[Question] What’s the best structure for optimal allocation of EA capital?

In 2017 (the last year for which we have com­plete data), Open Phil ac­counted for 78.7% of all EA grant­mak­ing. 2018 & 2019 will prob­a­bly fol­low a similar pat­tern, though the data isn’t in yet.

(Derived from Re­think Pri­ori­ties’ re­cent anal­y­sis; here’s a spread­sheet show­ing my work.)

So EA is cur­rently in a regime wherein the large ma­jor­ity of cap­i­tal flows from a sin­gle source, and cap­i­tal al­lo­ca­tion is set by a small num­ber of de­ci­sion-mak­ers.

Rough es­ti­mate: if ~60% of Open Phil grant­mak­ing de­ci­sion­ing is at­tributable to Holden, then 47.2% of all EA cap­i­tal al­lo­ca­tion, or $157.4M, was de­cided by one in­di­vi­d­ual in 2017. 2018 & 2019 will prob­a­bly have similar pro­por­tions.

It seems like EA en­tered into this regime largely due to his­tor­i­cally con­tin­gent rea­sons (Cari & Dustin de­vel­op­ing a close re­la­tion­ship with Holden, then out­sourc­ing a lot of their philan­thropic de­ci­sion-mak­ing to him & the Open Phil staff).

It’s not clear that this struc­ture will lead to op­ti­mal cap­i­tal al­lo­ca­tion. It’s straight­for­ward to imag­ine al­ter­na­tive struc­tures:

  • e.g. Cari & Dustin route 50% of their philan­thropy through Open Phil & 50% through a sep­a­rate foun­da­tion.

  • e.g. Cari & Dustin route 90% their philan­thropy through Open Phil, and al­lo­cate the re­main­ing 10% to grant­mak­ers seek­ing “moon­shots” (Peter Thiel has done some­thing like this by fund­ing the Thiel Fel­low­ship & Tyler Cowen’s Emer­gent Ven­tures).

  • e.g. Cari & Dustin make large grants di­rectly to the EA Funds, in ad­di­tion to do­ing grant­mak­ing through Open Phil.

I’m not claiming that any of the above will nec­es­sar­ily lead to bet­ter cap­i­tal al­lo­ca­tion than the cur­rent struc­ture, but it seems plau­si­ble that they might.

I’m not aware of much dis­cus­sion of al­ter­na­tive cap­i­tal struc­tures in the EA com­mu­nity, so ex­plor­ing this seems valuable.