Do EA funding organisations have contingency plans (I use the term loosely) to manage downside risks to cash-flow in the eventuality of a recession? With the possibility of a recession in the coming 6-18 months seemingly increasing, it would be prudent to model the scenarios and think through how to smooth the funding profile if needed. Given cash is already constrained post the collapse of “that will shall not be named”, it feels a recession (and thus implications to donations/value of investments etc.) could compound existing funding issues. I don’t expect to get a financial plan from any of the big funders, but I thought worth raising the question in the low probability scenario it isn’t already part of their modelling.
Don’t know about Open Phil and other EA funders specifically, but I believe a number of endowments/ foundations base their distributions off a three-year rolling average of assets. To the extent that is the case here, that practice gives some significant lead time before there is a meaningful reduction in grants.
Funding to EA orgs has roughly halved in the last year, so a recession would barely be noticed!
More broadly, the point you make is valid. One of the reasons I’ve stayed earning to give is that I’ve never been confident in the stability of EA funding over my future career.
In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year.
The median probability was 50%, in effect a coin flip.
Very fair identification of some sloppy wording by me there with “increasing”. Apologies, my main focus was on the relatively high risk. Though as you’ve noted the WSJ survey had a median probability of 50%, and Forbes (link below) notes the NY Fed recession probability indicator is at 56% (albeit decreased from its previous 66%) - an unusually accurate indicator. Assessments which should be making central banks and economic ministries a little nervous.
Even with some forecasters reducing their probabilities, the relative risk and high level of uncertainties underpinning them would suggest to me it’d be a good time to review plans to weather any downturn.
Do EA funding organisations have contingency plans (I use the term loosely) to manage downside risks to cash-flow in the eventuality of a recession? With the possibility of a recession in the coming 6-18 months seemingly increasing, it would be prudent to model the scenarios and think through how to smooth the funding profile if needed. Given cash is already constrained post the collapse of “that will shall not be named”, it feels a recession (and thus implications to donations/value of investments etc.) could compound existing funding issues. I don’t expect to get a financial plan from any of the big funders, but I thought worth raising the question in the low probability scenario it isn’t already part of their modelling.
Don’t know about Open Phil and other EA funders specifically, but I believe a number of endowments/ foundations base their distributions off a three-year rolling average of assets. To the extent that is the case here, that practice gives some significant lead time before there is a meaningful reduction in grants.
Funding to EA orgs has roughly halved in the last year, so a recession would barely be noticed! More broadly, the point you make is valid. One of the reasons I’ve stayed earning to give is that I’ve never been confident in the stability of EA funding over my future career.
Say more?
From The Wall Street Journal:
Very fair identification of some sloppy wording by me there with “increasing”. Apologies, my main focus was on the relatively high risk. Though as you’ve noted the WSJ survey had a median probability of 50%, and Forbes (link below) notes the NY Fed recession probability indicator is at 56% (albeit decreased from its previous 66%) - an unusually accurate indicator. Assessments which should be making central banks and economic ministries a little nervous.
Even with some forecasters reducing their probabilities, the relative risk and high level of uncertainties underpinning them would suggest to me it’d be a good time to review plans to weather any downturn.
https://www.forbes.com/advisor/investing/is-a-recession-coming/
No worries. I don’t want to nitpick. The concern you’re raising sounds reasonable.