Great post—I think this is a really important meta-topic within EA that doesn’t get enough airtime. It might also be worth considering the “hidden zero problem” coined by Mark Budolfson and Dean Spears here. The thrust of their argument is that if a charity is funded by the ultra-rich or their foundations, small donations may have measurably 0 impact.
As an example: suppose NGO X wants $10M in funding for 2022. Foundation X has been NGO X’s largest donor for a few years running. If small donors give NGO X $8M in 2022, Foundation X will fully fund it to $10M, but if small donors give $8M, Foundation X will give $1M more and still fully fund it to $10M. This means that some of the small donations did 0 impact other than saving Foundation X some cash.
Of the top of my head, there are a few obvious problems with the hidden-zero problem:
Foundations having more money isn’t necessarily a bad thing, especially if they give their assets away relatively quickly and effectively.
How are we supposed to know how much a certain real foundation like Open Philanthropy plans to give certain organizations?
Many charities don’t have such cut-and-dried budgets and fundraising goals. E.g., if GiveDirectly gets more money in 2022, it will simply give away more money by expanding the number of recipients and/or its geographical operations.
Regardless, Budolfson and Spears did a lot of fancy math to show the hidden zero problem is worth taking seriously in many cases, especially within EA.
All that being said, it’s not clear to me how the hidden zero problem impacts your claim here. On one hand, if we intentionally diversify funding sources, charities might raises their budgets and demand the same amount from big foundations. However, if these foundations see that more money is coming in from more donors, they might decide the charity/cause is no longer “neglected” and choose to reduce the size of their grant.
Would love to hear thoughts on this from people more deeply entrenched in the grant-making world...
Great post—I think this is a really important meta-topic within EA that doesn’t get enough airtime. It might also be worth considering the “hidden zero problem” coined by Mark Budolfson and Dean Spears here. The thrust of their argument is that if a charity is funded by the ultra-rich or their foundations, small donations may have measurably 0 impact.
As an example: suppose NGO X wants $10M in funding for 2022. Foundation X has been NGO X’s largest donor for a few years running. If small donors give NGO X $8M in 2022, Foundation X will fully fund it to $10M, but if small donors give $8M, Foundation X will give $1M more and still fully fund it to $10M. This means that some of the small donations did 0 impact other than saving Foundation X some cash.
Of the top of my head, there are a few obvious problems with the hidden-zero problem:
Foundations having more money isn’t necessarily a bad thing, especially if they give their assets away relatively quickly and effectively.
How are we supposed to know how much a certain real foundation like Open Philanthropy plans to give certain organizations?
Many charities don’t have such cut-and-dried budgets and fundraising goals. E.g., if GiveDirectly gets more money in 2022, it will simply give away more money by expanding the number of recipients and/or its geographical operations.
Regardless, Budolfson and Spears did a lot of fancy math to show the hidden zero problem is worth taking seriously in many cases, especially within EA.
All that being said, it’s not clear to me how the hidden zero problem impacts your claim here. On one hand, if we intentionally diversify funding sources, charities might raises their budgets and demand the same amount from big foundations. However, if these foundations see that more money is coming in from more donors, they might decide the charity/cause is no longer “neglected” and choose to reduce the size of their grant.
Would love to hear thoughts on this from people more deeply entrenched in the grant-making world...