Thanks for the comment! I tried to address this capital funding concern with the following paragraph in the post:
For reference, a fund of $10B (which I would expect to be around the amount that Open Philanthropy or FTX already have invested) in the S&P 500 would give about a .025% stake in each of those companies. This would be enough to engage in proxy battles but not to use proxy access. However, if you chose to skew your investments toward smaller (and presumably especially influential) companies, then you could potentially acquire much larger percentages of those companies and use more effective engagement strategies.
So the idea is that existing EA investment funds already probably have around a .02% stake in many large companies like Exxon, which means that they wouldn’t have to invest any more money or change their portfolio to follow this strategy.
I did not understand what you mean by “EA investment funds”. Is it actually the case that Open Phil invests $10 billion as a nonprofit? I can’t find anything about that on their website. I suppose FTX might as a company, but I can’t find any evidence that the FTX Foundation invests a large amount of money either. I don’t think it’s common for nonprofits to have already invested a tremendous amount of money in the stock market.
Good question, and I haven’t been very clear on this partially because I don’t know much about it.
That said, I do think it’s common for nonprofits to have lots of money invested in the stock market. This is what philanthropic foundations do. Examples include the Bill and Melinda Gates Foundation ($38B in assets) or the Ford Foundation ($16B). Universities are other examples of nonprofits with huge investments in the stock market (the Harvard Endowment is $53.2B).
Within EA, I think the two major foundations are Good Ventures (which funds Open Philanthropy’s recommendations) and FTX Foundation. It looks like Good Ventures had $3.4B in assets in 2020, and it was growing at around $1B a year before then, so it may be significantly higher now (I haven’t been able to find more current data). I also haven’t been able to find data on FTX since it’s so new.
Based on the information provided in the post, I would guess that Good Ventures’ existing investments are enough to engage in impactful shareholder activism.
Maybe another commenter with more knowledge about this stuff could chime in and correct any mistakes I’m making.
That’s really surprising and definitely makes me update in favor of shareholder activism as a strategy. It’s really clever to think about existing investments as a lever to have an effect.
Thanks for the comment! I tried to address this capital funding concern with the following paragraph in the post:
So the idea is that existing EA investment funds already probably have around a .02% stake in many large companies like Exxon, which means that they wouldn’t have to invest any more money or change their portfolio to follow this strategy.
I did not understand what you mean by “EA investment funds”. Is it actually the case that Open Phil invests $10 billion as a nonprofit? I can’t find anything about that on their website. I suppose FTX might as a company, but I can’t find any evidence that the FTX Foundation invests a large amount of money either. I don’t think it’s common for nonprofits to have already invested a tremendous amount of money in the stock market.
Good question, and I haven’t been very clear on this partially because I don’t know much about it.
That said, I do think it’s common for nonprofits to have lots of money invested in the stock market. This is what philanthropic foundations do. Examples include the Bill and Melinda Gates Foundation ($38B in assets) or the Ford Foundation ($16B). Universities are other examples of nonprofits with huge investments in the stock market (the Harvard Endowment is $53.2B).
Within EA, I think the two major foundations are Good Ventures (which funds Open Philanthropy’s recommendations) and FTX Foundation. It looks like Good Ventures had $3.4B in assets in 2020, and it was growing at around $1B a year before then, so it may be significantly higher now (I haven’t been able to find more current data). I also haven’t been able to find data on FTX since it’s so new.
Based on the information provided in the post, I would guess that Good Ventures’ existing investments are enough to engage in impactful shareholder activism.
Maybe another commenter with more knowledge about this stuff could chime in and correct any mistakes I’m making.
That’s really surprising and definitely makes me update in favor of shareholder activism as a strategy. It’s really clever to think about existing investments as a lever to have an effect.