Effective Giving Antarctica has a core activityāa website that encourages Antarctic residents to donate to effective charities as a mark of national prideāand a marginal activityāsocial media ads that cause people to click through to the website. EGA has two available strategies:
A bare-bones functional website that links through to GWWC for Ā£10k, which allows fundraising at a 4x manner by buying social media ads
A fancy website optimised for user experience with integrated payment system and donations advisor chatbot for Ā£100k, which allows fundraising at a 6x multiplier by buying social media ads.
If EGA has Ā£200k funding, it could raise Ā£190k x 4 with a bare bones website (3.8x) or Ā£100k x 6 with a fancy one (3x).
If EGA has Ā£500k to spend, it could raise Ā£490k x 4 with a bare bones website (3.92x) or Ā£400k x 6 with a fancy one (4.8x).
Raising the budget Ā£200k ā Ā£500k raises the optimal strategy giving multiplier 3.8x ā 4.8x, meaning the marginal giving multiplier is higher than the overall one.
This is just standard economies of scale: investing in technology (like a great website) that improves your productivity at a fixed outlay is more feasible at higher budgets.
There will be other forces acting on an effective giving organisation like market saturation (not that many residents of Antarctica, theyāll get sick of social media eventually). But there would definitely be situations where economies if scale would dominate and the marginal giving multiplier ends up higher than the overall one.
Thanks for the helpful example. I strongly upvoted it. I suspected you had something like it in mind. I still think the marginal multiplier of funding EGA at a given time (not across time) accounting for all effects decreases with spending if the organisation allocates funds to the most cost-effective activities 1st. In addition, I believe the marginal multiplier of funding EGA should ideally not change across time. EGA should try to move spending from the years with the lowest marginal multiplier to the years with the highest marginal multiplier, thus increasing the marginal multiplier of the years with the lowest marginal multiplier, and decreasing the marginal multiplier of the years with the highest marginal multiplier, until the marginal multiplier is the same in all years.
In your example, the marginal multiplier of the strategy EGA is scaling up neglecting effects on other strategies increases with spending. It is 4 for 200 kĀ£ of spending, and 6 for 500 kĀ£. However, I believe the marginal multiplier of EGA is not the same as the marginal multiplier of the strategy it is scaling up neglecting effects on other strategies. I would say a signicant fraction of the value of funding EGA while it has a bare-bones website, and scales up social media ads is increasing the probability of EGA shifting to the fancy website. Neglecting this results in underestimating the marginal multiplier of funding EGA. Here is another way of noting this. For a spending up to 10 kĀ£, the marginal multiplier of the strategy EGA is scaling up neglecting effects on other strategies is close to 0 (assuming the bare-bones website barely raises funds without social media ads). Yet, this does not reflect well the cost-effectiveness of funding EGA in its earliest stages. A significant fraction of the impact of initial funding comes from increasing the probability of EGA achieving strategies with a higher marginal multiplier neglecting effects on other strategies.
Here is how I relate the above to economies of scale. Being an early adopter of solar panels would not have looked like a cost-effective way of decreasing greenhouse gas (GHG) emissions looking just at the initial cost of solar panels, and neglecting the reduction in cost resulting from increased adoption. However, a significant fraction of the (expected) decrease in GHG emissions would have come from the potential of early adoption enabling cheaper panels. This is why I mentioned in my past comment āmarginal multiplier accounting for all effects, including longterm and low probability effectsā.
Relatedly, it may naively seem that decreasing the consumption of chicken by 0.1 kg does not change the production of chicken if this can only be adjusted by multiples of e.g. 1 k kg. However, in this case, a better model would be that decreasing the consumption of chicken by 0.1 kg would increase by roughly 0.01 pp (= 0.1/ā(1*10^3)) the probability of the production of chicken decreasing by 1 k kg. So the expected reduction in the production of chicken would still be roughly 0.1 kg (= 1*10^-4*1*10^3).
Iāll note CoGi has a different funding philosophy for early stage funding, where it will often provide 100% of funding for a few years to allow the testing and development of new strategies. This talk is specifically about mature effective giving organisations.
It is true that the 50% of funding applied by CoGi across years for scale-up may be more useful to the organisation establishing itself, and thus ultimately higher-impact taking into account uncertain future effects. (Indeed I assume thatās why CoGi does this).
However, itās still true that if an organisation raised Ā£5x for effective charities this year at an operations cost of Ā£x, its marginal effect on its yearly fundraising total of you giving it Ā£y could be greater than Ā£5y due to economies of scale. (Itās just that the effect of CoGi giving it its first Ā£z for the year is also greater than Ā£5z due to future effects).
If one is willing to tolerate uncertainty in oneās giving, long time horizons, and a significant evaluation burden, you can probably do better by signing up to the Meta Charity Funding Circle and hashing out which organisations could make best use of startup and core scale-up funding that donāt already have it, at which point you really are looking for highest-impact otherwise-unfunded opportunities, so the evaluation burden to find and fund them gets large. If youāre not, then picking something CoGi funds at 50% and donating to its operations costs is a great way to āsave 5 lives for Ā£4000 rather than 1ā.
Do āĀ£5xā and āĀ£5yā refer to the impact accounting for all effects? If so, you are saying that the marginal multiplier accounting for all effects could be greater than the multiplier concerning the total spending accounting for all effects. I think this can only be the case if the organisation fails to allocate funds to the most cost-effective activities (accounting for all effects) 1st.
I still guess the marginal multiplier of the effective giving initiatives (EGIs) funded by Coefficient Giving (CG) is higher than 1, but I would be a bit surprised if it was 5. In this case, CG would be leaving lots of impact on the table by not funding EGIs more. CG is scaling up their funding of EGIs, and should ideally be doing this in the way that maximises impact. For CGās marginal funding of EGIs to have a multiplier of 5, one would have to think they should be scaling up faster. Maybe they should. The altruistic market is not perfectly efficient. However, it is worth having in mind that the multiplier of CGās marginal funding of EGIs may be closer to 1 after accounting for the risks of scaling up too fast. For example, a slower scale up could allow for learning more about which organisations are the most promising. I expect CG to be taking this into account, but mostly informally, not formally in the calculations of the multipliers of their grantees.
Ā£5x and Ā£5y refer to only money moved by fundraising in that year (or in the case of a pledge-based organisation, to pledges collected in that year multiplied by the estimated future money moved from a pledge). I believe this is standard for an organisation reporting its giving multiplier.
They do not account for total overall impact in the year (of a mature effective giving organisation), which would also need to account for a whole bunch of other things like
The intrinsic value of having a stable effective giving organisation next year as a place to put money with a substantial giving multiplier
The organisation acting as an entry point to the EA community and people who see an effective giving advert and get into EA for effective giving reasons then going on to make career changes
People who give effectively turning up to EA meetups and being great sources of career networking and advice, improving the value of the meetup.
People who start by giving effectively through an organisation, then transition to earning-to-give in a way that the organisation doesnāt capture.
Any formal or on-the-job training in doing effective fundraising the organisation provides its staff or volunteers, who then may leave to work at another effective giving organisation.
Positive reputational effects on the EA brand from advertisement of doing a fairly well-regarded politically neutral activity (though plenty of people donāt want to donate to the Against Malaria Foundation, you would be somewhat hard-pressed to find anyone who is pro-malaria and thinks someone who donates to AMF is evil).
I think certain effective giving organisations also have large impact through these fuzzier things too. Though itās hard to measure, effective giving organisations that involve a significant amount of volunteer coordination and thus training delivery, or that reach larger numbers of people (giving smaller amounts per person) so introduce more people to the concepts of EA, seem like theyād do more on the fuzzy impact side. Whereas paying a few staff who already know how to fundraise well to pitch at millionaires, less so.
-- I think CoGi have previously left a lot of impact on the table by not funding the expansion of effective giving enough (while consistently directing a lot of their money to GiveWell, implying they would have wanted to do so if theyād known they should be diverting more of that to incubating effective giving). The time between the pivot to careers in 2017 until the FTX crash in 2022 when the EA community narrative was āweāre talent-constrained not funding-constrainedā was a massive chokepoint for effective giving. Check out https://āācoefficientgiving.org/āāfunds/āāeffective-giving-and-careers/āā#featured-grants and look by yearābefore and after 2022 is a huge difference in grant allocations to effective giving organisations.
And if that chokepoint hadnāt have happened weād be a hugely different and probably much bigger and better EA community today. (To be clear, I donāt think it was at all obvious at the time that incubating effective giving was a good strategy! Itās only become so in hindsight.)
Even now I think we could scale up faster (and hugely welcome this scale-up post). But I understand that CoGi has a certain amount it wishes to allocate, and its strategy to maximise impact is allocating that in such a way as to create clear high-giving-multiplier funding gaps for other GiveWell-aligned donors to be able to step in and fill.
Even now I think we could scale up faster (and hugely welcome this scale-up post). But I understand that CoGi has a certain amount it wishes to allocate, and its strategy to maximise impact is allocating that in such a way as to create clear high-giving-multiplier funding gaps for other GiveWell-aligned donors to be able to step in and fill.
Are you confident that CG should be increasing the funding of EGIs faster (for example, by using looser funding caps)? If not, can you be confident that funding the EGIs supported by CG is significantly more cost-effective than funding GiveWell?
I am confident that CG running more RFPs, committing multi-year scale-up funding, branching out into diverse initiatives, and other such things with its increased EGI budget allocation is a very clear sign that it believes there is both high impact and absorbency here. And knowing that their previous RoI has been 5x, I doubt this one will end up substantially lower. I reckon theyāll use about the same judging criteria, the pot just wonāt run out so fast. Which means that I do think funding an EGI funded by CG is more cost-effective than GiveWell.
I am confident that CG running more RFPs, committing multi-year scale-up funding, branching out into diverse initiatives, and other such things with its increased EGI budget allocation is a very clear sign that it believes there is both high impact and absorbency here.
It does not follow from this that funding the EGIs supported by CG is more cost-effective than funding GiveWell? For this to be the case, assuming CG is trying to maximise their impact, one would have to think they should be scaling up their funding of EGIs faster, regardless of how fast they are currently scaling it. If CGās marginal funding of EGIs had a multiplier above 1 accounting for all effects, they would be leaving impact on the table by not scaling up faster.
I do believe that, from a purely expected-impact-maximising perspective, CG should scale up faster than they are currently doing by directing more of their money from GiveWell charities ā fundraising organisations for GiveWell charities. Thereās a whole bunch of opportunities above 1x they are intentionally missing out on, and also opportunities above their 5x funding bar they are trying to create and then intentionally miss out on. I believe that their current limit here is primarily reputational, and that altruism at this scale is not an efficient market.
The reputational considerations being that CG does not want to be seen using too much of its global health allocation paying for fundraisers, because someone could write a hitpiece on āa billionaire wants you to give money to help the extreme poor but wonāt give any himselfā.
Anyone who is not CG is not bound by the reputational considerations of CG, and can take advantage of a significant arbitrage opportunity.
CGās current scaling could still be maximising expected impact if they are correctly assessing the reputational risks of funding EGIs. However, I agree this applies less to small individual donors, and I also suspect the marginal multiplier accounting for all effects of these donors funding EGIs supported by CG is higher than 1.
I wonder whether it would be good for CG to clarify why they do not fund EGIs more. I feel like this would make sense even if the cause was the reputational risks you mentioned, which I believe are broadly seen as understandable.
Thanks for this discussion. I appreciate the thoughtful engagement even though I havenāt 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, weāre often not thinking about abstract diminishing returns on a smooth curve, weāre thinking about specific roles and what theyād 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 itās funding a function the org simply couldnāt perform before.
We try to do this kind of holistic (and sometimes hire-by-hire) assessment where we can, though we canāt 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, doesnāt always hold in practice. Lean orgs often underspend on things like marketing or growth capacity, not because those arenāt high-value, but because theyāre harder to justify from scarce operating budgets, especially when the payoff is uncertain. Additional funding can unlock spending that should have been happening but wasnāt.
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 granteesā funding, idealistically around 50%, but realistically 70ā100% for many newer grantees. When weāre that dominant a funder, the distinction between average and marginal matters less. Where weāve been a significantly smaller share of an orgās 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 10ā50% gap is cost-effective enough that more granular marginal analysis hasnāt been a top priority.
On why weāre 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.
I will present a mathematical example:
Effective Giving Antarctica has a core activityāa website that encourages Antarctic residents to donate to effective charities as a mark of national prideāand a marginal activityāsocial media ads that cause people to click through to the website. EGA has two available strategies:
A bare-bones functional website that links through to GWWC for Ā£10k, which allows fundraising at a 4x manner by buying social media ads
A fancy website optimised for user experience with integrated payment system and donations advisor chatbot for Ā£100k, which allows fundraising at a 6x multiplier by buying social media ads.
If EGA has Ā£200k funding, it could raise Ā£190k x 4 with a bare bones website (3.8x) or Ā£100k x 6 with a fancy one (3x).
If EGA has Ā£500k to spend, it could raise Ā£490k x 4 with a bare bones website (3.92x) or Ā£400k x 6 with a fancy one (4.8x).
Raising the budget Ā£200k ā Ā£500k raises the optimal strategy giving multiplier 3.8x ā 4.8x, meaning the marginal giving multiplier is higher than the overall one.
This is just standard economies of scale: investing in technology (like a great website) that improves your productivity at a fixed outlay is more feasible at higher budgets.
There will be other forces acting on an effective giving organisation like market saturation (not that many residents of Antarctica, theyāll get sick of social media eventually). But there would definitely be situations where economies if scale would dominate and the marginal giving multiplier ends up higher than the overall one.
Thanks for the helpful example. I strongly upvoted it. I suspected you had something like it in mind. I still think the marginal multiplier of funding EGA at a given time (not across time) accounting for all effects decreases with spending if the organisation allocates funds to the most cost-effective activities 1st. In addition, I believe the marginal multiplier of funding EGA should ideally not change across time. EGA should try to move spending from the years with the lowest marginal multiplier to the years with the highest marginal multiplier, thus increasing the marginal multiplier of the years with the lowest marginal multiplier, and decreasing the marginal multiplier of the years with the highest marginal multiplier, until the marginal multiplier is the same in all years.
In your example, the marginal multiplier of the strategy EGA is scaling up neglecting effects on other strategies increases with spending. It is 4 for 200 kĀ£ of spending, and 6 for 500 kĀ£. However, I believe the marginal multiplier of EGA is not the same as the marginal multiplier of the strategy it is scaling up neglecting effects on other strategies. I would say a signicant fraction of the value of funding EGA while it has a bare-bones website, and scales up social media ads is increasing the probability of EGA shifting to the fancy website. Neglecting this results in underestimating the marginal multiplier of funding EGA. Here is another way of noting this. For a spending up to 10 kĀ£, the marginal multiplier of the strategy EGA is scaling up neglecting effects on other strategies is close to 0 (assuming the bare-bones website barely raises funds without social media ads). Yet, this does not reflect well the cost-effectiveness of funding EGA in its earliest stages. A significant fraction of the impact of initial funding comes from increasing the probability of EGA achieving strategies with a higher marginal multiplier neglecting effects on other strategies.
Here is how I relate the above to economies of scale. Being an early adopter of solar panels would not have looked like a cost-effective way of decreasing greenhouse gas (GHG) emissions looking just at the initial cost of solar panels, and neglecting the reduction in cost resulting from increased adoption. However, a significant fraction of the (expected) decrease in GHG emissions would have come from the potential of early adoption enabling cheaper panels. This is why I mentioned in my past comment āmarginal multiplier accounting for all effects, including longterm and low probability effectsā.
Relatedly, it may naively seem that decreasing the consumption of chicken by 0.1 kg does not change the production of chicken if this can only be adjusted by multiples of e.g. 1 k kg. However, in this case, a better model would be that decreasing the consumption of chicken by 0.1 kg would increase by roughly 0.01 pp (= 0.1/ā(1*10^3)) the probability of the production of chicken decreasing by 1 k kg. So the expected reduction in the production of chicken would still be roughly 0.1 kg (= 1*10^-4*1*10^3).
A great reply!
Iāll note CoGi has a different funding philosophy for early stage funding, where it will often provide 100% of funding for a few years to allow the testing and development of new strategies. This talk is specifically about mature effective giving organisations.
It is true that the 50% of funding applied by CoGi across years for scale-up may be more useful to the organisation establishing itself, and thus ultimately higher-impact taking into account uncertain future effects. (Indeed I assume thatās why CoGi does this).
However, itās still true that if an organisation raised Ā£5x for effective charities this year at an operations cost of Ā£x, its marginal effect on its yearly fundraising total of you giving it Ā£y could be greater than Ā£5y due to economies of scale. (Itās just that the effect of CoGi giving it its first Ā£z for the year is also greater than Ā£5z due to future effects).
If one is willing to tolerate uncertainty in oneās giving, long time horizons, and a significant evaluation burden, you can probably do better by signing up to the Meta Charity Funding Circle and hashing out which organisations could make best use of startup and core scale-up funding that donāt already have it, at which point you really are looking for highest-impact otherwise-unfunded opportunities, so the evaluation burden to find and fund them gets large. If youāre not, then picking something CoGi funds at 50% and donating to its operations costs is a great way to āsave 5 lives for Ā£4000 rather than 1ā.
Do āĀ£5xā and āĀ£5yā refer to the impact accounting for all effects? If so, you are saying that the marginal multiplier accounting for all effects could be greater than the multiplier concerning the total spending accounting for all effects. I think this can only be the case if the organisation fails to allocate funds to the most cost-effective activities (accounting for all effects) 1st.
I still guess the marginal multiplier of the effective giving initiatives (EGIs) funded by Coefficient Giving (CG) is higher than 1, but I would be a bit surprised if it was 5. In this case, CG would be leaving lots of impact on the table by not funding EGIs more. CG is scaling up their funding of EGIs, and should ideally be doing this in the way that maximises impact. For CGās marginal funding of EGIs to have a multiplier of 5, one would have to think they should be scaling up faster. Maybe they should. The altruistic market is not perfectly efficient. However, it is worth having in mind that the multiplier of CGās marginal funding of EGIs may be closer to 1 after accounting for the risks of scaling up too fast. For example, a slower scale up could allow for learning more about which organisations are the most promising. I expect CG to be taking this into account, but mostly informally, not formally in the calculations of the multipliers of their grantees.
Ā£5x and Ā£5y refer to only money moved by fundraising in that year (or in the case of a pledge-based organisation, to pledges collected in that year multiplied by the estimated future money moved from a pledge). I believe this is standard for an organisation reporting its giving multiplier.
They do not account for total overall impact in the year (of a mature effective giving organisation), which would also need to account for a whole bunch of other things like
The intrinsic value of having a stable effective giving organisation next year as a place to put money with a substantial giving multiplier
The organisation acting as an entry point to the EA community and people who see an effective giving advert and get into EA for effective giving reasons then going on to make career changes
People who give effectively turning up to EA meetups and being great sources of career networking and advice, improving the value of the meetup.
People who start by giving effectively through an organisation, then transition to earning-to-give in a way that the organisation doesnāt capture.
Any formal or on-the-job training in doing effective fundraising the organisation provides its staff or volunteers, who then may leave to work at another effective giving organisation.
Positive reputational effects on the EA brand from advertisement of doing a fairly well-regarded politically neutral activity (though plenty of people donāt want to donate to the Against Malaria Foundation, you would be somewhat hard-pressed to find anyone who is pro-malaria and thinks someone who donates to AMF is evil).
I think certain effective giving organisations also have large impact through these fuzzier things too. Though itās hard to measure, effective giving organisations that involve a significant amount of volunteer coordination and thus training delivery, or that reach larger numbers of people (giving smaller amounts per person) so introduce more people to the concepts of EA, seem like theyād do more on the fuzzy impact side. Whereas paying a few staff who already know how to fundraise well to pitch at millionaires, less so.
--
I think CoGi have previously left a lot of impact on the table by not funding the expansion of effective giving enough (while consistently directing a lot of their money to GiveWell, implying they would have wanted to do so if theyād known they should be diverting more of that to incubating effective giving). The time between the pivot to careers in 2017 until the FTX crash in 2022 when the EA community narrative was āweāre talent-constrained not funding-constrainedā was a massive chokepoint for effective giving. Check out https://āācoefficientgiving.org/āāfunds/āāeffective-giving-and-careers/āā#featured-grants and look by yearābefore and after 2022 is a huge difference in grant allocations to effective giving organisations.
And if that chokepoint hadnāt have happened weād be a hugely different and probably much bigger and better EA community today. (To be clear, I donāt think it was at all obvious at the time that incubating effective giving was a good strategy! Itās only become so in hindsight.)
Even now I think we could scale up faster (and hugely welcome this scale-up post). But I understand that CoGi has a certain amount it wishes to allocate, and its strategy to maximise impact is allocating that in such a way as to create clear high-giving-multiplier funding gaps for other GiveWell-aligned donors to be able to step in and fill.
Are you confident that CG should be increasing the funding of EGIs faster (for example, by using looser funding caps)? If not, can you be confident that funding the EGIs supported by CG is significantly more cost-effective than funding GiveWell?
I am confident that CG running more RFPs, committing multi-year scale-up funding, branching out into diverse initiatives, and other such things with its increased EGI budget allocation is a very clear sign that it believes there is both high impact and absorbency here. And knowing that their previous RoI has been 5x, I doubt this one will end up substantially lower. I reckon theyāll use about the same judging criteria, the pot just wonāt run out so fast. Which means that I do think funding an EGI funded by CG is more cost-effective than GiveWell.
It does not follow from this that funding the EGIs supported by CG is more cost-effective than funding GiveWell? For this to be the case, assuming CG is trying to maximise their impact, one would have to think they should be scaling up their funding of EGIs faster, regardless of how fast they are currently scaling it. If CGās marginal funding of EGIs had a multiplier above 1 accounting for all effects, they would be leaving impact on the table by not scaling up faster.
I do believe that, from a purely expected-impact-maximising perspective, CG should scale up faster than they are currently doing by directing more of their money from GiveWell charities ā fundraising organisations for GiveWell charities. Thereās a whole bunch of opportunities above 1x they are intentionally missing out on, and also opportunities above their 5x funding bar they are trying to create and then intentionally miss out on. I believe that their current limit here is primarily reputational, and that altruism at this scale is not an efficient market.
The reputational considerations being that CG does not want to be seen using too much of its global health allocation paying for fundraisers, because someone could write a hitpiece on āa billionaire wants you to give money to help the extreme poor but wonāt give any himselfā.
Anyone who is not CG is not bound by the reputational considerations of CG, and can take advantage of a significant arbitrage opportunity.
CGās current scaling could still be maximising expected impact if they are correctly assessing the reputational risks of funding EGIs. However, I agree this applies less to small individual donors, and I also suspect the marginal multiplier accounting for all effects of these donors funding EGIs supported by CG is higher than 1.
I wonder whether it would be good for CG to clarify why they do not fund EGIs more. I feel like this would make sense even if the cause was the reputational risks you mentioned, which I believe are broadly seen as understandable.
Thanks for this discussion. I appreciate the thoughtful engagement even though I havenāt 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, weāre often not thinking about abstract diminishing returns on a smooth curve, weāre thinking about specific roles and what theyād 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 itās funding a function the org simply couldnāt perform before.
We try to do this kind of holistic (and sometimes hire-by-hire) assessment where we can, though we canāt 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, doesnāt always hold in practice. Lean orgs often underspend on things like marketing or growth capacity, not because those arenāt high-value, but because theyāre harder to justify from scarce operating budgets, especially when the payoff is uncertain. Additional funding can unlock spending that should have been happening but wasnāt.
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 granteesā funding, idealistically around 50%, but realistically 70ā100% for many newer grantees. When weāre that dominant a funder, the distinction between average and marginal matters less. Where weāve been a significantly smaller share of an orgās 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 10ā50% gap is cost-effective enough that more granular marginal analysis hasnāt been a top priority.
On why weāre 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.