Small donors have played a valuable role by providing seed funding to new projects in the past. They can often fund promising projects that larger donors like OpenPhil can’t because they have special knowledge of them through their personal networks and the small projects aren’t established enough to get through a large donor’s selection process. These donors therefore act like angel investors. My concern with the EA fund is that:
By pooling donations into a large fund, you increase the minimum grant that it’s worth their time to make, thus making it unable to fund small opportunities
By centralising decision-making in a handful of experts, you reduce the variety of projects that get funded because they have more limited networks, knowledge, and value variety than the population of small donors.
Also, what happened to EA Ventures? Wasn’t that an attempt to pool funds to make investments in new projects?
Thanks a lot for the feedback. I work at CEA on the EA Funds project. My thoughts are below although they may not represent the views of everyone at CEA.
Funding new projects
I think EA Funds will improve funding for new projects.
As far as I know small donors (in the ~$10K or below range) have traditionally not played a large role in funding new projects. This is because the time it takes to evaluate a new project is substantial and because finding good new projects requires developing good referral networks. It generally doesn’t make sense for a small donor to undertake this work.
Some of the best donors I know of at finding and supporting new projects are private individuals with budgets in the hundreds of thousands or low millions range. For these donors, it makes more sense to do the work required to find new projects and it makes sense for the projects to find these donors since they can cover a large percentage of the funding need. I think the funds will roughly mimic this structure. Also, I think Nick Beckstead has one of the better track records at helping to get early-stage projects funded and he’s a fund manager.
Donor centralization
I agree with this concern. I think we should aim to not have OpenPhil program officers be the only fund managers in the future and we should aim for a wider variety of funds. What we have now represents the MVP, not the long-term goal.
EA Ventures
I was in charge of EA Ventures and it is no longer in operation. The model was that we sourced new projects and then presented them to our donors for potential funding.
We shut down EA Ventures because 1) the number of exciting new projects was smaller than we expected; 2) funder interest in new projects was smaller than expected and 3) opportunity cost increased significantly as other projects at CEA started to show stronger results.
My experience at EA Ventures updated me away from the view that there are lots of promising new projects in need of funding. I now think the pipeline of new projects is smaller than would be idea although I’m not sure what to do to solve this problem.
Just to give a perspective from the ‘other’ (donor) side:
I was excited about EA Ventures, partly because of the experimental value (both as an experiment in itself, and it’s effect on encouraging other people to experiment). I also agreed with the decision to cease operation when it did, and I think Kerry’s read of the situation basically concurs with my own experience
Also, as Kerry said, I think a large part of what happened here was that “the best projects are often able to raise money on their own without an intermediary to help them”. At the time EA Ventures was running, EA was (and may still be) a close-enough community that I was finding out about several of the opportunities EAV was presenting via my own network, without EAV’s help. That’s not at all to say EAV was providing zero value in those cases since they were also filtering/evaluating, but it meant that the most promising charity (in my opinion) that I heard about via EAV was something I was already funding and keen to continue to fund up to RFMF/percentage-of-budget constraints.
I think I was confused by ‘small donor’ - I was including in that category friends who donate £50k-£100k and who fund small organisations in their network after a lot of careful analysis. If the fund is targeted more at <$10k donors that makes sense.
OpenPhil officers makes sense for MVP.
On EA Ventures, points 1 and 2 seem particularly surprising when put together. You found too few exciting projects but even they had trouble generating funder interest? So are you saying that even for high-quality new projects, funder interest was low, suggesting risk-aversion? If so, that seems to be an important problem to solve if we want a pipeline of new potentially high-impact projects.
On creating promising new projects, myself and Michael Peyton Jones have been thinking a lot about this recently. This thinking is for the Good Technology Project—how can we create an institution that helps technology talent to search for and exploit new high-social-impact startup opportunities. But a lot of our thinking will generalise to working out how to help EA get better at exploration and experimentation.
“On EA Ventures, points 1 and 2 seem particularly surprising when put together. You found too few exciting projects but even they had trouble generating funder interest?”
This isn’t surprising if the model is just that new projects were uniformly less exciting than one might have expected: there were few projects above the bar for ‘really cool project’, and even they were only just above the bar, hence hard to get funding for.
Part of the problem is that the best projects are often able to raise money on their own without an intermediary to help them. So, even if there are exciting projects in EA, they might not need our help.
As far as I know small donors (in the ~$10K or below range) have traditionally not played a large role in funding new projects.
While this is not enough to contradict your point and while I agree the general process of small donor fundraising is inefficient, I think it is worth noting a single counterexample I know of—the Local Effective Altruism Network raised $65K for its 2016 chapter building initiatives entirely from donors donating under $15K each with many donors donating under $1K.
Small donors have played a valuable role by providing seed funding to new projects in the past. They can often fund promising projects that larger donors like OpenPhil can’t because they have special knowledge of them through their personal networks and the small projects aren’t established enough to get through a large donor’s selection process. These donors therefore act like angel investors. My concern with the EA fund is that:
By pooling donations into a large fund, you increase the minimum grant that it’s worth their time to make, thus making it unable to fund small opportunities
By centralising decision-making in a handful of experts, you reduce the variety of projects that get funded because they have more limited networks, knowledge, and value variety than the population of small donors.
Also, what happened to EA Ventures? Wasn’t that an attempt to pool funds to make investments in new projects?
Hi Richard,
Thanks a lot for the feedback. I work at CEA on the EA Funds project. My thoughts are below although they may not represent the views of everyone at CEA.
Funding new projects
I think EA Funds will improve funding for new projects.
As far as I know small donors (in the ~$10K or below range) have traditionally not played a large role in funding new projects. This is because the time it takes to evaluate a new project is substantial and because finding good new projects requires developing good referral networks. It generally doesn’t make sense for a small donor to undertake this work.
Some of the best donors I know of at finding and supporting new projects are private individuals with budgets in the hundreds of thousands or low millions range. For these donors, it makes more sense to do the work required to find new projects and it makes sense for the projects to find these donors since they can cover a large percentage of the funding need. I think the funds will roughly mimic this structure. Also, I think Nick Beckstead has one of the better track records at helping to get early-stage projects funded and he’s a fund manager.
Donor centralization
I agree with this concern. I think we should aim to not have OpenPhil program officers be the only fund managers in the future and we should aim for a wider variety of funds. What we have now represents the MVP, not the long-term goal.
EA Ventures
I was in charge of EA Ventures and it is no longer in operation. The model was that we sourced new projects and then presented them to our donors for potential funding.
We shut down EA Ventures because 1) the number of exciting new projects was smaller than we expected; 2) funder interest in new projects was smaller than expected and 3) opportunity cost increased significantly as other projects at CEA started to show stronger results.
My experience at EA Ventures updated me away from the view that there are lots of promising new projects in need of funding. I now think the pipeline of new projects is smaller than would be idea although I’m not sure what to do to solve this problem.
Just to give a perspective from the ‘other’ (donor) side:
I was excited about EA Ventures, partly because of the experimental value (both as an experiment in itself, and it’s effect on encouraging other people to experiment). I also agreed with the decision to cease operation when it did, and I think Kerry’s read of the situation basically concurs with my own experience
Also, as Kerry said, I think a large part of what happened here was that “the best projects are often able to raise money on their own without an intermediary to help them”. At the time EA Ventures was running, EA was (and may still be) a close-enough community that I was finding out about several of the opportunities EAV was presenting via my own network, without EAV’s help. That’s not at all to say EAV was providing zero value in those cases since they were also filtering/evaluating, but it meant that the most promising charity (in my opinion) that I heard about via EAV was something I was already funding and keen to continue to fund up to RFMF/percentage-of-budget constraints.
Thanks, that clarifies.
I think I was confused by ‘small donor’ - I was including in that category friends who donate £50k-£100k and who fund small organisations in their network after a lot of careful analysis. If the fund is targeted more at <$10k donors that makes sense.
OpenPhil officers makes sense for MVP.
On EA Ventures, points 1 and 2 seem particularly surprising when put together. You found too few exciting projects but even they had trouble generating funder interest? So are you saying that even for high-quality new projects, funder interest was low, suggesting risk-aversion? If so, that seems to be an important problem to solve if we want a pipeline of new potentially high-impact projects.
On creating promising new projects, myself and Michael Peyton Jones have been thinking a lot about this recently. This thinking is for the Good Technology Project—how can we create an institution that helps technology talent to search for and exploit new high-social-impact startup opportunities. But a lot of our thinking will generalise to working out how to help EA get better at exploration and experimentation.
“On EA Ventures, points 1 and 2 seem particularly surprising when put together. You found too few exciting projects but even they had trouble generating funder interest?”
This isn’t surprising if the model is just that new projects were uniformly less exciting than one might have expected: there were few projects above the bar for ‘really cool project’, and even they were only just above the bar, hence hard to get funding for.
This is my read on what happened.
Part of the problem is that the best projects are often able to raise money on their own without an intermediary to help them. So, even if there are exciting projects in EA, they might not need our help.
While this is not enough to contradict your point and while I agree the general process of small donor fundraising is inefficient, I think it is worth noting a single counterexample I know of—the Local Effective Altruism Network raised $65K for its 2016 chapter building initiatives entirely from donors donating under $15K each with many donors donating under $1K.