Maybe EA philanthropists should be invest more conservatively, actually
The pros and cons of unusually high risk tolerance in EA philanthropy have been discussed a lot, e.g. here. One factor that may weigh in favor of higher risk aversion is that nonprofits benefit from a stable stream of donations, rather than one that goes up and down a lot with the general economy. This is for a few reasons:
Funding stability in a cause area makes it easier for employees to advance their careers because they can count on stable employment. It also makes it easier for nonprofits to hire, retain, and develop talent. This allows both nonprofits and their employees to have greater impact in the long run. Whereas a higher but more volatile stream of funding might not lead to as much impact.
It becomes more politically difficult to make progress in some causes during a recession. For example, politicians may have lower appetite for farm animal welfare regulations and might even be more willing to repeal existing regulations if they believe the regulations stifle economic growth. This makes it especially important for animal welfare orgs to retain funding.
These are good arguments for providing stable levels of funding per year, but there are often ways to further that goal without materially dialing back the riskiness of one’s investments (probable exception: crypto, because the swings can be so wild and because other EA donors may be disproportionately in crypto). One classic approach is to set a budget based on a rolling average of the value of one’s investments—for universities, that is often a rolling three-year average, but it apparently goes back much further than that at Yale using a weighted-average approach. And EA philanthropists probably have more flexibility on this point than universities, whose use of endowments is often constrained by applicable law related to endowment spending.
Maybe EA philanthropists should be invest more conservatively, actually
The pros and cons of unusually high risk tolerance in EA philanthropy have been discussed a lot, e.g. here. One factor that may weigh in favor of higher risk aversion is that nonprofits benefit from a stable stream of donations, rather than one that goes up and down a lot with the general economy. This is for a few reasons:
Funding stability in a cause area makes it easier for employees to advance their careers because they can count on stable employment. It also makes it easier for nonprofits to hire, retain, and develop talent. This allows both nonprofits and their employees to have greater impact in the long run. Whereas a higher but more volatile stream of funding might not lead to as much impact.
It becomes more politically difficult to make progress in some causes during a recession. For example, politicians may have lower appetite for farm animal welfare regulations and might even be more willing to repeal existing regulations if they believe the regulations stifle economic growth. This makes it especially important for animal welfare orgs to retain funding.
These are good arguments for providing stable levels of funding per year, but there are often ways to further that goal without materially dialing back the riskiness of one’s investments (probable exception: crypto, because the swings can be so wild and because other EA donors may be disproportionately in crypto). One classic approach is to set a budget based on a rolling average of the value of one’s investments—for universities, that is often a rolling three-year average, but it apparently goes back much further than that at Yale using a weighted-average approach. And EA philanthropists probably have more flexibility on this point than universities, whose use of endowments is often constrained by applicable law related to endowment spending.