Thanks Tom, you guys have done a lot on a very low budget and I’m keen to hear about what you do next. I think the value of information about different approaches makes the project very worthwhile.
One issue which I have with your $9-to-$1 figure is that your costs seem artificially low: you are not paying market rates for your employees’ labour. I think this is true either in the sense of how much you would have to pay to replace them or in the sense of how much they might earn (and perhaps donate) elsewhere. It might be better to budget as paying a more normal wage to your employees with them donating the difference back to Charity Science.
Note that I actually think this is a budgeting issue for most EA orgs, which somewhat obscures counterfactual impact. I brought it up here not to pick on Charity Science but just because you guys are so amazingly frugal that it makes even more of a difference than normal!
I think there are a lot of different ways to calculate impact. We generally try to follow GiveWell’s model as closely as possible as we have found them to be consistently stronger at truthful impact reporting. If we had used other meta-charities’ ways of calculating our impact, it would have been far higher (e.g. if we had included projections of future donations, or did not exclude counterfactuals as harshly as we did).
As for calculating our opportunity costs, I think this is an interesting question and a good thing to take into account. In our next impact report we will be sure to include these figures. For the time being we will put the calculations in this comment.
We based our calculations on what would happen if we did earning to give instead of running Charity Science. We took into account an estimate of earning based on each of our ages, time worked on CS, degree level, rate of taxes we would have to pay, cost of living, and the percentage each individual would donate, etc. We think we would have donated $45,500 in the first year. This may be substantially lower though, as Joey and I may have had to do some capacity-building to enter the for-profit sector, which would have cost time and money. It also assumes we find jobs immediately and have no extra job expenses such as clothing or travel. This gives a ratio of about 1:3 over the year, or 1:6 over the last 6 months.
In terms of replacements, I currently expect to hire minimum wage non-EA workers to do a large amount of the future fundraising (with either one ED staying as ED, or just having an EA heavy board). That is also worth keeping in mind if someone wants to calculate it from that perspective.
I really like people asking these sorts of questions. I hope to see this sort of rigour and these sorts of strong questions applied to all meta-charities consistently.
For the record, I think the $45,500 donations figure is a significant overestimate, even just considering the donations I’d have counterfactually made given the limited amount of time I spent on fundraising this year—indeed based on those I know that it is. (I’d ask people to just trust that I’m most aware of the factors behind my estimates for my donations.)
One thing which I guess we can spell out since people are wondering how much we’d donate is that this figure has Joey and Xio donating everything above $6,000 (£3,157) a year each, post-tax. And it has me donating much more than I actually would, as my earnings in this limited time wouldn’t push me over my theshold for donating everything as opposed to giving 10%. As it happens we think Charity Science is the best donation opportunity that we know of, so we’d donate to it.
I also think that a 1:6 ratio, let alone a 1:3 one, is misleadingly low.
I’d be keen to see you include projections of future donations and other potentially important factors as well. I think it’s fine to do both so long as you make it clear. It seems silly to judge all EA orgs just by “money moved over the last year” (e.g. if we all did that, no-one would have given to GiveWell in their first couple of years, which would have been bad).
Note that this argument is very similar to the reasons why GiveWell includes a number of costs in its per-bednet costs for AMF that AMF excludes because they are provided ‘for free’, including CEO salary. This is a point disputed between GiveWell and AMF (http://www.givewell.org/international/top-charities/AMF; search for ‘what do you get for your dollar’), but I think GiveWell have basically got it right here.
Don’t forget the staff are partly being paid in exciting work, the respect of their EA peers, a sense of purposefulness, and so on. As a result compensating differentials lowers the market price for their labour, and they are more well compensated holistically than they appear to be.
Conversely, bankers do work most people find boring and difficult, face hostility from much of the population, frequently think their work is pointless, and so on. As such compensating differentials increases the market price for their labour, and they are less well compensated holistically than they appear to be.
Good point, I didn’t notice this. It would be interesting to know how effectively funds are being raised if the hours of any full-time staff and volunteers are budgeted at Canada’s average wage of $50k per year.
Of course, there are other considerations, like if these people were earning to give, they couldn’t give 100%, and the per dollar impact might increase over the lifetime of an EA organisation, but it would be good to know.
being raised if the hours of any full-time staff and volunteers are budgeted at Canada’s average wage of $50k per year
Well wages now are less than $10k per person, so, that would move from 9:1 to less than 2:1, which is a lot lower than other organizations that evaluate themselves in terms of money moved to effective charities. But I think that would be misleadingly low in a different way, since they improved their fundraising techniques over time (e.g. much of their fundraising came in these birthday/Christmas fundraisers that came late). So I’d project higher efficacy going forward, and hopefully new innovations. I’d also include value of information produced during the process for other groups.
Basically, I would view funding now more in terms of R&D to find new fundraising methods than in terms of money moved thus far.
@Ryan—I think Joey and Xio made an estimate in one of their previous review documents.
@Carl—I agree with this. It seems a bit misleading to advertise CS as already cost-effective in terms of money moved, but worthwhile to fund for other reasons.
Thanks Tom, you guys have done a lot on a very low budget and I’m keen to hear about what you do next. I think the value of information about different approaches makes the project very worthwhile.
One issue which I have with your $9-to-$1 figure is that your costs seem artificially low: you are not paying market rates for your employees’ labour. I think this is true either in the sense of how much you would have to pay to replace them or in the sense of how much they might earn (and perhaps donate) elsewhere. It might be better to budget as paying a more normal wage to your employees with them donating the difference back to Charity Science.
Note that I actually think this is a budgeting issue for most EA orgs, which somewhat obscures counterfactual impact. I brought it up here not to pick on Charity Science but just because you guys are so amazingly frugal that it makes even more of a difference than normal!
I think there are a lot of different ways to calculate impact. We generally try to follow GiveWell’s model as closely as possible as we have found them to be consistently stronger at truthful impact reporting. If we had used other meta-charities’ ways of calculating our impact, it would have been far higher (e.g. if we had included projections of future donations, or did not exclude counterfactuals as harshly as we did).
As for calculating our opportunity costs, I think this is an interesting question and a good thing to take into account. In our next impact report we will be sure to include these figures. For the time being we will put the calculations in this comment.
We based our calculations on what would happen if we did earning to give instead of running Charity Science. We took into account an estimate of earning based on each of our ages, time worked on CS, degree level, rate of taxes we would have to pay, cost of living, and the percentage each individual would donate, etc. We think we would have donated $45,500 in the first year. This may be substantially lower though, as Joey and I may have had to do some capacity-building to enter the for-profit sector, which would have cost time and money. It also assumes we find jobs immediately and have no extra job expenses such as clothing or travel. This gives a ratio of about 1:3 over the year, or 1:6 over the last 6 months.
In terms of replacements, I currently expect to hire minimum wage non-EA workers to do a large amount of the future fundraising (with either one ED staying as ED, or just having an EA heavy board). That is also worth keeping in mind if someone wants to calculate it from that perspective.
I really like people asking these sorts of questions. I hope to see this sort of rigour and these sorts of strong questions applied to all meta-charities consistently.
-Xio
For the record, I think the $45,500 donations figure is a significant overestimate, even just considering the donations I’d have counterfactually made given the limited amount of time I spent on fundraising this year—indeed based on those I know that it is. (I’d ask people to just trust that I’m most aware of the factors behind my estimates for my donations.)
One thing which I guess we can spell out since people are wondering how much we’d donate is that this figure has Joey and Xio donating everything above $6,000 (£3,157) a year each, post-tax. And it has me donating much more than I actually would, as my earnings in this limited time wouldn’t push me over my theshold for donating everything as opposed to giving 10%. As it happens we think Charity Science is the best donation opportunity that we know of, so we’d donate to it.
I also think that a 1:6 ratio, let alone a 1:3 one, is misleadingly low.
I’d be keen to see you include projections of future donations and other potentially important factors as well. I think it’s fine to do both so long as you make it clear. It seems silly to judge all EA orgs just by “money moved over the last year” (e.g. if we all did that, no-one would have given to GiveWell in their first couple of years, which would have been bad).
Note that this argument is very similar to the reasons why GiveWell includes a number of costs in its per-bednet costs for AMF that AMF excludes because they are provided ‘for free’, including CEO salary. This is a point disputed between GiveWell and AMF (http://www.givewell.org/international/top-charities/AMF; search for ‘what do you get for your dollar’), but I think GiveWell have basically got it right here.
This is a really interesting point, which I’d like to see more explored in EA transparency efforts.
80,000 Hours includes total time estimates and our own very rough estimates of the opportunity costs of this time in our evaluation documents.
https://80000hours.org/2014/05/plan-change-analysis-and-cost-effectiveness/
Don’t forget the staff are partly being paid in exciting work, the respect of their EA peers, a sense of purposefulness, and so on. As a result compensating differentials lowers the market price for their labour, and they are more well compensated holistically than they appear to be.
Conversely, bankers do work most people find boring and difficult, face hostility from much of the population, frequently think their work is pointless, and so on. As such compensating differentials increases the market price for their labour, and they are less well compensated holistically than they appear to be.
Good point, I didn’t notice this. It would be interesting to know how effectively funds are being raised if the hours of any full-time staff and volunteers are budgeted at Canada’s average wage of $50k per year.
Of course, there are other considerations, like if these people were earning to give, they couldn’t give 100%, and the per dollar impact might increase over the lifetime of an EA organisation, but it would be good to know.
Well wages now are less than $10k per person, so, that would move from 9:1 to less than 2:1, which is a lot lower than other organizations that evaluate themselves in terms of money moved to effective charities. But I think that would be misleadingly low in a different way, since they improved their fundraising techniques over time (e.g. much of their fundraising came in these birthday/Christmas fundraisers that came late). So I’d project higher efficacy going forward, and hopefully new innovations. I’d also include value of information produced during the process for other groups.
Basically, I would view funding now more in terms of R&D to find new fundraising methods than in terms of money moved thus far.
@Ryan—I think Joey and Xio made an estimate in one of their previous review documents.
@Carl—I agree with this. It seems a bit misleading to advertise CS as already cost-effective in terms of money moved, but worthwhile to fund for other reasons.