Long-term investment fund at Founders Pledge

Edit 03/​07/​20: See this post for the next step in this pro­ject. The post be­low was origi­nally pub­lished on 09/​01/​20.

At Founders Pledge, we are con­sid­er­ing launch­ing a long-term in­vest­ment fund for our mem­bers. Con­tri­bu­tions to this fund would by de­fault be in­vested, po­ten­tially over cen­turies or mil­len­nia to come. Grants would only be made when there’s a strong case that a dona­tion op­por­tu­nity beats in­vest­ment from a longter­mist per­spec­tive.

This idea was prompted in large part by re­cent re­search in the EA com­mu­nity, most no­tably Phil Tram­mell’s ini­tial work on pa­tient philan­thropy and Will MacAskill’s fo­rum post and the en­su­ing dis­cus­sion on out­side-view longter­mism.

We have just started this in­ves­ti­ga­tion, and don’t hold the views ex­pressed be­low strongly. This post is mainly a call for in­put: we’d like to make the best pos­si­ble use of the ex­per­tise and con­nec­tions available in the larger EA com­mu­nity.

Why a long-term in­vest­ment fund

In brief, we cur­rently see three main po­ten­tial ways in which in­vest­ing to give later may be bet­ter than giv­ing now:

  1. By ex­ploit­ing the pure time prefer­ence in the mar­ket, i.e. that non-pa­tient peo­ple are will­ing to sell the fu­ture (and es­pe­cially the long-term fu­ture) cheaply

  2. By ex­ploit­ing the risk pre­mium in the mar­ket, to the ex­tent that longter­mist al­tru­ists should price risks differ­ently to the market

  3. By giv­ing us more time to learn and get bet­ter at iden­ti­fy­ing high-im­pact giv­ing op­por­tu­ni­ties to benefit the long term

There are also con­sid­er­a­tions that may counter (par­tially or in full) these three benefits:

  1. We may be liv­ing at one of the most in­fluen­tial times in history

  2. There are risks of ex­pro­pri­a­tion, e.g. ex­is­ten­tial catas­tro­phes or le­gal changes

  3. There are risks of value or com­pe­tency change in the wrong di­rec­tion, e.g. gov­er­nance ends up in the wrong hands or new moral and non­moral in­sights are not incorporated

We have ma­jor un­cer­tainty about all six fac­tors, and in­tend to look into them fur­ther as part of this in­ves­ti­ga­tion. As­sum­ing le­gal fea­si­bil­ity, we think it likely (>50%) that a well-gov­erned long-term in­vest­ment fund is among the high­est-im­pact giv­ing op­por­tu­ni­ties we cur­rently know of from a longter­mist per­spec­tive.

What the fund would (ideally) entail

Dona­tions would be in­vested with the idea of grow­ing the fund, po­ten­tially over cen­turies or even mil­len­nia to come. Money would only be de­ployed when there is a strong case that al­lo­cat­ing to a fund­ing op­por­tu­nity is higher-im­pact from a longter­mist per­spec­tive than keep­ing the money in­vested. This could hap­pen, for in­stance, if our es­ti­mate of the ex­pro­pri­a­tion rate rises greatly, le­gal and/​or mar­ket changes make in­vest­ing much less at­trac­tive, or we iden­tify a truly ex­traor­di­nary fund­ing op­por­tu­nity that we don’t ex­pect to be filled by oth­ers.

We might de­cide to cre­ate a sep­a­rate le­gal en­tity for the fund, to make it less de­pen­dent on what hap­pens to Founders Pledge in the long term. If so, we’ll have to define a legally fixed ob­jec­tive. We think we should define this in pure moral terms to al­low for strate­gic flex­i­bil­ity, e.g. it should not in­clude any­thing about in­vest­ing. It should also bal­ance pro­tec­tion against value drift with flex­i­bil­ity to in­cor­po­rate new moral in­sights. Our start­ing idea is “to provide max­i­mum benefit to all sen­tient be­ings, re­gard­less of where or when they ex­ist”.

In ad­di­tion to this fixed le­gal ob­jec­tive, we are think­ing about the best way to struc­ture the fund’s year-to-year gov­er­nance. For in­stance, we could care­fully se­lect a board of trustees to guard the ob­jec­tive of the fund and up­date its strat­egy. They should em­body the val­ues of the fund and be strate­gi­cally knowl­edge­able. This would al­low a lot of the gov­er­nance to re­main adapt­able: value and com­pe­tency drift could be averted by good ini­tial trustee choices and a solid pro­cess of suc­ces­sion.

If we launch this fund, we will recom­mend it to our longter­mist mem­bers alongside our ex­is­tent recom­men­da­tions on ex­is­ten­tial risk re­duc­tion and forth­com­ing new longter­mist recom­men­da­tions. Some of our mem­bers have already ex­pressed in­ter­est. We also ex­pect this fund could be in­ter­est­ing for non-longter­mist mem­bers who nonethe­less want to al­lo­cate a frac­tion of their ‘giv­ing port­fo­lio’ to benefit­ing the longer term.

What type of in­put we would most value at this stage

In or­der of prefer­ence:

  • Con­nec­tions or ex­per­tise on in­ter­na­tional trust, char­ity and in­vest­ment law

  • Le­gal and tax con­sid­er­a­tions will have a ma­jor in­fluence on how we could best set up this fund. If you have ex­per­tise in this area or could con­nect us to any­one who does, your help would be highly ap­pre­ci­ated. Please reach out to sjir@founder­spledge.com.

  • Crit­i­cisms of the idea and any of its premises

  • Refer­ences to rele­vant pa­pers /​ ar­ti­cles are also wel­come. Please leave these in the com­ments.

  • Ex­am­ples of similar funds

  • To learn more about e.g. risks of value drift, risks of ex­pro­pri­a­tion and le­gal struc­tures, we’re look­ing into case stud­ies of similar funds, both ac­tive now and in the past. We are aware of the Wel­l­come Trust, the Mor­mon in­vest­ment fund, the No­bel Foun­da­tion, the Is­lamic Waqfs, sovereign wealth funds, uni­ver­sity trusts, and the Catholic Church. If you know of any other good ex­am­ples or have use­ful sources on the above-men­tioned ones, please let us know in the com­ments.

  • Creative ideas for op­ti­mal gov­er­nance of the fund

  • Creative thoughts on nam­ing and fram­ing of the fund

  • Our cur­rent work­ing ti­tle is ‘Le­gacy Fund’, but if you have any other ideas, feel free to sug­gest.