Providing insurance is really hard, and insurance coverage is inherently limited. From the LessWrong article I linked:
This sounds a lot like insurance, and effective altruists could indeed insure themselves against a myriad of risks. Unfortunately, insurers will reject claims whenever possible, many risks cannot be easily insured, and insurance requires monthly payment, which requires a stable income. In other words, insurance is no replacement for a personal financial buffer. Insurance is useful to mitigate specific high-cost risks, but that’s it.
(Additionally, insurance introduces the overhead of an insurance company. When I asked for a ballpark estimate at the insurer I interned at, I was told that at most one-third of all premium money is put back into payment of legitimate claims.)
Regarding the specifics, I’m not really clear on why an emergency fund should be coupled with donations.
By focusing exclusively on reimbursing donors in financial trouble, we avoid opening a can of worms. First of all, the risk of fraud is much lower. If you can only get back half of what you gave away, there is no way to use the fund to make money, unless you control a GiveWell-recommended charity. Second, we do not have to judge whether someone is EA-aligned. Third, people cannot take advantage of the fund and, perhaps more importantly, people will not have to worry other people are taking advantage of the fund.
To expand on the last point, if we ever decide to reimburse a donation because someone’s second car broke down, that might annoy some people with a different idea of what constitutes an emergency, but at least they know that person donated at least twice the amount needed to fix the car. Now, if we handed out fix-your-second-car money to people who never donated anything to charity, I’d predict riots.
Also, coupling the two promotes donations. People who would normally find parting with substantial amounts of money scary have the assurance that they can always knock on our door.
Agreed! I have applied to ACX Grants to set up a trial version. If anyone else is interested in funding this, send me a message.