I believe that GiveWell/OpenPhil often try to avoid providing over 50% of a charity’s funding to avoid fragility / over-reliance.
Holden Karnofsky clarified on the 80,000 Hours podcast that Open Phil merely feels nervous about funding >50% of an organizations budget (and explained why), but often does fund >50% anyway.
Is an upshot of that view that personal small donations are effectively matched 1:1?
Holden thinks that there is some multiplier there, but it’s less than 1:1:
And I do think there is some kind of multiplier for people donating to organizations, there absolutely is, and that’s good. And you should donate to EA organizations if you want that multiplier. I don’t think the multiplier’s one-to-one, but I think there’s something there.
Full excerpt:
Rob Wiblin: A regular listener wrote in and was curious to know where Open Phil currently stands on its policy of not funding an individual organization too much, or not being too large a share of their total funding, because I think in the past you kind of had a rule of thumb that you were nervous about being the source of more than 50% of the revenue of a nonprofit. And this kind of meant that there was a niche where people who were earning to give could kind of effectively provide the other 50% that Open Phil was not willing to provide. What’s the status of that whole situation?
Holden Karnofsky: Well, it’s always just been a nervousness thing. I mean, I’ve seen all kinds of weird stuff on the internet that people… Games of telephone are intense. The way people can get one idea of what your policy is from hearing something from someone. So I’ve seen some weird stuff about it “Open Phil refuses to ever be more than 50%, no matter what. And this is becoming this huge bottleneck, and for every dollar you put in, it’s another dollar…” It’s like, what? No, we’re just nervous about it. We are more than 50% for a lot of EA organizations. I think it is good to not just have one funder. I think that’s an unhealthy dynamic. And I do think there is some kind of multiplier for people donating to organizations, there absolutely is, and that’s good. And you should donate to EA organizations if you want that multiplier. I don’t think the multiplier’s one-to-one, but I think there’s something there. I don’t know what other questions you have on that, but it’s a consideration.
Rob Wiblin: I mean, I think it totally makes sense that you’re reluctant to start approaching the 100% mark where an organization is completely dependent on you and they’ve formed no other relationships with potential backup supporters. They don’t have to think about the opinions of anyone other than a few people that Open Phil. That doesn’t seem super healthy.
Holden Karnofsky: Well, not only do they… I mean, it’s a lack of accountability but it’s also a lack of freedom. I think it’s an unhealthy relationship. They’re worried that if they ever piss us off, they could lose it and they haven’t built another fundraising base. They don’t know what would happen next, and that makes our relationship really not good. So it’s not preferred. It doesn’t mean we can never do it. We’re 95% sometimes.
Rob Wiblin: Yeah, it does seem like organizations should kind of reject that situation in almost any circumstance of becoming so dependent on a single funder that to some extent, they’re just… Not only is the funder a supporter, but they’re effectively managing them, or you’re going to be so nervous about their opinions that you just have to treat them as though they were a line manager. Because you know so much more about the situation than the funder probably does, otherwise they would be running the organization. But accepting that, so you’re willing to fund more than 50% of an organization’s budget in principle?
Holden Karnofsky: Yeah.
Rob Wiblin: But you get more and more reluctant as they’re approaching 100%. That does mean that there is a space there for people to be providing the gap between what you’re willing to supply and 100%. So maybe that’s potentially good news for people who wanted to take the earning to give route and were focused on longtermist organizations.
Holden Karnofsky: Yeah, and I think the reason it’s good news is the thing I said before, which is that it is good for there not to just be one dominant funder. So when you’re donating to EA organizations, you’re helping them have a more diversified funding base, you’re helping them not be only accountable to one group, and we want that to happen. And we do these fair-share calculations sometimes. So we’ll kind of estimate how much longtermist money is out there that would be kind of eligible to support a certain organization, and then we’ll pay our share based on how much of that we are. And so often that’s more like two thirds, or has been more like two thirds than 50%. Going forward it might fall a bunch. So I mean, that’s the concept. And I would say it kind of collapses into the earlier reason I gave why earning to give can be beneficial.
I think this dynamic has sometimes applied in the past.
However, Open Philanthropy are now often providing 66%, and sometimes 100%, so I didn’t want to mention this as a significant benefit.
There might still be some leverage in some cases, but less than 1:1. Overall, I think a clearer way to think about this is in terms of the value of having a diversified donor base, which I mention in the final section.
There might still be some leverage in some cases, but less than 1:1.
If they have a rule of providing 66% of a charity’s budget, surely donations are even more leveraged? $1 to the charity unlocks $2.
Of course, this assumes that additional small donations to the charity will counter-factually unlock further donations from OpenPhil, which is making some strong assumptions about their decision-making
That’s fair—the issue is there’s a countervailing force in that OP might just fill 100% of their budget themselves if it seems valuable enough. My overall guess is that you probably get less than 1:1 leverage most of the time.
I believe that GiveWell/OpenPhil often try to avoid providing over 50% of a charity’s funding to avoid fragility / over-reliance.
Is an upshot of that view that personal small donations are effectively matched 1:1?
I.e. Suppose AMF is 50% funded by GiveWell, when I give AMF $100, I’m allowing GiveWell to give another $100 without exceeding the threshold.
Curious if anyone could corroborate this guess.
Holden Karnofsky clarified on the 80,000 Hours podcast that Open Phil merely feels nervous about funding >50% of an organizations budget (and explained why), but often does fund >50% anyway.
Holden thinks that there is some multiplier there, but it’s less than 1:1:
Full excerpt:
I think this dynamic has sometimes applied in the past.
However, Open Philanthropy are now often providing 66%, and sometimes 100%, so I didn’t want to mention this as a significant benefit.
There might still be some leverage in some cases, but less than 1:1. Overall, I think a clearer way to think about this is in terms of the value of having a diversified donor base, which I mention in the final section.
If they have a rule of providing 66% of a charity’s budget, surely donations are even more leveraged? $1 to the charity unlocks $2.
Of course, this assumes that additional small donations to the charity will counter-factually unlock further donations from OpenPhil, which is making some strong assumptions about their decision-making
That’s fair—the issue is there’s a countervailing force in that OP might just fill 100% of their budget themselves if it seems valuable enough. My overall guess is that you probably get less than 1:1 leverage most of the time.