I think what this post highlights for me is that we (or at least I) would like to see more work done on “donation risk” within the EA community, and how we allocate and make giving investments in causes with potentially large effects but uncertain upsides.
For short run causes, we basically accept almost no donation risk—you must show that your organisation uses all the money effectively towards a cause that actually works and delivers the upside you have promised. Even slight delays or hiccups (like AMF struggling to allocate funds this year) are sufficient to prompt donors to look elsewhere. For extremely long run causes my perception is the exact opposite, but perhaps I should not comment, because I don’t support most current work into them.
What about medium run causes, should we look at donation risk like the short-run or do we treat them more like the extreme long run? For many such cases—a big difference is that an organisation like 80,000 hours seems only to have have a lack of evidence because it is new. If/when it becomes more mature and its students go on to take or not take their advice, a better picture of its effectiveness might emerge. Likewise with projects like the OPP where we may well get a better picture of the good it is doing over time, so I am quite positive about them in a venture capitalist sort of way.
Medium run erisk and political projects face donation risk difficulties though. We can see the upsides are big but showing our contribution actually mattered and that we are doing the best job working towards it is very hard.
Something like the efficient frontier in modern portfolio theory comes to mind, where you have a tradeoff between risk and return. We have nowhere near enough data, and don’t have a uniform metric of return, as the $/DALY seems too controversial, but I can still dream.
I think what this post highlights for me is that we (or at least I) would like to see more work done on “donation risk” within the EA community, and how we allocate and make giving investments in causes with potentially large effects but uncertain upsides.
For short run causes, we basically accept almost no donation risk—you must show that your organisation uses all the money effectively towards a cause that actually works and delivers the upside you have promised. Even slight delays or hiccups (like AMF struggling to allocate funds this year) are sufficient to prompt donors to look elsewhere. For extremely long run causes my perception is the exact opposite, but perhaps I should not comment, because I don’t support most current work into them.
What about medium run causes, should we look at donation risk like the short-run or do we treat them more like the extreme long run? For many such cases—a big difference is that an organisation like 80,000 hours seems only to have have a lack of evidence because it is new. If/when it becomes more mature and its students go on to take or not take their advice, a better picture of its effectiveness might emerge. Likewise with projects like the OPP where we may well get a better picture of the good it is doing over time, so I am quite positive about them in a venture capitalist sort of way.
Medium run erisk and political projects face donation risk difficulties though. We can see the upsides are big but showing our contribution actually mattered and that we are doing the best job working towards it is very hard.
Something like the efficient frontier in modern portfolio theory comes to mind, where you have a tradeoff between risk and return. We have nowhere near enough data, and don’t have a uniform metric of return, as the $/DALY seems too controversial, but I can still dream.