What would you do if you had half a million dollars?

Patrick17 Jul 2021 16:18 UTC
107 points
52 commentsEA link

I won the 2020/​2021 $500,000 donor lottery. I’m interested in maximizing my positive impact on the long-term future, and I thought it would be helpful to elicit thoughts from the effective altruism community about how best to do this.

In this post I outline the high-level options I’m considering. (I wrote more about the options that readers may be less familiar with.) If you’d like to share your opinion, please fill out this short survey. I’m most interested in

  • whether I failed to mention any considerations that would make one option much worse or much better, and

  • your subjective opinion about how good each option is.

Donate directly to charities

Previous donor-lottery winners who have written about their donation decisions have given directly to charities rather than to re-granting organizations (see here, here, and here[1]). But my impression is that I don’t have sufficient local knowledge or relevant expertise that would give me an advantage over existing longtermist grantmakers. This could change if I were to invest a lot of time into discovering donation opportunities. Having more effort put into discovery and evaluation of EA funding opportunities would be valuable. But grant evaluation that’s sufficiently well-informed would require both getting up to speed as a grant evaluator and evaluating the grants themselves, and this would be a lot of work.

Long-Term Future Fund (LTFF)

The Long-Term Future Fund gives out small grants (typically less than $100k), usually to individuals. Its managers also consider making larger grants to organizations, though these account for a minority of their grantmaking. In the last funding round, six people worked part-time on evaluating grant applications, with the Centre for Effective Altruism providing additional support. They say they have room for more funding:

We anticipate being able to spend $3–8 million this year (up from $1.4 million spent in all of 2020). To fill our funding gap, we’ve applied for a $1–1.5 million grant from the Survival and Flourishing Fund, and we hope to receive more funding from small and large longtermist donors. [source]

They plan to add more fund managers so that they can evaluate more grants.

Longview Philanthropy

Longview Philanthropy advises large donors (primarily those who give $1 million or more per year). Though the LTFF and Longview each give both to organizations and to individuals, Longview tends to give relatively more grants to organizations and fewer to individuals. Another difference is that the LTFF has a high volume of grant applications that it evaluates quickly, whereas Longview does fewer, more in-depth grant investigations. Finally, the LTFF publishes its grant evaluations publicly, but Longview shares information about its grant decisions with only its donors and other grantmakers. (Because of its focus on large donors, communicating this information publicly is less valuable.)

If I were to give to Longview, the donation would go to their recently created general-purpose fund. This fund has some advantages over Longview’s other grantmaking:

  • Longview can better take advantage of time-sensitive giving opportunities, such as funding that would affect hiring decisions. (Job candidates may not be willing to wait for weeks or months for funding to come through.)

  • Grantees would have increased certainty about funding, which would help with planning.

Longview currently has one full-time staff member, Kit Harris, whose primary focus is grantmaking (there are plans to hire more full-time grantmakers); four other staff members are also involved in the grantmaking process, and Longview has recently hired four part-time research assistants. Longview is in regular contact with people working at related organizations such as Open Philanthropy (see a partial list of Longview’s advisers here).

Effective Altruism Infrastructure Fund

I think effective altruism is probably good, so it could make sense to support it financially. Here’s the write-up of the grants made since the EA Infrastructure Fund’s management was replaced. They say they have room for more funding:

We expect that we could make valuable grants totalling $3–$6 million this year. The fund currently holds around $2.3 million. This means we could productively use $0.7–$3.7 in additional funding above our current reserves, or $0–$2.3 million (with a median guess of $500,000) above the amount of funding we expect to get by default by this November. [source]

This is a smaller shortfall than that of the LTFF, and the median guess matches the amount I’m giving away.

Like the LTFF, the EA Infrastructure Fund plans to add more fund managers.

Patient Philanthropy Fund (PPF)

The Patient Philanthropy Fund is under development and will likely be launched later this year. It will be incubated by Founders Pledge, but if it’s successful it’ll be spun out into its own organization. The fund would invest its money, potentially for centuries, before disbursing it. This article lists some advantages of the approach:

In brief, we currently see three main potential ways in which investing to give later may be better than giving now:

  1. By exploiting the pure time preference in the market, i.e. that non-patient people are willing to sell the future (and especially the long-term future) cheaply

  2. By exploiting the risk premium in the market, to the extent that longtermist altruists should price risks differently to the market

  3. By giving us more time to learn and get better at identifying high-impact giving opportunities to benefit the long term

This article goes into more detail. Additional benefits of a patient-philanthropy fund include

  • The fund could act as insurance against the possibility of longtermist giving—currently concentrated in a few large donors—declining in the future. (There’s a countervailing consideration—perhaps less important, though more likely—which is that the funding space could become more crowded, diminishing the value of future donations.)

  • The fund could access investment strategies that might offer the potential for higher expected returns, such as hedge funds, private equity, or leverage. (This would be worth doing only if the fund had enough money for the additional returns to be worth the cost of managing a more-complex investment strategy.)

It seems plausibly good for such a fund to exist, but some people believe that greater returns are to be had by spending money now (see here). I myself lean toward the view that now is an unusually good time to give, but I think there’s a reasonable chance that a long-term investment fund would be better.

Even if the general idea of investing to give later isn’t the best use of these funds, donating to help get the PPF off the ground could still be. This is because (1) the idea might appeal to people (especially in the Founders Pledge community) who would otherwise not give to the highest-impact longtermist causes, (2) creating such a fund would require dealing with a number of legal and practical challenges, which could pave the way for future giving in this vein, and (3) the existence of the fund would help advance discussion about this approach to patient philanthropy—it would become a real rather than a merely theoretical option for giving.

So if I thought a donation would significantly boost the fund’s chances of attracting more donations, I would lean toward supporting it with at least a portion of the donor-lottery funds. There are two ways I could leverage them to help get the PPF off the ground: I could be part of the pre-launch commitments, or I could pledge the money as part of a post-launch matching pool.

Invest the money and wait a few years

I directed CEA to invest the lottery funds in diversified equity mutual funds.[2] In a few years, I’ll know more and the stock market will be higher (in expectation). Many of the considerations regarding the Patient Philanthropy Fund also apply to this option. (Continuing to hold the donor-lottery money in investments at CEA would preserve flexibility in where to donate, but the Patient Philanthropy Fund could have access to investment expertise and strategies not available to CEA and could plausibly generate higher returns.)

Pay someone to help me decide

Five hundred thousand dollars is enough money that it could be worthwhile to pay someone to research the question of where to give the money. A problem with this approach is that the most-qualified people are busy with other things, and finding and managing the right person would be a significant undertaking in itself. But if I could find someone qualified and willing to take on this task, this would increase the grant-evaluation capacity of effective altruism.

If you’re potentially interested in such an arrangement, please email me (pbrinichlanglois@gmail.com) or indicate your interest in the survey.

Something else

Option X. The dark horse. Something out of left field.

Perhaps there’s something I should be considering besides what’s listed above.

Conclusion

If you read this far, I would greatly appreciate hearing your thoughts through this brief survey. Also feel free to comment below or email me at pbrinichlanglois@gmail.com.

Acknowledgements

Thanks to Ozzie Gooen, who had the idea for this article and provided feedback about it.

  1. ↩︎

    The last of these comprised two grants to the Good Food Institute, which does give out grants. But I wouldn’t put this into the same category as the EA Funds or Longview Philanthropy, since (1) grants account for a minority of GFI’s budget, and (2) GFI is pursuing a specific strategy (accelerating the development of meat alternatives) to the broader problem of animal welfare.

  2. ↩︎

    I think that having donor-lottery funds invested in a diversified portfolio of global equities should be the default. CEA can easily invest in Vanguard’s mutual funds. About three months passed between my winning the lottery and the funds being invested, mostly because I procrastinated. If the average donor-lottery winner donates the money after a year, keeping the funds in equities instead of a bank account would increase the expected amount of money donated by tens of thousands of dollars.

Patrick17 Jul 2021 16:18 UTC
107 points
52 commentsEA link