I think one other major complications of funder diversification is managing multiple competing interests. So in some ways it’s great to have more funders so you aren’t reliant on them to agree with all of your strategic choices but you can just do the most impactful thing and get one of the funders to back it but sometimes that also works in the opposite way with funding diversity. I think this is less the case for AIM as you are more established, but in the early stages of funding diversification there aren’t actually that many EAA funders to chose from, people often argue that its a higher counterfactual to have non EA funders but on the flip side you then have to manage those funders priorities and if they are less EA they often want you to invest more in a less impactful thing in order to fund you. So being that the funding options are so small in the EAA movement I’m not sure that funder diversification nets out as positive for all organisations or that we should all strive for it.
<< Needing more than one funder provides a healthy sanity check on if the project is really the best use of funds>>
Also to this point… doesn’t it heavily depend on the funder? If the funder isn’t impact driven I’m not sure it’s a great sign they want to fund you?
Additionally less important but it also takes up much more time to report and communicate with non EA donors. For us for example they don’t care or understand ICAPs (fair enough) so then you have to spend time translating your work to what they care about. I think this is fine but it’s a bit more of a time sink when they care about things that you don’t actually think are important to track in regards to impact eg vanity metrics.
I do however firmly agree with this your point on increasing funding in itself not being an aspirational goal and wish more organisations would be firmer with capping their funding goals if they will likely decrease their impact per dollar significantly consistently in the future, particularly in contrast to other organisations. So I agree with the conclusion but perhaps not that funding diversification is a prerequisite for it. Is it not possible that organisations can just reject funding over a certain amount regardless of funding diversification?
<< Needing more than one funder provides a healthy sanity check on if the project is really the best use of funds>> Also to this point… doesn’t it heavily depend on the funder? If the funder isn’t impact driven I’m not sure it’s a great sign they want to fund you?
A funder who isn’t impact driven could be the best funder of all! The “cost” of funding—in terms of good that wasn’t done because the funder didn’t donate to the next organization on their list—may be low, zero, or in rare cases even negative.
I think people model this in theory more often than it happens in practice. Three reasons why:
The total funding pie is pretty fixed; I expect it to be quite rare to grow it.
It could be that the next org on the list is much worse, but normally, if they are funding something effective, there is a non-random reason they came to the top of the list. I think it’s more common that a funder has different values—e.g., they are supporting global health and mental health, and you have a strong view that the one you are working on is significantly better (of course, someone working on the other would say the opposite). But I think that seems a bit immodest/morally presumptuous to then treat this counterfactual as massively different based on a pretty debatable value call.
You could, in fact, recommend your funding to go somewhere else with high EV (thus making the counterfactual higher). E.g., if someone says, “I like AIM, I want to give it $1m,” and I say, “Sorry, we have no room for funding, but have you considered X charity? It is also really good and hits similar ground.” This is not possible in every fundraising situation, but it is doable, and if I know an opportunity that I think is $-for-$ better than AIM, I have been pretty successful at redirecting funding that would go to AIM there.
Oh interesting. I want to dig into this more now, but my impression is that an individual’s giving portfolio—both major donors & retail donors, but more so people who aren’t serious philanthropists and/or haven’t reflected a lot on their giving—is that they are malleable and not as zero-sum.
i think with donors likely to give to ea causes, a lot of them haven’t really been stewarded & cultivated and there probably is a lot of room for them to increase their giving.
Well i think that’s the point of the post to debate this! And i think there are relevant trade offs in regards to maintaining the impact of the organisations which are seeking to diversify funds that aren’t usually considered so maybe “far more counterfactually” seems too strong.
I think there’s an important nuance here regarding what truly constitutes a ‘healthy sanity check’ when it comes to funding. Simply having a non-EA funder interested in your project doesn’t necessarily validate its impact. For instance, if a funder’s motivation is based on personal affinity, like finding the team charming or being impressed by the organization for non-impact reasons, this might not confirm that the project is the best use of resources.
To me, a real sanity check comes from the support of funders who prioritize impact and apply a high bar to their investments. If a highly discerning funder with a strong emphasis on impact independently chooses to support the project, regardless of whether you accept their funding or not, that’s a stronger endorsement than diversification for its own sake.
Yes I would probably agree with all that. I think the endorsement is stronger from an EA donor and that’s great, but the end value of the money itself seems more likely to be far stronger from a non aligned donor.
Yes, reasonable points. I do think that there is a mediating size variable here. E.g., for organizations with sub-$1m budgets, having the knowledge that others would/could donate if you need it might be more optimal than diversifying, due to the time costs of doing so. I do think the x2 time is a lower bound, as some funders might take ~x10 more time, and you are more likely to put up with them if you are seeking diversification.
Great post!
I think one other major complications of funder diversification is managing multiple competing interests. So in some ways it’s great to have more funders so you aren’t reliant on them to agree with all of your strategic choices but you can just do the most impactful thing and get one of the funders to back it but sometimes that also works in the opposite way with funding diversity. I think this is less the case for AIM as you are more established, but in the early stages of funding diversification there aren’t actually that many EAA funders to chose from, people often argue that its a higher counterfactual to have non EA funders but on the flip side you then have to manage those funders priorities and if they are less EA they often want you to invest more in a less impactful thing in order to fund you. So being that the funding options are so small in the EAA movement I’m not sure that funder diversification nets out as positive for all organisations or that we should all strive for it.
<< Needing more than one funder provides a healthy sanity check on if the project is really the best use of funds>> Also to this point… doesn’t it heavily depend on the funder? If the funder isn’t impact driven I’m not sure it’s a great sign they want to fund you?
Additionally less important but it also takes up much more time to report and communicate with non EA donors. For us for example they don’t care or understand ICAPs (fair enough) so then you have to spend time translating your work to what they care about. I think this is fine but it’s a bit more of a time sink when they care about things that you don’t actually think are important to track in regards to impact eg vanity metrics.
I do however firmly agree with this your point on increasing funding in itself not being an aspirational goal and wish more organisations would be firmer with capping their funding goals if they will likely decrease their impact per dollar significantly consistently in the future, particularly in contrast to other organisations. So I agree with the conclusion but perhaps not that funding diversification is a prerequisite for it. Is it not possible that organisations can just reject funding over a certain amount regardless of funding diversification?
Expanding acronyms for readers who might not know them:
EAA: Effective Animal Advocacy
ICAPs: Importance and Counterfactuals-Adjusted Placements, an Animal Advocacy Careers specific metric
A funder who isn’t impact driven could be the best funder of all! The “cost” of funding—in terms of good that wasn’t done because the funder didn’t donate to the next organization on their list—may be low, zero, or in rare cases even negative.
I think people model this in theory more often than it happens in practice. Three reasons why:
The total funding pie is pretty fixed; I expect it to be quite rare to grow it.
It could be that the next org on the list is much worse, but normally, if they are funding something effective, there is a non-random reason they came to the top of the list. I think it’s more common that a funder has different values—e.g., they are supporting global health and mental health, and you have a strong view that the one you are working on is significantly better (of course, someone working on the other would say the opposite). But I think that seems a bit immodest/morally presumptuous to then treat this counterfactual as massively different based on a pretty debatable value call.
You could, in fact, recommend your funding to go somewhere else with high EV (thus making the counterfactual higher). E.g., if someone says, “I like AIM, I want to give it $1m,” and I say, “Sorry, we have no room for funding, but have you considered X charity? It is also really good and hits similar ground.” This is not possible in every fundraising situation, but it is doable, and if I know an opportunity that I think is $-for-$ better than AIM, I have been pretty successful at redirecting funding that would go to AIM there.
Could you say more on how you came to this conclusion?
Mostly basing this on the macro data I have seen that seems to suggest giving as a % of GDP has stayed pretty flat year to year (~2%).
Oh interesting. I want to dig into this more now, but my impression is that an individual’s giving portfolio—both major donors & retail donors, but more so people who aren’t serious philanthropists and/or haven’t reflected a lot on their giving—is that they are malleable and not as zero-sum.
i think with donors likely to give to ea causes, a lot of them haven’t really been stewarded & cultivated and there probably is a lot of room for them to increase their giving.
A hundred percent true. Less “impact driven” funders money is likely far more counterfactually valuable than that of an impact driven funder.
Well i think that’s the point of the post to debate this! And i think there are relevant trade offs in regards to maintaining the impact of the organisations which are seeking to diversify funds that aren’t usually considered so maybe “far more counterfactually” seems too strong.
I think there’s an important nuance here regarding what truly constitutes a ‘healthy sanity check’ when it comes to funding. Simply having a non-EA funder interested in your project doesn’t necessarily validate its impact. For instance, if a funder’s motivation is based on personal affinity, like finding the team charming or being impressed by the organization for non-impact reasons, this might not confirm that the project is the best use of resources.
To me, a real sanity check comes from the support of funders who prioritize impact and apply a high bar to their investments. If a highly discerning funder with a strong emphasis on impact independently chooses to support the project, regardless of whether you accept their funding or not, that’s a stronger endorsement than diversification for its own sake.
Yes I would probably agree with all that. I think the endorsement is stronger from an EA donor and that’s great, but the end value of the money itself seems more likely to be far stronger from a non aligned donor.
Yes, reasonable points. I do think that there is a mediating size variable here. E.g., for organizations with sub-$1m budgets, having the knowledge that others would/could donate if you need it might be more optimal than diversifying, due to the time costs of doing so. I do think the x2 time is a lower bound, as some funders might take ~x10 more time, and you are more likely to put up with them if you are seeking diversification.