instead prefer to be more certain of doing good, even if it means you might do less good overall you might prefer to donate only to GiveWell top charities.

5. Your trust in the Centre for Effective Altruism

Behind the scenes, the structure of Effective Altruism Funds operates similarly to a donor-advised fund (DAF) with the Centre for Effective Altruism (CEA) operating as the DAF. Donations go to CEA and are put aside until the Fund Manager recommends a donation. CEA’s trustees must then approve the donation before the donation is sent to the recipient. Just as in a DAF, making a donation through EA Funds surrenders ownership of the donation to CEA with the understanding that the Fund Manager will have advisory privileges over how the fund is used. We chose this structure so that we could try and minimise fees on donations and make the donation process as seamless as possible but it means you are trusting us with your donation. While we expect to follow the Fund Managers’ recommendations in the vast majority of cases there may be unexpected cases that would require CEA's discretion to resolve. Some examples include Fund Managers resigning, Fund Managers ending their term with money remaining in the fund, Fund Managers making recommendations that are not in keeping with the description of the fund, etc. We are unlikely to have planned for all cases and may need to exercise discretion to resolve unforeseen circumstances.

What's happening to the Giving What We Can Trust?

If you want to support our top charities (those currently recommended by GiveWell) you can still donate to the Giving What We Can Trust. In the future, we plan to move the payment infrastructure supporting the trust over to the same platform as Effective Altruism funds so that you can support individual, top charities there too in the same way that you currently can with the Trust. If–taking into account all of the points discussed in this post–you think that donating to Effective Altruism Funds is likely to be higher impact, get in touch at funds@effectivealtruism.org to find out about switching your donation from the Giving What We Can Trust to Effective Altruism Funds.

What does this mean in practice for Giving What We Can Members and the pledge?

Nothing about the pledge itself has changed. It is still a lifetime pledge to “give at least ten percent of what I earn to whichever organisations can most effectively use it to improve the lives of others”. We simply believe that Effective Altruism Funds could be one of the best ways to do so at present.

Visit Effective Altruism Funds