Thanks for this discussion. I appreciate the thoughtful engagement even though I haven’t had the capacity to follow the full back-and-forth in detail. I wanted to offer a few points from the grantmaker perspective that might be useful.
On the marginal cost-effectiveness question: most of the effective giving organizations we fund are running very lean, and their costs are primarily staffing. So when we think about marginal funding, we’re often not thinking about abstract diminishing returns on a smooth curve, we’re thinking about specific roles and what they’d unlock. For example, if an org is going from two to four FTE, the additional hires might be an ultra-high-net-worth advisor who opens up a whole new donor segment, or a marketing hire who can meaningfully expand reach. In cases like these, the marginal dollar can be highly cost-effective (sometimes more so than earlier spending) because it’s funding a function the org simply couldn’t perform before.
We try to do this kind of holistic (and sometimes hire-by-hire) assessment where we can, though we can’t do it for every grantee at every funding level.
One further point: the theoretical argument that orgs should already be spending on their highest-priority items first, so marginal funding should by definition go to lower-priority uses, doesn’t always hold in practice. Lean orgs often underspend on things like marketing or growth capacity, not because those aren’t high-value, but because they’re harder to justify from scarce operating budgets, especially when the payoff is uncertain. Additional funding can unlock spending that should have been happening but wasn’t.
On average vs. marginal assessment: as I mentioned above, we tend to rely on average cost-effectiveness in our evaluations. I recognize that might be a limitation. In practice, we represent a large share of many grantees’ funding, idealistically around 50%, but realistically 70–100% for many newer grantees. When we’re that dominant a funder, the distinction between average and marginal matters less. Where we’ve been a significantly smaller share of an org’s funding, we have done more explicit marginal analysis, and we expect to move further in that direction, particularly when we represent a smaller share or when a grantee is requesting a substantial increase in funding. We want to make sure the additional funding makes sense. That said, we believe most organizations in our portfolio are cost-effective enough and able to absorb more funding at this stage, and that filling a 10–50% gap is cost-effective enough that more granular marginal analysis hasn’t been a top priority.
On why we’re not funding effective giving orgs even more: in many cases, we are increasing grant sizes for successful grantees, and part of our 2026 strategy is actively pushing high-performers to absorb more funding where we see opportunity. But our portfolio spans more than effective giving, we also want to grow in areas like effective careers, where organizations typically have fewer alternative funding sources than EG orgs, which can tap tipping functions and individual donors more readily. We also think of ourselves as providing sustained, long-term support. As we expand and take on more renewable grants, which naturally grow over time with inflation and organizational costs, an increasing share of our budget might go to renewals. Committing to be the sole or near-sole funder for most of these organizations would be irresponsible, both for our portfolio flexibility and for their long-term resilience.
Thanks for this discussion. I appreciate the thoughtful engagement even though I haven’t had the capacity to follow the full back-and-forth in detail. I wanted to offer a few points from the grantmaker perspective that might be useful.
On the marginal cost-effectiveness question: most of the effective giving organizations we fund are running very lean, and their costs are primarily staffing. So when we think about marginal funding, we’re often not thinking about abstract diminishing returns on a smooth curve, we’re thinking about specific roles and what they’d unlock. For example, if an org is going from two to four FTE, the additional hires might be an ultra-high-net-worth advisor who opens up a whole new donor segment, or a marketing hire who can meaningfully expand reach. In cases like these, the marginal dollar can be highly cost-effective (sometimes more so than earlier spending) because it’s funding a function the org simply couldn’t perform before.
We try to do this kind of holistic (and sometimes hire-by-hire) assessment where we can, though we can’t do it for every grantee at every funding level.
One further point: the theoretical argument that orgs should already be spending on their highest-priority items first, so marginal funding should by definition go to lower-priority uses, doesn’t always hold in practice. Lean orgs often underspend on things like marketing or growth capacity, not because those aren’t high-value, but because they’re harder to justify from scarce operating budgets, especially when the payoff is uncertain. Additional funding can unlock spending that should have been happening but wasn’t.
On average vs. marginal assessment: as I mentioned above, we tend to rely on average cost-effectiveness in our evaluations. I recognize that might be a limitation. In practice, we represent a large share of many grantees’ funding, idealistically around 50%, but realistically 70–100% for many newer grantees. When we’re that dominant a funder, the distinction between average and marginal matters less. Where we’ve been a significantly smaller share of an org’s funding, we have done more explicit marginal analysis, and we expect to move further in that direction, particularly when we represent a smaller share or when a grantee is requesting a substantial increase in funding. We want to make sure the additional funding makes sense. That said, we believe most organizations in our portfolio are cost-effective enough and able to absorb more funding at this stage, and that filling a 10–50% gap is cost-effective enough that more granular marginal analysis hasn’t been a top priority.
On why we’re not funding effective giving orgs even more: in many cases, we are increasing grant sizes for successful grantees, and part of our 2026 strategy is actively pushing high-performers to absorb more funding where we see opportunity. But our portfolio spans more than effective giving, we also want to grow in areas like effective careers, where organizations typically have fewer alternative funding sources than EG orgs, which can tap tipping functions and individual donors more readily. We also think of ourselves as providing sustained, long-term support. As we expand and take on more renewable grants, which naturally grow over time with inflation and organizational costs, an increasing share of our budget might go to renewals. Committing to be the sole or near-sole funder for most of these organizations would be irresponsible, both for our portfolio flexibility and for their long-term resilience.
Thanks for the helpful clarifications, Melanie. They made sense to me.