Found Bridgespan’s 2018 report useful and interesting.
Nice list Saulius, thank you.
[idea]: Invite-only Google Sheet List of considerations relevant to funding a group (one group per tab) and then columns of donor’s weights for those considerations. I would find this really interesting.
Deal could be that you only get access if you’re willing to share your weights!
For instance, like other big non-profits, EA orgs might want to hire institutional fundraisers to tap into larger grants from big foundations other than the usual suspects
I’ve looked into this a few times and it does seem like it will become a promising channel. In particular from the big donors that do very large checks (>$500k). At least one org I know is experimenting with hiring a full-time grant-writer. I currently think it won’t work well for most EA orgs for some time to come.
Worth noting that most big foundations have large sr. management time overheads and often require designing bespoke projects just for that foundation. Grant-writers also generally have slow payback periods (>1-2 years not rare, more if first one doesn’t work out), are very tricky to evaluate during hiring and expire once you run out of foundations / major donors to apply to (most don’t do much repeat funding). Not insurmountable challenges.
An alternative is to hire one-off fundraisers who approach lesser known major donors for you, I think that may be promising but requires a large time investment to train that person to talk about your charity. They also still require a large amount of Sr. mgmt’s time (non-foundation major donors will generally want to speak to the founders and most those conversations will end up being a no) and are more likely to generate one-off funding rather than repeat.
It may be that expanding philanthropic advisory within EA in general is more promising. Whilst not specifically focused on raising funds for EA orgs, an increased number of smart and best-arguments-aware donors in the space in general could well have a similar result for less sr. mgmt time cost.
It could also be that having a semi-centralised fundraising team that manages a team of generalist fundraisers that are shared and specialist fundraisers that each work for a different large EA org could work really well. Train them all up in tandem and work out how to evaluate them, focus on >$300k checks from major donors but also have a grant-writer or two shared between them, hire most talent from mainstream pools, etc., We looked into something like this to function across all the GiveWell charities but it ultimately looked like it wouldn’t work.
It doesn’t seem unlikely that that last option never makes sense, because by the time you have orgs large enough to justify the above ($5m-$10m pa), those orgs also organically start to hire their own internal fundraisers and grant-writers just to meet their large budgets.
Looking forward to putting more thought into this.
Social protection system coverage (helping more people access government benefits); CC estimates that this is less than one-fifth as valuable as cash transfers
That is surprising, they’ve done a lot of work in and around India where welfare budget utilisation has been infamously poor until only quite recently and where the huge rural population seems to make it particularly hard to get welfare to the poorest who need it most.
I wonder how their economists account for the counterfactual of unused government funds, I’ve seen quite a few calcs where unused welfare funds that go back into the central pot are only discounted by 1⁄4 − 1⁄2, which I still find very unintuitive even given only that the average wealth of a government spending recipient is far higher than that of a recipient of welfare.
I’ve been keeping an eye out for a charity / org in India that is particularly good at increasing access to government welfare so this is relevant for that.
Really impressed by both how you’ve executed this as well as the write-ups. 🙌
Awesome think-piece, thank you
Note: I have a feeling that ‘policing tone’ is an annoying meme for a forum and something more appropriate for moderators than for readers so I’ll post this one and default to refraining from doing it again.
Quick few thoughts on the tone of this, feel free to ignore if it doesn’t change your mind:
Most of these articles have been good but this one is certainly the worst out of all that I have seen (n=25 or so, from multiple writers) and I believe it has negative expected value.
This part, right at the top and at a few other points, I felt a little uncomfortable. If I were the author and I read this, I feel like I would feel more ‘attacked by my allies’ than ‘constructively critiqued’.
I feel like some quick changes to the tone, particularly early on (e.g., ‘I found this one distasteful’ rather than ‘this is the worst I’ve seen’) feels less aggressive. Perhaps adding an extra paragraph at the beginning saying a few positive things about their column in general (if you have those views) and saying that you only mean your comments in a constructive way. Personally, that would be enough for me to take the feedback well. Maybe no one on their team reads it, maybe one person reads it and forwards it to the whole team. Seems worth assuming the latter is the case and it’s that scenario that prompted me to make this comment.
Given in particular that Future Perfect is not funded by donors that explicitly identify with EA ideas and that run by Vox, my quick guess is that careful constructive criticism is far more valuable / low risk than more assertive / slightly aggressive criticism (apologies if I’m already preaching to the choir here). I’m currently still really glad that Vox, Ezra etc., have chosen to do this column taking lots of EA ideas into account.
Funnily enough I had a similar opinion about one of the mobile thumbnails for their anti-mars piece. The thumbnail read “Elon wants to go to Mars, here’s why that’s a bad idea” which didn’t seem worth it.
Some part of the large potential upside of this fund, and the reason why some of the team are excited to put so much of their time into it, is that if we do a really good job it could grow and attract significant additional capital into the meta cause areas.
Whilst a relatively small cause area, in a more efficient market for non-profits, I would expect that the space was funded to the brim due to the outsized returns available within it. I see moving additional capital into this space as highly valuable and I think it’s often a smaller, easier jump for many donors than some of the more exotic super-high-impact cause areas.
My intuition is that I think that the fund would not be particularly attractive to new donors or have that much potential for growth if we only funded one project at a time and given that there are a number of projects available with similarly high expected value, spreading over a number of orgs (and including some early stage orgs) seems like a valuable thing to do.
I think this sentiment is shared across the team but may also include other reasons.
Final post for the day as it’s late. Posting this question myself as I think it’s a useful one to have addressed:
Why have you chosen to spread your grants across a number of orgs and not given most of it to just the one or two org/s you thought were the most pressing?
The challenges of funding small early stage orgs deserves a whole piece to itself but I can say that this topic has come up internally quite a few times and we will continue to try to address it.
We did make a few small grants to smaller orgs this time around as we wanted to signal that we supported those projects.
One potential future is that we decide to give a much larger proportion of the grant allocation to smaller orgs. That would require either for the larger orgs to more easily fill their room for funding (one clear signal of this would be those orgs no longer needing capital from flexible donors that might have funded smaller projects in the alternative) or for some strong arguments for increasing our prioritisation of smaller orgs. Right now the benefit of experimenting by funding small orgs is traded-off against the increased uncertainty.
Some of the larger orgs are also only large because they are performing incredibly well. It’s worth pointing out that they were previously smaller orgs themselves and that the benefit of experimenting with earlier stage orgs isn’t realised unless they can be scaled up once they’ve proven their approach.
This is also how I currently feel about EA grants. I’d love to see them work out how to scale up their operation. It’s a project that is more bottlenecked on talent than funding and early stage re-granting is really hard. An obvious retort would be for them to lower their standards and give out more grants with less analysis (in venture capital this technique is distastefully referred to ‘spray and pray’). This isn’t particularly feasible at present I don’t think. Any re-granting program has its own donors and there aren’t any major donors that I have heard of that are willing to have their funds distributed in this manner. It’s also not clear that this would be a good thing given the risk of bad orgs with seed funding doing significant damage through PR risks, dilution effects or similar. Maybe the benefits outweigh the risks but either way, this is another effect that puts off donors from giving to a re-granting program that uses this approach.
My best guess, is that EA Grants’ (or similar group’s) best approach is to take their time to work out how to deploy early stage capital in a systematic and professional manner that can attract funding from larger foundations like Open Phil that usually don’t have capacity to handle much early stage funding.
For now, and I don’t speak for the whole team here, my best estimates are that very early-stage funding in most cases is lower impact than filing the funding gaps of growing orgs and for an impact-maximising fund such as ourselves we should only be putting smaller checks into particularly promising early stage orgs that we want to signal confidence in.
I’m very open to having my mind changed on this and have enjoyed taking the time to put thought to paper in this AMA today (as is hopefully apparent from the volume of text for any of those still reading).
Also to clarify: while I don’t currently think it’s highest impact for this fund to be making lots of early stage grants due to the points raised above and others, I do think that a systematic team of full-time staff putting all necessary processes in place, attracting the right talent would be able to raise and deploy lots of early stage funding in a way that is highly valuable. I’m very much hoping that this what EA Grants manage to achieve.
This is also not a closed topic for us and it’s not that unlikely that, come next granting round and having discussed this further, the EA Meta Fund team decide to devote more of our allocation to earlier stage groups.
I’d be interested to read some thorough thinking on how to trade-off between funding early orgs and later orgs. I’d have a bunch of considerations I would want to make sure made it in there but I don’t currently have any piece of work where I’ve tried to do a general collection of these considerations and weight them. I generally feel like I make better decisions when I can apply my intuitions to a series of smaller decisions that come together in some way.
A question I have that I would like to learn more about at some point (I currently assume it’s not very relevant for some time to come) is how to think about competitive dynamics in small donor funded markets. In large profit-driven markets it seems well accepted by economists that more competition is generally a good thing for the consumer. In smaller donor-driven markets it seems like a less closed case. If choosing between funding an established player or another org doing the same thing, how should we think about that? Presumably at some point the cost of duplicated effort, talent and capital requirements are overridden by the benefits of competition. My current working assumption is that that point is quite far along, especially given second mover advantage. If this is incorrect then perhaps we should be funding more early stage clones of existing orgs.
Better frameworks for thinking about fungibility. See my points from above reply to Tee. The reasoning used for these currently is pretty ad-hoc and potentially it’s better that way, but it does seem like it could be important enough to warrant further research. I think I saw a while back that it was on GPI’s research agenda.
Better frameworks for evaluating community building or spreading important ideas. It’s really hard and involves a number of highly sensitive input assumptions. Whilst this is of course very relevant for CEA-type groups and prioritisation research groups, it’s also relevant for groups like Founders Pledge. In poverty charity evaluation one question has been whether long-term flow through effects actually dominate the equation. Similarly, it might be the case that for money moving groups that the community building or important-idea-spreading functions might dominate the equation. This would be an important realisation for funders but potentially more so for those orgs themselves. A big issue is that it might be too case dependent to generalise. I don’t think a model would be very helpful, but a well thought through list of considerations to evaluate with some estimates on how much to weight each one could potentially be very useful.
I’ve forwarded this data to the team—thanks for sharing it, I missed it when it went up on the forum.
How to take data like this into account is an interesting and tricky question. I can have a go at a few points that seem relevant:
I’d rather see opportunities as projects and funding gaps rather than asking ‘who received what funding already?’. Point made only to clarify, I realise this isn’t what you were suggesting.
EA Meta as a cause area does have a larger requirement for funding than is currently available. The only two donors to meta orgs I know of that are not already donating at their own full capacity are my employer and Open Phil. However, both are deploying capital as fast as they can limited by other restrictions (risk, talent, appetite of principal etc). Certain key groups have performed particularly well and fundraised well so they are making decisions based not on maximising their ‘impact per dollar donated’ but on maximising their absolute impact given some other bottleneck/s. It does not necessarily follow that an org in the latter category is lower impact per dollar donated than an org that isn’t. I think some more simply expressed version of the above would be more useful than discussing whether orgs / cause areas are funding constrained (outside of evaluating counterfactuals when making career decisions).
The operations of some orgs are also far more scalable than others and in general I want to reward this. While we mostly speak about relative returns (impact per dollar) we should also keep in mind absolute returns. In particular, it’s worth nothing that reaching a certain size and scale of operation opens an org up to large grants from large foundations, accessing capital that otherwise wouldn’t have gone into the cause area. An adage used in venture capital is that it “takes founders just as long to raise $100k as it takes to raise $1m”. This does seem to hold true for non-profits as well so long as there is enough mid-stage and late-stage capital available.
The general approach I take is to only challenge an orgs declared room for funding if it seems surprisingly large, small or poorly justified. Potentially, given that in many cases funds one org receives come at the cost of those same funds going to another org, room for funding and budget declarations should be more heavily scrutinised. i.e., It’s OK to stretch a high return business model slightly into it’s diminishing returns so long as it remains more effective than smaller marginal groups whose funding they might be restricting. In other words: we should probably be encouraging EA meta orgs to avoid being wasteful with their resources.
This said, funding is only zero sum for some donor segments. Some donors are restricted by , for example, Open Phil’s rough 50% rule or a donor’s limited time and confidence requirements causing them to prioritise larger capital deployments.
I have seen at least two examples of larger orgs directly taking into account the flexibility of donor capital that they receive and spending some time trying to replace that donor with someone less flexible with lower opportunity cost. To me this seems highly commendable.
How a group have used previous funding plays an important role in evaluating their likelihood of using new funding well.
Some orgs are a cluster of valuable projects that could just as easily be evaluated project-by-project and we wouldn’t want to be guilty of something akin to gerrymandering.
It seems like where orgs are a collection of projects, ideally we would be able to evaluate each of those projects individually, as well as evaluating the group as a whole. It would be helpful if these cluster orgs were better able to track the progress of their projects individually. 80k are particularly good at this.
I also quite like:
Upstream orgs that improve the quantity and quality of available talent, capital and insight.
It’s snappy, easy to remember and gets to the heart of the cause area.
I don’t think it’s as clear what it means though and perhaps shouldn’t be used by itself without further explanation.
Three main sources:
1) Via the application form: This is [hopefully] coming soon. The plan is for two of us to monitor the applications and then send proposals to the group same as the process for anything that comes from intro’s (see reply to the comment above from @lukeprog). I must note that reviewing applications can be very time consuming and I’ve personally found it generally requires much less energy to review projects that come in via intros than what comes in via open application forms.
2) Via intros. From my time in early stage businesses I felt this model was adopted by almost all venture capital orgs for good reasons and I have some trust in the method. I’ll put a little more on my own view on this in a separate comment.
3) Existing knowledge. Between us we made quite a long list of opportunities we already knew of in our first meeting. Even just the funding gaps on that list would be enough to absorb the whole fund for some time to come, however it does seem prudent to keep looking for even more promising projects.
Two of the team members already spend a significant portion of their day job investigating and evaluating meta groups (Luke and myself). For Luke this is about 50% of his time for his own philanthropy and I spend maybe 10-20% of my time depending on what other projects I have on the go. In general, a core criterion for choosing us for the team was (I believe) that we all spend quite a bit of our non-day job thinking about or evaluating meta orgs. Matt and Denise have been very active, and strategic, donors in the space for many years and Tara whilst only making a switch to earning-to-give last year, thought very hard about this while she was on the other side of the table as COO and CEO of CEA. I also find her views on how to evaluate community efforts are particularly valuable. We all come across a variety of opportunities from our existing activities and expect anything we miss to come our way once we open up public applications (coming soon).
Re time spent discussing: we are trying to minimise the amount of time we spend on group calls, probably only 3-6 a year as they are generally less efficient than a-synchronous communication. We have internal email threads and a private forum that we are using for collaborating on research and swapping arguments / opinions.
Roughly, our process is that someone from the team looks into a funding opportunity, they then put it to the rest of the team in an email thread or in the forum with their research / arguments and the rest of the team then reply with their comments, questions, opinions. Then, ahead of a granting period, we come together to discuss the various proposals and over the next week or two each decide in a Google Sheet how we would want to split the available funds. There is a simple algorithm that averages and rounds, obeys our general rules for grant minimums etc., and we discuss / negotiate each other’s decisions and change our allocations until we all agree the outcome looks like a) a sensible outcome and b) represents the group’s views.
During the calls we have someone taking minutes and the offline discussions are all in text form, someone takes the initial proposals, minutes and offline discussion texts and turns those into write-ups. We each then give a round or two of feedback on the write-ups before submitting the decision and writeups to CEA for execution.
Exactly how much time this takes up for each of us is currently unclear as we all seem to be thinking about and replying to threads both inside and outside our day jobs.
Thanks for the kind words Tee! Agreed and hopeful. I do also think that it’s very valuable for some pots of funding to not be very public as there are some bad incentives and restrictions caused by public work.
E.g., I’m (currently) quite happy currently that EA Grants doesn’t have to justify each grant publicly. This allows them to take gut-calls on early stage projects and to fund lots of small things without having to hire a large number of staff.
Whatever level of transparency each grant making body decides is appropriate for their strategy, in general I think more of the benefits of grant making (and research in general) compound when done publicly and transparently. I’m just glad that there are some pots of capital coming together that can make quick decisions and back lots of early stage projects.
This said, I’m of course not all that confident in this view.