Don’t think in terms of fundraising ‘overhangs’ – all there is in a marginal funding bar.
That bar will go up and down over time depending on how much money is available, and how good the opportunities are that we discover.
The main reason there’s less funding now is due to bear market – this isn’t something that’s easily avoidable, and it’s not clear it would be worth avoiding: since EA investors are more risk-neutral than the average market participant, EAs should take more risk than others, which means our available resources will down more than average during market crashes (and hopefully up more than average during bull markets). That’s exactly what’s happened.
I agree it would be nice to be more diversified about of crypto and facebook stock, though figuring out what’s optimal given all the other constraints gets pretty complicated, and a risk-matched exposure to global equities would have fallen a similar amount.
I agree with you that we should stop saying “funding overhang”. I’m also not advocating for Sam or Dustin to sell their stocks and put their money into supposedly safer assets.
What should be done in my opinion is to work harder on diversifying and increasing the amount of money available to EA causes and make sure that GiveWell et al. have to decrease “the bar” faster and more consistently (makes stuff more predictable and therefore probably more effective). One way (out of many) to do so that seems pretty obvious to me would be to put even more money into the effective giving landscape to convince millions of people in the world to give more effectively (again, I’m biased). A decent chunk of that would come from income and not equities. Still correlates with the global markets but much less so.
To a certain extent effective giving organizations are already receiving considerably more money than a couple of years ago but as long as several have a counterfactual multiplier (donations raised / cost of raising donations) of > 10 I think we should be much more aggressive since it kind of pays for itself many times over (and also to hedge against a possible prolonged bear market).
Don’t think in terms of fundraising ‘overhangs’ – all there is in a marginal funding bar.
That bar will go up and down over time depending on how much money is available, and how good the opportunities are that we discover.
The main reason there’s less funding now is due to bear market – this isn’t something that’s easily avoidable, and it’s not clear it would be worth avoiding: since EA investors are more risk-neutral than the average market participant, EAs should take more risk than others, which means our available resources will down more than average during market crashes (and hopefully up more than average during bull markets). That’s exactly what’s happened.
I agree it would be nice to be more diversified about of crypto and facebook stock, though figuring out what’s optimal given all the other constraints gets pretty complicated, and a risk-matched exposure to global equities would have fallen a similar amount.
I agree with you that we should stop saying “funding overhang”. I’m also not advocating for Sam or Dustin to sell their stocks and put their money into supposedly safer assets.
What should be done in my opinion is to work harder on diversifying and increasing the amount of money available to EA causes and make sure that GiveWell et al. have to decrease “the bar” faster and more consistently (makes stuff more predictable and therefore probably more effective). One way (out of many) to do so that seems pretty obvious to me would be to put even more money into the effective giving landscape to convince millions of people in the world to give more effectively (again, I’m biased). A decent chunk of that would come from income and not equities. Still correlates with the global markets but much less so.
To a certain extent effective giving organizations are already receiving considerably more money than a couple of years ago but as long as several have a counterfactual multiplier (donations raised / cost of raising donations) of > 10 I think we should be much more aggressive since it kind of pays for itself many times over (and also to hedge against a possible prolonged bear market).
See also Benjamin Todd’s post: Let’s stop saying ‘funding overhang’ - EA Forum (effectivealtruism.org)