I agree that things could work like this in theory, but I see two significant issues with how you describe it.
First, the process isn’t as simple as “charities are created; the ones proven effective easily and regularly get money; the ineffective ones run out of money and disappear”. That resembles the perfect competition model in economics: something handy to reason about the world, but that simplifies reality to the point of hiding many complexities. In reality, many ineffective charities survive for decades, while promising ones sometimes struggle to find the funding they need. These imperfections are one of the very reasons why effective altruism was first conceptualized.
Second, even if this ideal model was true, equally-skilled people still respond differently to risk. For example, in practice, there’s a significant difference between being able to say to a potential hire:
“Right now, we only have money to pay our staff for less than a year, but our charity is provably effective, so there’s nothing to worry about.”
“We have 2-3 years of financial runway. Beyond that, we’re confident we’ll find more money, though we can’t have 100% uncertainty.”
It’s a recurrent bias within EA to not see much difference between these two statements. EA people tend to be more tolerant to risk in their career decisions, and okay with making big bets that don’t always pay out. They also tend to be relatively young and without kids.
But once an organization grows in size, impact, and ambition, it can’t rely forever on risk-tolerant twenty-something EAs. It needs more experienced and senior people to join. And with more experience often come various financial commitments (e.g., mortgage, kids); that’s where financial stability can make a big difference.
I agree that things could work like this in theory, but I see two significant issues with how you describe it.
First, the process isn’t as simple as “charities are created; the ones proven effective easily and regularly get money; the ineffective ones run out of money and disappear”. That resembles the perfect competition model in economics: something handy to reason about the world, but that simplifies reality to the point of hiding many complexities. In reality, many ineffective charities survive for decades, while promising ones sometimes struggle to find the funding they need. These imperfections are one of the very reasons why effective altruism was first conceptualized.
Second, even if this ideal model was true, equally-skilled people still respond differently to risk. For example, in practice, there’s a significant difference between being able to say to a potential hire:
“Right now, we only have money to pay our staff for less than a year, but our charity is provably effective, so there’s nothing to worry about.”
“We have 2-3 years of financial runway. Beyond that, we’re confident we’ll find more money, though we can’t have 100% uncertainty.”
It’s a recurrent bias within EA to not see much difference between these two statements. EA people tend to be more tolerant to risk in their career decisions, and okay with making big bets that don’t always pay out. They also tend to be relatively young and without kids.
But once an organization grows in size, impact, and ambition, it can’t rely forever on risk-tolerant twenty-something EAs. It needs more experienced and senior people to join. And with more experience often come various financial commitments (e.g., mortgage, kids); that’s where financial stability can make a big difference.