Public Fundraising has Positive Externalities
Epistemic status: revealed to me in a dream
Summary: fundraising from the public has positive externalities: it also functions as outreach and red-teaming. If organizations have not taken this into account they may have under-invested in public outreach and should do more of it.
A simplistic approach
Here is a simple model for how a normal organization might think about fundraising:
A: Estimate how much money you expect to be able to raise from fundraising activities.
B: Estimate how useful that money would be to you.
C: Estimate the costs of fundraising (e.g. staff time).
If B > C, do fundraising! If not, skip it for now.
My claim is this is a bad model for EA orgs, because it misses a significant fraction of the benefits.
Field-building benefits
Soliciting donations from the general public is generally quite hard. The skills required to do this are often quite different from those involved in running the organization’s core operations, and can be a significant distraction. It is hard to convince people what you’re doing is a good idea, and even those who agree often don’t donate.
But this is not wasted effort: the difficulty in converting agreement into donations means that fundraisers are effectively subsidizing outreach. The people who read your work but don’t hand over their credit card details might be sold on the mission but skeptical of the team… so they donate to another org. Or they might be a student with limited liquid assets but willing to apply for jobs in the space in a few years. Or they might bring up the idea to their friends, or answer an online poll, or change their vote. Each of these seem pretty valuable—for example, it seems plausible to me that a large fraction of the value of SIAI’s fundraising efforts might have come from these channels, rather than via directly increasing SIAI’s budget.
Epistemic benefits
Fundraising can also be unpleasant because it opens yourself up to criticism. If you’re just doing your own thing with one or two large donors, you have little need to explain yourself to anyone else. You need to appeal to the big foundations, but you probably have a decent idea of what they want, and they’re also likely to be pretty busy. Even if they say no, they’re unlikely to send you a long message about how you are bad and your organization is bad and you should feel bad.
In contrast, having the audacity to run a public fundraiser naturally invites questions and criticisms from people who are skeptical of your effectiveness and theory of change. These critics have no obligation to represent a single perspective or agree with each other, so you may find yourself being attacked from multiple directions at once.
However, this may be one of the only sources of feedback your org can get, especially if you are small. For the same reasons peer review, flawed as it is, is useful in science, your org can potentially benefit from feedback and questioning and critique of your assumptions, plans and execution.
Fundraising from the broader group of EAs can attract high quality criticism from similarly-minded people; raising from a broader audience could potentially attract feedback from a wider range of perspectives.
There is something of a principal-agent problem here; for the staff, criticism is unpleasant. For the organization, it is a mixed bag, because good criticism, even if harshly worded, can help them improve. And from the perspective of the broader movement it seems very good, because damning public criticism helps avoid grant misallocation. So my guess is that, from an impartial point of view, organizations under-invest in exposing themselves to public scrutiny.
You could think of this argument as being somewhat analogous to the idea that startups should seek to produce a MVP quickly, and get feedback from actual customers, as even though it’s painful it is good to help you stop deluding yourself.
The main risk
The main downside I see is that soliciting funds from the general public encourages mission creep: rather than focusing on the most effective projects, organizations will instead be encouraged to focus on those that are easiest to raise money for.
This will be a larger concern for some organizations than others. I would speculate (with low confidence) that it is a larger risk if you are attempting to fundraise from a small number of large sources (who may have the bargaining power to extract significant concessions, and whose objectives are sufficiently transparent that you can modify yourself to become more congruent) than from the amorphous general public.
For some organizations this disadvantage might be so large, in conjunction with the cost of fundraising, as to outweigh the benefits. My argument is just that I think this disadvantage is relatively clear, whereas the advantages are more likely to have been overlooked.
What is the significance of this?
My guess is that while this applies to all non-profits, this matters to an unusually large degree to EA, due the presence of very large funders allowing many organizations to almost completely neglect mass fundraising campaigns. Many orgs do not even post an annual fundraiser on the forum, let alone run ads on google, reddit and so on.
If organizations respond to this rationally but selfishly (to the extent that makes sense for a non-profit) then they will under-advertise to the general public.
I think this would be good if people did it more. Rather than (implicitly) all competing for the same pseudo-fixed pie of hard-core EA dollars, more orgs could try to appeal to the wider public. Up until now a lot of EA outreach has focused on selling the philosophy of EA first, but I think many of the individual projects can be justified without significant philosophical foundation-building, and it would be good to have some more concrete project-focused outreach.
One step towards this would be if grant-application-soliciting organizations included a field for a link to the organization’s public fundraiser, to increase the expectation that organizations would at least attempt to do so.
You could also imagine an organization that aimed to help multiple EA orgs fundraise, perhaps funded by taking a % of the money raised (this would align incentives but maybe deter donors so it is unclear to me if net good).
Thanks to all those who inspired this post and gave feedback.
Good post. I think you miss the biggest benefit of all though: growing the size of the donor pie is more effective than fundraising from EA donors’ set budgets. If you’re promoting a public health charity to EA funders you’re competing for funding with the likes of AMF. If you’re promoting it to the wider public, you’re mostly competing for funding with other less effective charities or the money being spent on consumer goods.
(corollary: the efforts of a moderately efficient charity to fundraise from the general public via low-cost, viral gimmicks like ice bucket challenges can result in more net DALY gain than a more efficient charity securing funding from an EA fund. Yes, I’m inverting MacAskill’s ‘funding cannibalism’ argument… )
This benefit is likely much bigger than the positive externalities, provided you have a cause which is actually suitable for public fundraising (something like AMF has a much better chance of success than a meta charity or research org), or at least a subset of the public reasonably easily reached via interest groups (e.g “animal lovers” for campaigns against factory farming)
The feedback and “red teaming” aspect might be less useful than you think though, even for organisations that lack enough contact with the non-EA world (unless you’re counting non-EA HNWIs, corporations and funds with the time and inclination towards in-depth engagement as the general public)
Many areas of public fundraising don’t actually involve any real interaction with the public at all, so all you really get to do is A/B test your messaging.
As for actually talking to random members of the public… the feedback is probably going to disappoint, even when people are really nice. If you’re asking for non-trivial commitments, people will be in “say no” mode, which means you’ll hear quite a bit about which other charities they give to, how tight their financial circumstances are and the odd middlebrow dismissal of your pitch or the general area of charity you fit. But you won’t get any criticism of the “I spotted this error in your paper” sort that EAs seem to value most. If you’re shaking a bucket, conversations will be shorter still.
Literally talking to as many people as possible works with well organised teams on low wages and the right logistics (there’s a reason even big name charities use agencies). Even with only five new donor signups a day, low attrition rates can make it cost-effective in the long run and more so than paid media, but talking to the public all day for such a low response isn’t something it makes much sense to ask the core team (or volunteers) to be doing as anything more than an experiment. I’m speaking from experience here, having spent a couple of summers a row knocking on doors for a health-related charity with a strong local angle, and doing well enough to get invited to the meeting where all the metrics were discussed. It’s hard work and won’t work equally well for all causes
Lastly, because of all of the above, an EA central team that helps incubated causes with public fundraising strategy and implementation is probably a good idea if one doesn’t already exist...
Great point about the counterfactual for the funding, I should have thought of it and included in the post in the first place. Thanks a lot for sharing this great comment!
thanks for writing this! One comment:
My personal experience is the converse: large donors are more willing to dig into more complex theories of change, explain their skepticism to you and have you point out anything they might be missing, etc., whereas with small donors you either have to get them sold ~immediately or else they aren’t going to buy in.
(I think CEA is fortunate to have this kind of large donor though – probably there are other large funders who would cause more mission drift than the general public would.)
Thanks the reply; I’m not sure we really disagree.
A grab-bag of thoughts on the subject:
Back-and-forth communication is possible with large donors but not small donors.
This is equivalent to small donors pre-committing not to negotiate; they give you a take-it-or-leave-it offer, albeit one whose terms you can’t directly observe.
You can persuade a foundation your approach is good, increasing the expected funding.
But your competition can also do this, so this might effectively end up with the foundation having a higher bar than if they didn’t do this.
The average applicant might be better off if this channel did not exist! Though the best applicants will likely benefit from it.
Your experience with large EA foundations is positive because the discussions focus on the things you think matter and you respect their decision making.
But this is mainly because they are EA, not because they are large.
Less aligned foundations are more likely to want you to make arguments about things you consider less important.
Small EA donors probably care about similar things to you (just at lower levels of sophistication/granularity).
Funding is more binary from a donor, vs foundations which can scale grants with the confidence in you.
But there are many small donors, with different levels of confidence in you, so you aggregate donation still scales with average confidence.
Foundations can persuade you to change your approach.
If they are good evaluators this might be via insightful feedback and the effect is positive.
If they are bad or poorly aligned this might look more like your making concessions, giving up impact/dollar in return for more dollars.
In theory you could do similar ‘negotiation’ with small donors by trying to predict what they want. But this negotiation plays out without actual conversations taking place. Implicitly my argument is that this uncertainty makes negotiation here harder than with foundations.
Minor point that isn’t engaging with the substance of your post, which I basically agree with the main point, but a negative externality here is that fundraising is often annoying. There is adverse selection where organizations that fundraise are often corrupt (see: Wikipedia) and ineffective. If an org is fundraising, it makes me think implicitly, “Why do you need my money? What has caused you to have this scarcity? Are you ineffective and have been passed over?” Personally I’d prefer moving past the social technology of donations and move more towards impact market-like mechanisms.
Simple, clear, thought-provoking model. Thanks!
I also faintly recall hearing something similar in this vicinity: apparently some volunteering groups get zero (or less!?) value from many/most volunteers, but engaged volunteers dominate donations, so it’s worthwhile bringing in volunteers and training them! (citation very much needed)
Nitpick: are these ‘externalities’? I’d have said, ‘side effects’. An externality is a third-party impact from some interaction between two parties. The effects you’re describing don’t seem to be distinguished by being third-party per se (I can imagine glossing them as such but it’s not central or necessary to the model).
Interesting argument about ‘side effects’ vs ‘externalities’. I was assuming that organizations/individuals were being ‘selfishly’ rational, and assuming that a relatively small fraction of things like the field-building effects would benefit the specific organization doing the field-building. But ‘side effects’ does seem like it might be more accurate, so possibly I should adjust the title.
Sure, take it or leave it! I think for the field-building benefits it can look more obviously like an externality (though I-the-fundraiser would in fact be pleased and not indifferent, presumably!), but the epistemic benefits could easily accrue mainly to me-the-fundraiser (of course they could also benefit other parties).
Thanks for the post, Larks! In theory it looks like more public funraising would be good. However, I wonder to which extent EA-aligned orgs. have tried it, but did not have much success.