The US legal definition of hardship is more stringent than ours, and we can only assist people who experience US-level hardship because we operate under a US charity. No choice there. I think pointing people to legal definitions won’t help.
Extending the eligibility period is less of a utilitarian choice than something deontological/oriented at community building. We believe we have a duty to help EAs who’d be able to support themselves if they hadn’t given away their money. Besides that, we hope current and potential EAs will see that we’re looking out for each other, which will make the EA community a more attractive place to be in. There’s also an argument to be made that getting donors back on their feet might get them to donate again, and it could stop them from leaving EA altogether.
Interesting point
bob
The form was indeed outdated, and I agree that moving away from email would be a good thing.
This is something we’d like to expand to, but it’s much harder to define “EA volunteer” than “donor to effective charities”. Once donor assistance is running smoothly, we’ll likely give volunteer assistance a try.
Thanks for letting us know, fixed!
I personally think the inflation section is just as important. People won’t make a long-term bet denominated in USD with an expected ROI lower than inflation. This also affects markets that aren’t 95% lopsided.
So, maybe, focusing on stronger cases?
Yes, and seminal cases.
We have those as well. I am still a bit out of my depth here, but I believe the rules are stricter when it comes to cash transfers than when comes to providing education. The lawyer I consulted did not feel the agency’s position was particularly coherent, though.
For associations like symphony orchestras, tax-exemption does exist but the process is completely different.
But if Basefund handles everything and the funders just feel like a detail that’s happening behind the scenes, this would be less of a concern.
This will indeed be the case!
Nope, fixed.
Setting up a non-profit is relatively easy. Registering a non-profit as a tax-exempt charity is more challenging. Tax-exemption of charities is not something that is coordinated at the EU level, unfortunately.
To me, the bread fund version feels like a last resort on the order of asking relatives for help, while the 50% version feels like something you can rely on. Most people are risk averse with respect to their personal finances, and I think the (perceived) uncertainty of going through individual funders would feel significant to most people.
I definitely could see the optics being a problem.
We will cap at 50%, and I have edited the post to reflect that. Does that change anything for you? Does the number of available funders matter to you?
Donors will not contact individual funders. They’ll come to us. We’ll maintain a ledger where we keep track how much money each person has earmarked for the emergency fund. Based on that, we will ask funders to donate. What part are you uncomfortable with? The fact that funders can misuse the earmarked funds?
Have you run a poll to see how people feel about the two versions?
Will do!
I’m confused why an approach involving a US and UK entity isn’t being focused on, if it’s at all promising.
Besides constraints on time and budget, the structure inspired by bread funds has a few large advantages detailed in the post.
Will this be tax deductible to an American or UK EA?
The original plan was to register the charity in the Netherlands and get initial funding from Dutch citizens. Then, if it appeared more funding was needed, we would apply for charity status in the US or the UK.
In the new plan, donations will not be taxed in the UK or US, or in any of the countries I looked at.
I’m unsure, but it seems like tax was talked about here, do I understand that the update in this post we are reading, supercedes these ideas in that past comment?
That’s right.
The design of this seems really different than the original design mentioned, which allows a person to take back their original funds. This has major structural differences, as mentioned here. Is this correct and do you have any comments?
Not entirely. The design is different, but we still cap recoupments at 50% of total donations. I forgot to mention that in the post, and I’ll correct it.
I agree that your proposal gets around most (maybe all?) of the issues I mentioned.
Ah, that’s where we went wrong. I assumed you would have mentioned that if you thought so.
However, your proposal focuses on earning-to-givers who have already given a fair bit, this seems to be tackling a minority of the problem (maybe 20%?).
I agree, and it is quite challenging to determine the size of that minority. If anyone knows anyone who has been in this situation, please send me a message.
Hey, I wrote the article you refer to. I only intend to partially reimburse people who donated money to EA-related causes. Most problems you describe apply to a safety net for all effective altruists, which would be much more difficult. I’ll quote a comment of mine:
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 EAs can only get back half of what they gave away, there is no way to use the fund to make money, unless they control a GiveWell-recommended charity. Second, we do not have to judge whether people are 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.
I believe this covers all points you raised, but let me know if I missed anything. Just to reiterate, my hypothetical charity wouldn’t make a judgment on whether applicants are still effective altruists if they need money.
The top comment on my article:
This seems like the type of infrastructure that should be experimented with on a small scale rather than heavily debated
Do you agree with this?
This is a commendable effort! However, it is unfortunate that detected fraud cases and actual fraud cases are conflated throughout the article.
$241,633 was lost to fraud this year — that’s about what we expect
We estimate 0.23% of those funds was lost to theft, bribes, and imposters.
By your own admission, the increase from 0.18% to 0.23% is mostly the result of improved detection. Such a large improvement in a one-year span suggests there is still a lot of low-hanging fruit. Because of that, fraud is probably much more common than reported here.
It is perfectly normal not to know how much money you are losing to fraud! I have spoken to fraud detection folks at an insurance company as well as ex-forensics. Established large organizations don’t have reliable estimates either. Detected fraud cases do have a use, of course, as a lower bound on actual fraud cases.
This post can be considered a response to that very comment! The main change is described here:
Note that both linked essays discuss a fund that only offers support to contributors. I no longer think that is desirable, and it will be very difficult to convince governments to grant such a construction tax-exempt status.
By expanding the scope to all donors to EA-related causes, contributors to the fund no longer gain an entitlement. This means that the fund will almost certainly be recognized as a charity, and donations will be tax-exempt.
As for the long silence, I only recently had the time to contemplate the change I made.
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.
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.
I agree that crypto is not the most user-friendly option, but more traditional options would almost certainly increase the regulatory and administrative burden on arbiters.
On the regulatory side: the use of crypto allows arbiters to never have full custody over funds. The law obviously hasn’t caught up with crypto yet, but we don’t think anyone will argue arbiters passively appointed by bettors are hosting games of chance. If arbiters actually agree beforehand to receive funds from both parties, and they even have the option to run away with the funds, we expect regulators to give them a lot more scrutiny (and rightfully so).
On the administrative side: arbiters have no risk of assets being frozen because their payment processor mistakes them for an online casino, there’s no risk of arbiters’ personal finances and stakes commingling, etc.
We tried to keep the crypto aspect as simple as possible. We use a stablecoin (1 xDAI = 1 USD) that can also be used for the (negligible) transaction fees, and there is no need to set up allowances or other weird stuff. Still, we won’t deny it’s a hurdle.