Salary Sacrifices Are Donations. Let’s Treat Them as Such.
TLDR
NGOs pay less than for-profits.
Employees accept this because they have impact.
This makes employees implicit donors to the NGOs
NGOs should account for this in cost-effectiveness calculations
This is a coordination problem and can only be solved as a movement
Salary sacrifice is more tax-efficient than donating the money
This would make finding talent for pressing problems much easier
It is a problem EA is uniquely positioned to solve
In this post, I use “salary sacrifice” informally to mean voluntarily accepting compensation below one’s market alternative. I do not mean the formal payroll or tax arrangement called “salary sacrifice” in some jurisdictions.
Measuring impact
How do you measure your impact of working at an NGO? You could try analyzing your replaceability, but that’s hard and pretty contested. Or you could just look at the “input”—donations vs the “output”—impact, and divide it up.
For example: Let’s assume the Against Malaria Foundation managed to save one life. They did this with EUR 3000 donations raised. From those donations they paid salaries, bednets, research and evaluation.
The Against Malaria Foundation “sells” that impact to their donors. As a donor, you can “buy” one life saved for EUR 3000. AMF then pays their staff and suppliers to “produce” that life saved. What’s the impact of the employees?
I’d argue that if they would pay their employees a competitive for-profit salary in this case, the employee’s share of the input is 0. Maybe they aren’t motivated by impact, that’s why they took the full salary. They just “do their job” and produce value for their employer.
Of course that’s not the case in reality. In reality the employees often work for less. Maybe they took a paycut equal to EUR 100 for this life saved, then their “share” of this life in this case would be 100⁄3000 = 3%.
Implications for cost effectiveness analyses
In the example above the AMF employee gets 3% of the impact, but that means that the donor only gets 97%. Yet we sold the donor on the idea that they get the full life. This might seem small but it could impact decision making for donors.
Take, for example, two fictitious animal welfare charities: One is using AI to create social media campaigns, the other uses a lot of volunteers to create social media content. Both create the same outcome − 1000 chickens saved, for the same donations—EUR 1000.
With the lens suggested here, the donor to the AI charity should get the full 1000 chickens saved attributed while in the case of the volunteer-run one, the donor only gets maybe 500 chickens attributed. So the donor should donate to the AI charity. This is good, because it incentivises the volunteers to find other opportunities where their volunteer work can create impact that can’t be had with AI, for example with in person campaigns.
This is a coordination problem
I’ve recently talked with a charity founder: Their cost effectiveness was lower than that of their “competitor” because their competitor paid themselves a lower salary. This is a race to the bottom that is unhealthy for the movement.
I’d love for the EA movement to find a way to benchmark salaries to industry standards, and then make it voluntary and optional for employees to decide how much of that to “donate back” to the charity. This would have lots of advantages
It would attract talent that otherwise would’ve been inaccessible because that talent wouldn’t have been willing to take as big of a sacrifice.
It would allow less privileged groups to join the charity world that otherwise just wouldn’t have the means to take paycuts like this.
It would give employees a tangible measure to estimate how much impact they are having with their job.
It would avoid discussions like here whenever NGOs decide to pay market-rate salaries
The problem is, of course, that this can’t be done by one charity alone. This would negatively impact their cost effectiveness when compared to others. Best thing to try probably is for large donors to start requiring this from their charities and thereby change the standard. For that the donors need to accept that their reported impact will go down.
First steps are being made. For example, 80,000 hours lists salary sacrifice from their employees on their website for those that decide to give beyond the sacrifice made by everybody already because they are pegged to NGO benchmarks.
Salary sacrifices are tax efficient
One might ask: If we start offering employees for-profit-like salaries, why would they then donate that to their own charity? They could donate it somewhere where it has a higher marginal impact, or even keep it.
On the one hand, that doesn’t matter, because it won’t make a difference for the cost effectiveness analysis of the charity towards their donors, that’s the whole point.
On the other hand, salary sacrifices are actually pretty tax efficient:
Because your sacrificed income never makes it to payroll, you can give tax-free more than your country’s tax-free cap would allow.
You also automatically “donate” the employer overhead cost (social security, pension, …), but of course then will have less pension.
Check for your local jurisdiction. For UK-based gift-aid for example the story might be a bit different.
What does this mean for career choice?
If the contribution of an employee at an NGO is simply their sacrificed salary, can’t they then just earn to give and have more impact? I would say they totally should. If they have a comparably better personal fit there.
Salary should be a rough guide for where your skills can contribute the most, and if we would use market-rate salaries for NGOs, this would increase signal even more.
So far, organizations like 80,000 hours, High Impact Professionals, and others had to solve a dual-problem: Find the best talent for the most pressing problems and make sure they are willing to take pay cuts. That’s an unnecessarily hard combination.
If we would start paying market rates (which can be very very high for in demand AI jobs or biorisk jobs), we could split these efforts into two: Find the best talent for the biggest problems, not matter their motivations, and motivate everybody to give, no matter their talents.
What’s there to lose?
We are selling to donors more impact than what they are getting for their money by not including salary sacrifices. But that’s what everybody is used to now. “Marking down” the impact is a hard sell.
But EA is a not an average donor community. We strive on estimation and attribution and if there is one that could fix this quantification gap, it’s us. I’d love to see more discussion on this, also happy to be proven wrong of course!
I completely understand your point, but as a donor I have to say I’m considerably more likely to give when I feel that people in the organisation accept lower salaries because they genuinely believe in the cause. When I read, for example, that Marcus Abramovitch has donated 60% of his lifetime earnings and is now managing the Manifund Falcon fund without taking any salary, my immediate reaction was: this person is not in it for the money, and I trust him to make the most of my donation.
If you need to pay more to attract talent, that’s fine but I don’t think it’s particularly effective to pay more than necessary just to match market salaries.
That said, I do think a pledge should count as fulfilled if someone accepts a significantly below-market salary while working for a highly effective charity.
Hi Hans, I appreciate this a lot. I just feel i should say, I am by no means poor. I dont spend much money but I have some investments (private and public) that have done really well and job offers that make me confident ill be fine no matter what. My worst case scenario is I do some boring market making or investment banking.
Well, I already assumed you weren’t poor when 1.5 million was 60% of your earnings. But there are people who made much more and gave far less. My point is that as a donor, it’s hard to see how effective an organisation really is. So the fact that you believe in it enough to work without getting paid just makes me feel more confident that my money is being put to good use.
Thanks for doing this!
Thanks for your thoughts!
I think what I am proposing here is perfectly compatible with your requirement as a donor: We can make it the norm to pay market salaries but then you as a donor can still say you only donate to charities where the founder or staff donate a significant fraction of that salary back to the charity with salary sacrifices. That’s a bit like the common for-profit equivalent for investors to want founders to have “skin in the game” by having equity.
Let’s take Marcus’ example (please correct me if I am making wrong assumptions here!): Marcus’ fund will turn donations into impact by regranting. As a donor to the fund, you only get a “cut” of that impact because the fund did some work (research, payment processing, …). As a donor to the fund I am happy to give them a cut because it saves me time. How big is the cut? I think the foregone salary by Marcus (and potentially other staff) are a good estimate for this. That’s why we should model his foregone salary has an implicit donor to the fund and divide the fund impact by all the donations, including his foregone salary. I hope this is making sense!
For this to work, those donations would need to be made public which presumably creates considerable pressure on staff who feel compelled to give simply to avoid deterring donors. I can’t see such a system ever gaining traction in the European Union, given how seriously we take privacy, though it might function well in cultures with different norms around financial transparency.
It makes perfect sense mathematically. Whether it would be a wise marketing strategy is another question. Telling donors that overhead is only 5% because the fund manager forgoes a salary is a far more compelling pitch than saying overhead is 7.31% but the fund manager donates 2.31% of it back. (The numbers are purely illustrative, of course.)
Not sure if we’d have to make all donation public. But in the example of Marcus, he did that, he publicly stated that he is not taking salary. Your original claim was you prefer to donate to charities where you know that people take a low salary. The only way to know this is for this to be public.
For this to work we’d only need to know total market-equivalent salaries and total “donated” fraction of this. Doesn’t have to be per-staff. This is not very different from the overhead reporting right now and should be possible with privacy laws.
Re marketing: I agree that this differnt view of looking at impact is a bit harder to get across initially but it could eventually be much cleaner: It allows to give a “mathematical” quantifiable view on what “split” of the impact I am getting as a donor. At least in this community, that’s something people want I think.
I guess you could align your proposals with European privacy laws, but it would never be truly private, especially in a small charity.
It was not a claim but a statement of fact. I’m not saying it’s the right thing to do. It’s just that when I hear a story like Markus’s, or when I have dinner with the management of Sea Shepherd Global and learn that they all sleep on volunteers’ couches while on an official mission because they wouldn’t want to use any donor money on a hotel room it inspires me, and I want to give. When I hear that a COO of the Centre for Effective Altruism earns $227,461, I may understand it intellectually, but it just doesn’t inspire me at all.
There will always be some information about salaries available. When charities have to hire people in many countries, they are required to state how much they will pay and people are always free to share how much they earn if they wish to do so. Information about donations seems to be more worthy of protection to some people. The view that donating publicly is in some way “unpure” because the people doing it are acting in their own interest, i.e. to look good is surprisingly common. I have heard this many times when people were talking about celebrities and what they donated.
It might also be an issue for Christians. Matthew 6:1–4 says:
I don’t hold these views, quite the contrary. I think one should talk about one’s own commitment in order to motivate others, and perhaps this simply isn’t an issue in EA charitys. I just wanted to mention it as something worth considering.
Yes, I agree about the inspiring vs non-inspiring feelings and how this has impact.
I still feel there must be a way to flip this somehow and find a way to assign and recognise impact and contributions that feels motivating and uplifiting to everybody, but maybe that’s for another post haha
Thanks for taking the time to write these comments, really appreciate it!
I feel it would be interesting, but not necessarily uplifting, to estimate how much the EA community spends on any given intervention. Let’s return to your Atlantic Shepherd example. Sea Shepherd is one of those classic charities that handles everything in-house from fundraising and awareness-raising to carrying out the actual anti-poaching interventions. The charities typically recommended by EAs, on the other hand, externalise a great deal of their costs.
Imagine we set up “Atlantic Shepherd” as an EA charity. Before it ever received funding, an organisation like Rethink Priorities would likely have helped make the case for ocean interventions. Grantmakers would have supported them in getting started. Animal Charity Evaluators would assess them. Several other charities would recommend them. The 80,000 Hours podcast would feature them. And then there are all the charities working on building the EA community itself, as well as those raising funds on Atlantic Shepherd’s behalf. All of these organisations have spent real resources advancing the cause, yet none of those costs ever appear when analysing Atlantic Shepherd’s cost-effectiveness. It would be entirely possible for the community to be spending twice as much per fish saved as Sea Shepherd does, while the cost-effectiveness analysis still shows Atlantic Shepherd coming out ahead by a wide margin.
Agree on this 100%. I originally wanted to bake in that line of reasoning in this article but I felt it was already controversial enough as it is hahaha. This is another example of everybody claiming marginal impact adding up to 10x of the imapct we actually had.
Happy to write a post about this together at some point!
Thanks Christophe for sharing these thoughts. I would flip this discussion somewhat, as you note (and which I agree with).
The example you raise is a good one, but for me it points to an inefficiency in how donors measure effectiveness rather than in how organisations set salaries. Within a standard cost-effectiveness calculation, there’s a direct incentive for organisations to underpay senior staff, particularly founders. For smaller organisations with budgets in the range of $300-500k, two co-founders paying themselves a living wage of $30-40k instead of a market rate of $80-100k generates savings of $80-140k. That’s a reduction in total costs of roughly 25%, which inflates reported cost-effectiveness by a corresponding amount, entirely artificially.
This creates three real problems. First, it distorts comparisons between organisations at the early stage, potentially directing funding toward interventions that look cost-effective partly because their founders are financially sacrificing. Second, and relatedly, it penalises organisations that pay fair salaries, which is the race to the bottom you’re describing. Thirdly, it can curtail individuals, who may otherwise have a great incentive in donating to other high-impact causes to actually do so.
My view is that researchers conducting cost-effectiveness analyses have a role to play here: benchmarking standardised market rates for senior staff, independent of what individuals actually choose to pay themselves. This would remove the artificial incentive, give organisations flexibility to determine their own compensation, and allow any differential between market rate and actual salary to be treated as what it effectively is: a donation. The linked EA Forum piece makes this case well.
I recognise this is a longer-term structural shift and harder to move than individual donor preferences. But I think a lot of what you’re describing is downstream of this measurement problem, and that’s where the leverage is.
Yes 100%. Sorry I might have written a bit convoluted but this is one of the points I wanted to make.
There are many EAs would would like to get a job at an EA org, and lower salaries means that more jobs can be offered. So I think EA “unemployment” is a bigger problem for the movement than the people who do have EAs jobs not making enough money.
Yes, but I generally think there is talent available in the EA community.
Most salaries at EA orgs are in the top couple percent of the world, so I don’t think this is a big issue.
Most employees already know the market rate, so they can subtract. And I think most orgs do appreciate their employees for working for less than market rate. But I could see it helping with getting credit for GWWC.
A disadvantage of starting with market rate is that the person who would’ve accepted the NGO rate might on average pay themselves more because they would more consciously have to give up money. They means a combination of more donor money required and more EA “unemployment”, which I think would reduce effectiveness overall.
This is implying we are right now tricking people into giving up more than they consciously would. I’m not sure that’s what we would want as a movement.
I think this might vary heavily depending on the focus area. In AI for sure, not sure about the others.
I’m aware of the EA unemployment but I’m not sure if we should optimize for EAs working in EA orgs. Shouldn’t the best talent or fit win? Especially for hard-to-fill roles like biorisk researchers, AI alignment people, a GiveDirectly country operation manager role, etc. Of course, value alignment shoudl play a part in assessing job match, but I’m not sure willingness to take a low salary is the right selector.
Either way, all these points are downstream of the main point I’m trying to make: We should take market rate equivalents in cost effectivness calculations so we don’t overpromise impact to donors. We can do this and then still decide to only accept candidates that take a 50% pay cut.
I don’t think so-there’s an analogy here with opt in versus opt out. You could say that people have a certain preference to be an organ donor and that whether it is opt in or opt out, you should get the same percent of participation of being an organ donor. However, we find that in reality, whether the system is opt in or opt out has a huge impact on the actual participation rate. This is similar for retirement programs.
Claude says 98th percentile salary globally is USD48k, and it estimates the median at AI-aligned orgs to be $65k for animals, $85k for global health, meta $85k and AI safety $115k.
I agree that we should be maximizing overall effectiveness, and that reducing EA “unemployment” should not be a primary goal. However, I do think that there are a lot of well-qualified EAs who have not been able to get an EA job (see here for links). I think there are social pressures to have EA wages not lower than other nonprofits. As evidenced by some EAs’ donating patterns, they are willing to accept lower wages than most. So I think that total effectiveness would be higher with lower wages. Of course it does not apply in all cases.
I definitely agree with the point that we should be recognizing the contribution of people who work for less money, including volunteers. Unlike Shapely values, counterfactuals can add up to more than 100%. This might be better in the other comment thread about volunteers, but here goes anyway. Let’s say we have charity A that does one unit of impact per employee, and charity B that does one unit of impact per employee but each employee also manages volunteers that produce another unit of impact. I think that the counterfactual impact of the donor by funding the salary of the employee at charity B is two units, because without the donor, you would not get any impact. Then I think the counterfactual impact of the volunteers is one unit (because it wouldn’t happen without them). Let’s assume the employee is paid at market rate and replaceable for this thought experiment. So then we have two units of impact but the counterfactual impact is three units. So obviously Shapely values that must add to 100% you can’t give all the impact to the donor. And you can easily come up with more complicated scenarios where this will not work out as cleanly. But I do think it’s possible that using volunteers (or lower salaries) can increase the counterfactual impact of the donor.
Edited to switch to charity B.
Great opt-in vs opt-out framing, that snarky comment of mine about tricking people was written too fast!
About that example: I think you meant to write “at charity B” instead of “at charity A”?
* Charity A: 1 employees at market rate, one unit of impact > 1 impact for donor
* Charity B: 1 employees at market rate, one unit of impact + 1 volunteers with 1 impact > 2 impact for donor
I think that the donor should not have “2 counterfactual impact” in this case. But maybe I am misunderstanding things.
Let’s play with some more examples
* Charity C: 1 employee and 10000 volunteers, 10001 impact total. Should the donor really get 10001 impact? To me that feels really off
* Charity D: The employee also becomes a volunteer but does the same job. In a way the employee is “donating” their salary and becomes the donor. Should the employee now get “2 impacts”? That again feels off? Are they somehow better than the other volunteer?
* Charity E: 100 donors, all donating $1. It’s a blind kickstarter campaign and the charity can only do the intervention if they raise 100, otherwise money back, but the donors don’t know how many others already donated, so order doesn’t matter. In a way each donor should get the full “counterfactual” impact because without each individual donor the fundraise would’ve failed. But again attributing the same full impact 100 times feels wrong.
Yes—thank you—fixed!
Very unlikely to be the case in the real world, but if the donor makes the whole chain of events happen, then I think that is the counterfactual impact.
Again, if without that person, there would be no impact, I think that’s the counterfactual. In general, a volunteer who could manage other volunteers I think would be more valuable.
Yeah—an even more extreme case would be an election with 100,000,001 votes versus 100,000,000 votes—would all 100,000,001 people get to claim they cast the deciding vote for the election? Perhaps someone who has thought more about this wants to weigh in? @aaronhamlin ?
It’s tricky too: the GWWC pledge only considers salary curtailments as donations if you manually and reversibly lower your salary and believe the charity is highly effective. In many non EAs organisations (say accepting a lower salary to work in key government organisations) that’s not an option.
A minor maths point but it will be important if you start running these calculations in real contexts.
”Maybe they took a paycut equal to EUR 100 for this life saved, then their “share” of this life in this case would be 100⁄3000 = 3%.”
Actually, here the real cost of the life saved is 3100 EUR, not 3000. If it helps, you can imagine the employee being paid the competitive salary, then donating back the 100 EUR.
hahaha yes totally missed this, thank you!!
The use of volunteers is a paradox I think about a lot. I volunteer for Sea Shepherd myself, I believe in the cause, and I wouldn’t want to be paid for it, because then it would feel like just another job. When we go to an event to raise funds or sell merchandise, we generally come away feeling that we raised the money, which is in a sense true: the money wouldn’t have been raised without us. So we feel that we saved the fish, and that’s not entirely wrong either. Surveys consistently show that being personally asked is the most common reason people cite for donating, so I doubt many of those donations would have happened without us. And yet the donors also, quite rightly, feel that it was thanks to them. But the fish only got saved once. It would be nearly impossible to determine who should get credit for how many fish saved. So from a marketing perspective, I think the smart move is to let everyone feel like the hero.
In your thought experiment, I would donate to the charity that uses volunteers to create their content. I save the 1,000 hens either way. By giving to the volunteer-run charity, I also give meaning to the volunteers’ work, and beyond that, volunteers who stay engaged will likely talk to friends and family, contributing to a broader shift in attitudes and hopefully bringing in additional donations.
But I also completely understand why you would give to the other charity.
Looking back I think my example wasn’t the best one. But this “the fish only get saved once” is exactly the point I’m trying to get to.
Take this example: another charity “Atlantic Shepherd” is doing exactly what you guys do, except they need ten times as many volunteers to raise the same funds. If we go by the model “everybody has impact” this would 10x the felt impact. Would you prefer to Atlantic Shepherd or to Sea Shepherd? Your reasoning would imply you would want to donate to Atlantic Shepherd but if we would take the Atlantic Shepherd volunteers and have them work on more efficient causes (like joining Sea Shepherd), we would increase impact. Modeling volunteer time explicitly as donations would help quantify this.
This example differs from the original in two important ways. In the hen scenario, an AI was doing all the creative work so my argument was that donating to the volunteer-run charity would save the same number of hens while also generating joy for the volunteers. In this new case, both charities rely on volunteers. Yes, Atlantic Shepherd may have more of them, but a larger volunteer base can also dilute each individual’s sense of ownership over the organisation’s success, so the joy produced might well cancel out.
The second difference concerns effectiveness. In the hen example, I assumed we were dealing with a well-run organisation, where volunteers spreading the word to friends and family would be a genuine bonus. Atlantic Shepherd, by contrast, appears to use volunteer labour rather inefficiently. In that context, volunteers are arguably more likely to vent about incompetent management than to attract new donors.
Personally I tend to see donating and volunteering as fundamentally distinct activities. When it comes to donations, impact is essentially all that matters to me. With volunteering, things like interesting work, like-minded company, and good conversations matter just as much. Comparing the two across those dimensions feels like comparing apples and oranges.
From an organisational perspective, I think charities should use volunteers whenever it genuinely makes sense. Building a strong community is a worthwhile goal in its own right, particularly in fields like animal advocacy. At the same time, they owe their volunteers meaningful, well-structured work. Nobody enjoys feeling like their time is being wasted.
I agree that from a personal perspecive, donations and volunteering are very different. I also love volunteering for the community, the energy I’m getting from it, and, let’s be honest, I’m getting zero in-the-moment good vibes from my donations, that’s a different category for me.
However as a donor, when evaluating charities, I do care how they use volunteers. Because in this framing the volunteers should get “part of the saved fish”. That leaves less “saved fish” for me.
In the thought experiment I gave I meant to assume that both orgs are identical except for that volunteering efficiency. Both are great to volunteer at, feel the same, everything the same, just that, for some reason, one is less efficient at using volunteer time.
You definitely have a point here and I might even get convinced. However, I see educating volunteers and building a movement as ends in themselves. So maybe there is just more value to distribute? (The saved fish + the movement that was built.)
I do share your feeling that more value is attributed to donors than they really deserve. I see this as a problem especially when people want to compensate. Some EAs think that going vegan is not that important because compensating is so cheap. But the only tractable way of compensating would be to get others to eat plant-based in which case I think it would be fair to attribute most of the saved animals to the people who actually ate fewer animal products or went vegan, and not to the person who donated to the charity that “convinced” them.
Hahaha yes I love that compensating paradox. I think the issue with that one is that it’s very narrow-minded and short-term focused. Sure in the short term for this specific intervention compensation might work, but as a movement we lose if we think like this.
Also agree that building movement and activating volunteers is value that probably isn’t always accounted for.
Maybe if the offsetting is convincing people to go vegan. But I think a lot of the offsetting is corporate campaigns to get higher welfare standards. That has much higher leverage than individual actions to eat higher welfare meat. Maybe once all the corporations have reformed, individual actions could start being competitive, but we can re-evaluate then.
I agree that these campaigns are promising, and I am a donor to Sinergia Animal myself. However, mass animal production creates issues beyond farmed welfare, such as climate change and resource diversion from starving populations. While those can be offset, my main concern is wild animal suffering caused by feed production.
Every farmed animal impacts multiple wild animals through agriculture. Unless we possess solid data on wild animal welfare ranges and how feed production affects them, we have no way of knowing how to offset a non-vegan diet’s impact on wild populations, or what the true cost would be. Consequently, I believe, claiming we can offset a non-vegan diet by sponsoring welfare campaigns is highly misleading at this stage.
There is huge uncertainty once you consider wild animals—more feed could increase wild animal welfare.
That’s exactly what I said. Uncertainty is a big issue here. But that doesn’t mean one is justified in not offsetting the impact one’s dietary choices have on wild animals, simply because a handful of people have put forward the hypothesis of net negative lives.
Are you suggesting that all non-vegans offset the impact on wild animals? How does one do that, even if it were agreed that wild animals had net positive lives?
Of course not. At this point it simply isn’t possible.Which is exactly what I argued:
I would argue, however, that vegans have less impact on wild animals which is precisely why framing welfare campaigns as an “offset” for a non-vegan diet strikes me as misleading. I have broader reservations about the concept of offsetting animal suffering altogether, but if such offsetting is to be meaningful in any real sense, it should focus on projects that reduce the consumption of animal products in order to replicate these effects.
Ok—so if one believes that wild invertebrate lives are net positive, then offsetting with animal welfare interventions means more feed is required, resulting in fewer wild invertebrates (and more deaths from pesticides, but I think this is small compared to the impact on the population of soil invertebrates of farming more land), meaning less utility overall. So this person would prefer an offset that is a scalable way of convincing people to go vegan. Though this may seem contradictory, I think there is a large variation in difficulty of going vegan (taste preferences, opportunity cost of time, impact on health, etc), so it is most effective if the people for whom it is easier to go vegan are exposed to the arguments.
However, if the person thinks that wild invertebrates lives are net negative, they would prefer the animal welfare interventions offset, because not only would that help the farmed animals, but it would also reduce the bad utilities of wild invertebrates lives.
There are two main effects. Higher welfare standards generally mean fewer animals are raised, since they and their products become more expensive. But those that are raised require more feed. As far as I know there is no consensus on which effect dominates.
They may prefer this kind of intervention and consequently donate to the relevant charities, but the amount they are supposed to pay to offset should stay the same. Since offsetting is generally framed around conservative estimates, it makes no sense to pay less just because you believe in something.
I totally agree. However, I’m not aware of a single charity that turns people who had no inclination of becoming vegan into vegans. That would be an almost impossible achievement, unless you paid them to do so and set up control mechanisms to make sure they stood true to their word.
Charities like Veganuary are targeted specifically at people who are already motivated to go vegan in the first place. So if someone turns vegan during the challenge it’s impossible to know whether the donor was counterfactual. For all we know the person could have become vegan two months earlier but chose to wait for the challenge. So we may want to use Shapley values. There is also a broader principle at play here: there is general consensus that the same outcome cannot be claimed multiple times for offsetting purposes. This is precisely how certificate trading works, whether for carbon or anything else. So, if we assign some weight to the person who invented the challenge, some weight to the staff who work for below market rates, some weight to every organisation who had previously influenced the person who eventually went vegan, and of course the main weight to that person themselves, little value is left for the donor.
Without access to the relevant data it is hard to say anything definitive, but it seems worth asking whether the cost per outcome would look quite different if conservative estimates were applied more rigorously.
Though Shapley values of impact have to add up to 100%, counterfactuals can add up to >100%.
Curious: Are you aware of these been used in the field / cost-effectiveness estimations etc.? I’m aware of the concept but have never seen it actually being used. But that I’m also not that deep in that space.
I’ve mainly worked at the cause area level, where I think these considerations are less relevant. But I have observed that if people are so enthusiastic about an area that many will volunteer (or take lower salaries), that does make progress in an area easier.
I strongly agree.
Note that even the ‘highly paid’ COO position at CEA is arguably substantially below market rate. A COO in industry would likely get paid double or more.
Thank you for the text and the interesting thoughts!
I don’t think charities will, or should, pay the same salaries as for-profits. They won’t do so because there are enough people willing to work for non-profits at lower salaries, and because all (EA) charities would effectively have to coordinate in order to pay salaries above the market rate for charity jobs. But they also should not do so, because that would actually reduce cost-effectiveness and therefore run counter to the purpose of charities.
Ideally, charities should structure salaries in whatever way maximizes cost-effectiveness. Suppose a charity needs to fill position X and could pay €100, €200, €300, or €400. At €100, nobody would take the job. At €200, the best candidate would create 100 units of impact. At €300, the best candidate would create 200 units of impact. At €400, there would be an employee who would create 210 units of impact. In that case, the charity should pay €300, regardless of what a comparable job would pay in the for-profit sector.
For-profits should actually follow the same principle as well, except that instead of impact, they optimize for contribution to company profit. If we assume that talented people are capable of contributing both to non-profit impact and to corporate profit, the question becomes: why are charity salaries lower on average? The answer is probably that people generally prefer working for charities.
In my view, there are several reasons for this. One important aspect is probably that many employees attribute the impact, at least partly, to themselves personally. Another aspect is certainly that working at a charity is often simply more enjoyable because you are surrounded by inspiring people, typically have more autonomy, and so on.
A similar dynamic exists in for-profit start-ups, which also tend to pay less than large established corporations, partly for those reasons. No start-up would say: “We’re going to pay as much as the big corporations.” Why shouldn’t a start-up make use of this advantage on the labor market? In my opinion, the same applies to charities.
Likewise, charities should also take advantage of the fact that they can pay less because employees attribute part of the impact to themselves, regardless of whether one thinks that attribution is justified or not. If someone believes that they will only get into heaven after death if they work for AMF, and is therefore willing to work for half the usual charity salary, then AMF should make use of that, for the benefit of the people whose lives can thereby be saved. (Of course, there are limits to this if the employee would suffer too much as a result.)
I also do not see the four stated advantages of for-profit-level salaries at charities:
“It would attract talent that otherwise would’ve been inaccessible because that talent wouldn’t have been willing to take as big of a sacrifice.”
Under the method described above, charities can still pay high salaries if the output justifies it, thereby attracting very talented people. But if there are people who personally see no advantage in working in a charity environment, for example because they strongly prefer the clearly regulated structures of large corporations, and therefore demand higher salaries than equally talented people who are willing to work for less because they value the charity environment, then there is no need to attract those people specifically.
“It would allow less privileged groups to join the charity world that otherwise just wouldn’t have the means to take pay cuts like this.”
The question here is how important reducing this social inequality is compared to the actual mission of a particular charity. Given that opening jobs to underprivileged groups comes with increased costs for the charity, one has to ask whether this is really the most cost-effective use of donated money. More generally, I think the focus should be on ensuring that everyone has enough money, rather than increasing salaries for selected positions within the charity sector.
“It would give employees a tangible measure to estimate how much impact they are having with their job.”
In my opinion, voluntary salary cuts can always in some sense be viewed as donations, and therefore as a measure of impact, regardless of whether the baseline salary corresponds to for-profit or non-profit market rates. Whether those donations are the only contribution to impact is a separate question, but that question arises in both cases anyway.
“It would avoid discussions like here whenever NGOs decide to pay market-rate salaries.”
First of all, I would not say that for-profits pay “market-rate salaries” while charities do not. There are simply two different labor markets: one for for-profits and one for charities. More generally, I think discussions about salaries are good. So from my perspective, avoiding such discussions is not an advantage.
The main point I’m trying to make is not that we should pay all people market-rate salaries, but that, at least, we should make this assumption in cost effectiveness calculations. Then actually paying those salaries would be the logical next step but maybe a step too far for marketing / market dynamics reasons.
Let me answer to two points you made:
This is the core of what I’m trying to get at. I am trying to argue that the imaginary pay cut vs a comparable for-profit job the employees are taking is the relative impact they are having. Therefore when we do cost effectiveness calculations, we should factor that in, so we don’t overpromise cost-effectivness to donors. Because employees are also donors, just with their time instead of their money.
This I fully agree with. So when comparing wiht for-profit salaries we should probably compare not with cut-throat banks but with companies that have a similar vibe/culture. I know that’s hard but some kind of estimate is better than nothing I think.
I’d push back on this. Maybe the career choice (decision to do the job at the given market rate instead of doing something else) of N employees on the market allows achieving the current total production at $2X total cost instead of, say $3X, if it was fully up to the market. (The decisions shifting the supply curve upwards so the market can buy more production at a given price)
In that case, the total funding required is $X less, so on average $X/N for each impact focused employee. For comparison, if the market consists of, say, another N impact agnostic employees (2N employees total), then the individual market rate salary was also $X/N. (Average funding need reduction comparable to the market salary.)
Now, the above numbers are obviously arbitrary, but I think this illustrates the effect that I (we?) hope to have from direct work.