I’m personally not convinced yet that GWWC can drive quality new members so cheaply. Asking for 10% is quite a high bar to clear, so I’m a bit astounded (and skeptical) GWWC has apparently been doing so well at recruiting people to pledge this. Especially with the cost per new member going down so low, I’m nervous that the new members are pledging a lot more than they’ll actually deliver.
It’s really great then that GWWC provides data on the actual total number of dollars donated to top charities, and even greater that this number comes counterfactually adjusted.
However, I see this number is primarily driven by one high net worth donor, and I don’t know how sustainable it is to expect to repeat this. Taking out that high net worth donor reduces GWWC to a ~1:2.3 ratio on money actually donated (counterfactually adjusted), which is still good and worth donating to (how often do you get 230% returns?), but lower than I’d hope and makes me nervous.
I notice parallels to the animal activism movement where I also spend a good deal of time—people there talk all the time about how they can spend just like $15 (or some other ridiculously small number) and get someone to go vegetarian for 4+ years. Just as I think people are rightfully skeptical of that number, I’d be skeptical of GWWC’s ability to convince someone to donate 10% for 4+ years based on just $230 of costs. (But I also see evidence against that makes it look like maybe some special people are just intrinsically willing to become EAs when pushed and will then donate a lot...)
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What is the value of GWWC’s marginal activities?
As I said, I’d still donate on a 1:2.3 ratio, but my core argument is that I’m nervous that marginal member recruitment will be done at diminishing marginal returns and the ratio could drop below 1:1. I may have done a poor job engaging with the arguments you’ve already made (so feel free to re-refer me). Something I’ve learned at Charity Science is that networks only run so deep and it can be easy to run out of the low-hanging fruit when trying to achieve scale.
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Reasons I may be wrong to be skeptical
Of course, while I do think talk is cheap and am skeptical that many of those who pledge will actually end up giving (just like many people who pledge to go veg don’t stick), it is definitely incorrect for me to assume that the value of all these pledges is 0. So I would need to re-weigh for that.
And I guess the size of the ask is so large that it can make up for a high failure rate—say someone sticks for four years and earns $40K, that’s $16K, which is enough that 52 other members could fail to give a penny and GWWC would still break even.
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Conclusion
Ultimately, though, I think GWWC is a good donation choice, but it’s a very high bar to clear to be “the absolute best possible place I could give money to, including saving to donate later”.
And, for what it’s worth, I’m confused why GWWC hasn’t met it’s fundraising threshold yet. I thought the EA community loved meta-charity...
Peter, thanks for writing out your reasons—it’s really useful.
I agree the one large donor point is worrying, but you shouldn’t set the donations given by the large donor to zero. There’s a reasonable chance GWWC recruits another large donor in the next couple of years and you should take account of that.
In fact, because donor size generally follows a power law, the top donor determines the mean, so if you ignore the top couple of large donors, your expectation value is always going to be too low.
The even bigger point is that I think it’s extremely conservative to set all future donations to zero. Yes, talk is cheap, so drop out rates could be much higher than we imagine, but as your example shows, to get to the point where the value of future pledges is zero requires extreme pessimism. Like on the order of 98% dropping out within a couple of years. There’s no evidence people are dropping out at anywhere near that rate.
Finally, you’re only considering downwards adjustments. What probability would you put on GWWC ‘optimistic’ scenario in the evaluation doc? I wouldn’t be super surprised if the leverage ratio turns out to be over 100. Let’s say that’s a 10% probability. Then the expected leverage ratio is already at least 10, even if I ignore all the other scenarios.
Then there’s also the impact that results from GWWC that isn’t just money moved (e.g. EA movement building), and the fact that funding now also lays the groundwork for long-term growth, which is where most of the expected value lies.
I’m personally not worried about “networks only run so deep” is a concern. In the early days it’s true GWWC spread in large part through the networks of the staff, but I don’t think this has been true for the last couple of years.
Finally, there’s an element of GWWC can’t win going on here. You say that the cost per member has got so cheap you’re skeptical that it’s real, so not convinced to donate. But I imagine if the cost per member had instead gone up, you’d be saying it’s diminishing returns, and also not convinced!
Thanks very much for your comments Peter, it’s very useful to know what people’s hesitations are. And thanks Ben, for answering! I just had a couple of quick things to add:
With regard to the one large donor—having one such actually makes it more likely that we’d attract others than it would have been otherwise. It doesn’t just provide evidence that it’s possible—it provides us with opportunities for meeting others in similar networks. Indeed, that has already happened. That impact is then partly due to the original large donor rather than separate things we do. But if attracting that original donor was impact down to GWWC, then presumably the impact of other donors coming partly through their help is similarly so.
It feels like you’re taking that 1:2.3 number at face value, but it’s worth bearing in mind that it leaves out a large number of our routes to impact, including, for example, any good done by donations to non-top charities, any good done by people giving to more effective charities than they would have otherwise, and any donations by non-members other than the one. And of course any money given by members in the future.
In terms of whether returns are diminishing or increasing, I think the third impact assessment on the fundraising prospectus is probably the most informative thing to read. It seems like at the moment we’re experiencing economies of scale rather than diminishing returns. That could be due to things like it being hard to be a very early adopter of something like giving 10%, but it being much easier to make the leap when there are already a whole bunch of people doing it; it could be because it’s easier now we’ve built up a bunch of infrastructure like a good website. Either way, it does seem to be the case.
To expand on this, the difference between core GWWC (and various layers of the core) and marginal GWWC appears to be a fundamental issue here. In response to a long thread in the other post were people were worrying about GWWC’s expansion at some point hitting lower than 1:1 fundraising ratios, Peter put it succinctly:
I agree that GWWC’s ratio is probably above 1 with a good deal of confidence (though I haven’t done the formal math to evaluate how extreme that statement is). But I think the more compelling argument is that expansion funding on the margin may not have a ratio above 1.
And I expanded:
Yes, there’s a huge, huge difference between the impact of GWWC existing as a place where people who wanted to pledge 10% of their income to help those living in global poverty could join others in publicly doing so, and the impact of its marginal funded activities now. GWWC existed as that place before The Centre for Effective Altruism was founded around it as an organisation with donors and a budget supporting paid employees. If minimal resources were spent on creating the basic infrastructure, and I don’t know if that’s so, but if so, then it had a mega high impact ratio. But it seems wrong to use that to justify keeping on spending more money on more employees doing more marginal projects until the impact from the original resource gets “used up.”
Ok this is all fair. I think, however, that a big fraction of the historical impact is due to on-going activity, of the kind that could continue, rather than being all due to the ‘set up’ generating the stream. And that would mean the historical ratio is a reasonable guide to the future.
This can be hard to see from the outside, but if you look at where new pledgers are coming from, it’s often new press coverage or student group activity. Many also only take the pledge after being nudged by someone in person, even if they had heard about GWWC some time before, so there’s an important role just talking to lots of people about the pledge. These kinds of activities can be scaled much further.
I’ll mention a few of my hangups:
What is the quality of a marginal GWWC member?
I’m personally not convinced yet that GWWC can drive quality new members so cheaply. Asking for 10% is quite a high bar to clear, so I’m a bit astounded (and skeptical) GWWC has apparently been doing so well at recruiting people to pledge this. Especially with the cost per new member going down so low, I’m nervous that the new members are pledging a lot more than they’ll actually deliver.
It’s really great then that GWWC provides data on the actual total number of dollars donated to top charities, and even greater that this number comes counterfactually adjusted.
However, I see this number is primarily driven by one high net worth donor, and I don’t know how sustainable it is to expect to repeat this. Taking out that high net worth donor reduces GWWC to a ~1:2.3 ratio on money actually donated (counterfactually adjusted), which is still good and worth donating to (how often do you get 230% returns?), but lower than I’d hope and makes me nervous.
I notice parallels to the animal activism movement where I also spend a good deal of time—people there talk all the time about how they can spend just like $15 (or some other ridiculously small number) and get someone to go vegetarian for 4+ years. Just as I think people are rightfully skeptical of that number, I’d be skeptical of GWWC’s ability to convince someone to donate 10% for 4+ years based on just $230 of costs. (But I also see evidence against that makes it look like maybe some special people are just intrinsically willing to become EAs when pushed and will then donate a lot...)
-
What is the value of GWWC’s marginal activities?
As I said, I’d still donate on a 1:2.3 ratio, but my core argument is that I’m nervous that marginal member recruitment will be done at diminishing marginal returns and the ratio could drop below 1:1. I may have done a poor job engaging with the arguments you’ve already made (so feel free to re-refer me). Something I’ve learned at Charity Science is that networks only run so deep and it can be easy to run out of the low-hanging fruit when trying to achieve scale.
-
Reasons I may be wrong to be skeptical
Of course, while I do think talk is cheap and am skeptical that many of those who pledge will actually end up giving (just like many people who pledge to go veg don’t stick), it is definitely incorrect for me to assume that the value of all these pledges is 0. So I would need to re-weigh for that.
And I guess the size of the ask is so large that it can make up for a high failure rate—say someone sticks for four years and earns $40K, that’s $16K, which is enough that 52 other members could fail to give a penny and GWWC would still break even.
-
Conclusion
Ultimately, though, I think GWWC is a good donation choice, but it’s a very high bar to clear to be “the absolute best possible place I could give money to, including saving to donate later”.
And, for what it’s worth, I’m confused why GWWC hasn’t met it’s fundraising threshold yet. I thought the EA community loved meta-charity...
Peter, thanks for writing out your reasons—it’s really useful.
I agree the one large donor point is worrying, but you shouldn’t set the donations given by the large donor to zero. There’s a reasonable chance GWWC recruits another large donor in the next couple of years and you should take account of that.
In fact, because donor size generally follows a power law, the top donor determines the mean, so if you ignore the top couple of large donors, your expectation value is always going to be too low.
The even bigger point is that I think it’s extremely conservative to set all future donations to zero. Yes, talk is cheap, so drop out rates could be much higher than we imagine, but as your example shows, to get to the point where the value of future pledges is zero requires extreme pessimism. Like on the order of 98% dropping out within a couple of years. There’s no evidence people are dropping out at anywhere near that rate.
Finally, you’re only considering downwards adjustments. What probability would you put on GWWC ‘optimistic’ scenario in the evaluation doc? I wouldn’t be super surprised if the leverage ratio turns out to be over 100. Let’s say that’s a 10% probability. Then the expected leverage ratio is already at least 10, even if I ignore all the other scenarios. Then there’s also the impact that results from GWWC that isn’t just money moved (e.g. EA movement building), and the fact that funding now also lays the groundwork for long-term growth, which is where most of the expected value lies.
Two other points.
I’m personally not worried about “networks only run so deep” is a concern. In the early days it’s true GWWC spread in large part through the networks of the staff, but I don’t think this has been true for the last couple of years.
Finally, there’s an element of GWWC can’t win going on here. You say that the cost per member has got so cheap you’re skeptical that it’s real, so not convinced to donate. But I imagine if the cost per member had instead gone up, you’d be saying it’s diminishing returns, and also not convinced!
Thanks very much for your comments Peter, it’s very useful to know what people’s hesitations are. And thanks Ben, for answering! I just had a couple of quick things to add: With regard to the one large donor—having one such actually makes it more likely that we’d attract others than it would have been otherwise. It doesn’t just provide evidence that it’s possible—it provides us with opportunities for meeting others in similar networks. Indeed, that has already happened. That impact is then partly due to the original large donor rather than separate things we do. But if attracting that original donor was impact down to GWWC, then presumably the impact of other donors coming partly through their help is similarly so. It feels like you’re taking that 1:2.3 number at face value, but it’s worth bearing in mind that it leaves out a large number of our routes to impact, including, for example, any good done by donations to non-top charities, any good done by people giving to more effective charities than they would have otherwise, and any donations by non-members other than the one. And of course any money given by members in the future. In terms of whether returns are diminishing or increasing, I think the third impact assessment on the fundraising prospectus is probably the most informative thing to read. It seems like at the moment we’re experiencing economies of scale rather than diminishing returns. That could be due to things like it being hard to be a very early adopter of something like giving 10%, but it being much easier to make the leap when there are already a whole bunch of people doing it; it could be because it’s easier now we’ve built up a bunch of infrastructure like a good website. Either way, it does seem to be the case.
To expand on this, the difference between core GWWC (and various layers of the core) and marginal GWWC appears to be a fundamental issue here. In response to a long thread in the other post were people were worrying about GWWC’s expansion at some point hitting lower than 1:1 fundraising ratios, Peter put it succinctly:
And I expanded:
I replied in the other thread: http://effective-altruism.com/ea/hz/please_support_giving_what_we_can_this_spring/
That reply:
Continues at http://effective-altruism.com/ea/hz/please_support_giving_what_we_can_this_spring/3vw