Could you expand on your last point? As I am not sure I understood it properly.
many EAs reason about funding stability as if every skilled person was happy to work at an organization that could run out of money in less than a year
I would agree that having charities with long term funding and stability is great. At the same time I feel that if a charity is provably effective then it will keep existing even if it has less than a year of funding because they shouldn’t have issues with asking for more funding.
Therefore, if you keep the funding under a year, the charities that work will continue working, those who are not as promising will dissolve. What would be the solution then? If you provide 3 years of funding to the effective charities, I assume nothing would change because those charities wouldn’t have issues with getting the funding. If you give 3 years of funding to an inefficient charity, do they have just 3 years to waste, or do they return the money?
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.
Could you expand on your last point? As I am not sure I understood it properly.
I would agree that having charities with long term funding and stability is great. At the same time I feel that if a charity is provably effective then it will keep existing even if it has less than a year of funding because they shouldn’t have issues with asking for more funding.
Therefore, if you keep the funding under a year, the charities that work will continue working, those who are not as promising will dissolve. What would be the solution then? If you provide 3 years of funding to the effective charities, I assume nothing would change because those charities wouldn’t have issues with getting the funding. If you give 3 years of funding to an inefficient charity, do they have just 3 years to waste, or do they return the money?
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.