Question: what’s the logic behind organizations like Good Ventures and people like Warren Buffet wanting to spend down instead of creating a foundation that exists for perpetuity, especially if they have such large amounts of money that they struggle to give it all out? Is it because they believe some sort of hinge of history hypothesis? Are they worried about value drift? Do they think that causes in the future will generally be less important (due to the world being generally better) or less neglected (“future people can help themselves better than we can?”)
The history of big foundations shows clearly that, after the founder’s death, they revert to the mean and give money mostly to whatever is popular and trendy among clerks and administrators, rather than anything unusual which the donor might’ve cared about. If you look at the money flowing out of e.g. the Ford Foundation, you’ll be hard-pressed to find anything which is there because Henry or Edsel Ford thought it was important, rather than because it’s popular among the NGO class who staffs the foundation. See Henry Ford II’s resignation letter.
If you want to accomplish anything more specific than “fund generic charities”—as anyone who accepts the basic tenets of EA obviously should—then creating a perpetual foundation is unwise.
I’m sure it varies from donor to donor, but experience teaches us that younger organizations are often more innovative and flexible, while aged ones often ossify. If I were a donor, I wouldn’t want to bet against that base rate. Even worse, there may be some tension between avoiding value drift and avoiding ossification. Future donors shouldn’t face that tension when acting in their own times.
I also wouldn’t undervalue reputation, that seems like an important factor for many wealthy individuals and particularly those who feels like they have sins to absolve and/or a reputational deficit to erase a la Bill Gates
Question: what’s the logic behind organizations like Good Ventures and people like Warren Buffet wanting to spend down instead of creating a foundation that exists for perpetuity, especially if they have such large amounts of money that they struggle to give it all out? Is it because they believe some sort of hinge of history hypothesis? Are they worried about value drift? Do they think that causes in the future will generally be less important (due to the world being generally better) or less neglected (“future people can help themselves better than we can?”)
The history of big foundations shows clearly that, after the founder’s death, they revert to the mean and give money mostly to whatever is popular and trendy among clerks and administrators, rather than anything unusual which the donor might’ve cared about. If you look at the money flowing out of e.g. the Ford Foundation, you’ll be hard-pressed to find anything which is there because Henry or Edsel Ford thought it was important, rather than because it’s popular among the NGO class who staffs the foundation. See Henry Ford II’s resignation letter.
If you want to accomplish anything more specific than “fund generic charities”—as anyone who accepts the basic tenets of EA obviously should—then creating a perpetual foundation is unwise.
Thanks, interesting letter/link!
I’m sure it varies from donor to donor, but experience teaches us that younger organizations are often more innovative and flexible, while aged ones often ossify. If I were a donor, I wouldn’t want to bet against that base rate. Even worse, there may be some tension between avoiding value drift and avoiding ossification. Future donors shouldn’t face that tension when acting in their own times.
I also wouldn’t undervalue reputation, that seems like an important factor for many wealthy individuals and particularly those who feels like they have sins to absolve and/or a reputational deficit to erase a la Bill Gates