It’s interesting that it would only apply to colleges and universities. I wonder why.
I’m 80% sure the following is correct:
Universities have a funding model that involves taking some percentage of money from the grants of their researchers/staff (you could characterize this as “skimming” off grants, though it’s a little pejorative [1]).
This “skimming” is mechanically imposed by the university on everyone, at least nominally. These skimmed fees then go to the school and don’t serve the purposes of the grant/project/impact, or any EA activity.
The rates used are high, 25%-40%, or even higher, see below.
However, you can get around these high rates by having the donor publicly declare a lower rate on their website.
So Open Phil declaring a 10% rate basically defeats the much higher “standard” rates the Universities charge. You could see this as giving the “grantee leverage” to negotiate a lower rate and keep more funds for themselves/project. You could also see it as forcing the University to accept lower rates and makes EA funds more cost effective.
Present a rhetorical name and gentle explanation (“Indirect Costs”)
Specifically give an out: “The only exceptions are...grant application form clearly states that a different indirect costs recovery rate applies to all applicants” (UBC), “Some foundations, associations, and other non-profit entities will not pay the University’s full rates...Once reviewed and approved, it will be added to the pre-approved waiver list.” (Stanford).
By the way, how this de-facto system originated seems interesting and raises questions: (“Could Open Phil get away with 5%, or 0%? Could another powerful donor? Is this a new EA intervention? ”, “Does this system ding unsophisticated donors, or ding specific classes of donors? Does that bias the use of money?”, “This system is sort of baroque, often involving a public website/form. How did that come about?”).
So why doesn’t Open Phil’s 10% fee on the website apply to business and non-profits?
As above, the page is specifically there to “defeat” the University rates which are otherwise rigidly imposed. For other grantees, Open Phil can other just tell them to spend money usefully.
Another interpretation/comment is that EAs don’t want, and don’t think it’s impactful for grantees, to have a cap of “10% on administration fees”. The related frugality/cost effectiveness is addressed elsewhere.
So, you can write a manifesto about how to see these rates. Universities are funded by tax dollars, serve social purposes, etc. The short summary is that it’s a good to fix this at 10%, unless you think University monies could be effective in ways EA value (they generally are not).
If I read the linked post literally, it should only apply to colleges and universities.
It’s interesting that it would only apply to colleges and universities. I wonder why.
I’m 80% sure the following is correct:
Universities have a funding model that involves taking some percentage of money from the grants of their researchers/staff (you could characterize this as “skimming” off grants, though it’s a little pejorative [1]).
This “skimming” is mechanically imposed by the university on everyone, at least nominally. These skimmed fees then go to the school and don’t serve the purposes of the grant/project/impact, or any EA activity.
The rates used are high, 25%-40%, or even higher, see below.
However, you can get around these high rates by having the donor publicly declare a lower rate on their website.
So Open Phil declaring a 10% rate basically defeats the much higher “standard” rates the Universities charge. You could see this as giving the “grantee leverage” to negotiate a lower rate and keep more funds for themselves/project. You could also see it as forcing the University to accept lower rates and makes EA funds more cost effective.
For evidence of the above, see the following page from Stanford, and a similar page from from UBC. Note that both pages:
Present a rhetorical name and gentle explanation (“Indirect Costs”)
Specifically give an out: “The only exceptions are...grant application form clearly states that a different indirect costs recovery rate applies to all applicants” (UBC), “Some foundations, associations, and other non-profit entities will not pay the University’s full rates...Once reviewed and approved, it will be added to the pre-approved waiver list.” (Stanford).
By the way, how this de-facto system originated seems interesting and raises questions: (“Could Open Phil get away with 5%, or 0%? Could another powerful donor? Is this a new EA intervention? ”, “Does this system ding unsophisticated donors, or ding specific classes of donors? Does that bias the use of money?”, “This system is sort of baroque, often involving a public website/form. How did that come about?”).
So why doesn’t Open Phil’s 10% fee on the website apply to business and non-profits?
As above, the page is specifically there to “defeat” the University rates which are otherwise rigidly imposed. For other grantees, Open Phil can other just tell them to spend money usefully.
Another interpretation/comment is that EAs don’t want, and don’t think it’s impactful for grantees, to have a cap of “10% on administration fees”. The related frugality/cost effectiveness is addressed elsewhere.
So, you can write a manifesto about how to see these rates. Universities are funded by tax dollars, serve social purposes, etc. The short summary is that it’s a good to fix this at 10%, unless you think University monies could be effective in ways EA value (they generally are not).