but it is a big deal if your portfolio underperforms when the market underperforms, because all of the donors are losing money at the same time.
Doesn’t it depend how much the charity is risk-averse? If the charity’s value as a function of wealth were completely linear (which isn’t true in practice), then these correlations wouldn’t matter, only expected income.
I don’t understand your last paragraph. Feel free to clarify if it’s worth the trouble. :)
Yes, it depends on whether there are diminishing marginal returns to charity overall. But you have made arguments based on the small size of individual donors relative to the large size of the charities they support, and those don’t settle the issue.
Thanks, Paul!
Doesn’t it depend how much the charity is risk-averse? If the charity’s value as a function of wealth were completely linear (which isn’t true in practice), then these correlations wouldn’t matter, only expected income.
I don’t understand your last paragraph. Feel free to clarify if it’s worth the trouble. :)
Yes, it depends on whether there are diminishing marginal returns to charity overall. But you have made arguments based on the small size of individual donors relative to the large size of the charities they support, and those don’t settle the issue.