Hi Brendon and Tharun,
Catherine from GiveWell here. Thanks for your post—it’s generated some good discussion!
First, I want to confirm a few aspects of our banking that have been discussed here:
A large proportion of the funding that we hold at any point in time is for making grants to our recommended charities. We typically grant those funds within 2-5 months of receiving them. Therefore, our balance fluctuates throughout the year as funds are received and granted.
The vast majority of donations to GiveWell are made in December, which means that both our end-of-year and beginning-of-year balances are significantly higher than the typical balance on any given day of the year. Our January balance is higher because we have not yet granted the December donations, and because some year-end donations are processed in January, such as checks (which tend to be larger donations) that are mailed to us on December 31.
Beyond funding for granting, we also maintain a balance of operating expenses.
We agree that consideration of where to hold and invest funds is important. Last year, we began work to revisit our banking practices. We also adopted an investment policy in December 2020 that enables us to invest a portion of our available cash balances in financial vehicles, with the following goals: preserving capital, meeting our liquidity requirements, minimizing volatility, and maximizing our after-tax return.
We are continuing our project to revisit our banking this year. In addition to the interest rates offered on accounts, our decisions about where to hold funds will also factor in our additional needs, such as strong customer service, security, understanding of non-profit vs. for-profit needs, user interface, connection with our various tools and platforms, and international operability. We plan to take this work forward in 2021.
Hi Peter,
Catherine from GiveWell here. We appreciate the dialogue this piece has generated. We agree that economic growth is an important area to consider evaluating, due to its potential for significant and positive impacts on well-being.
Today, our top charities list comprises charities implementing programs that have been studied via randomized controlled trials (RCTs). By pointing to these trials (and the monitoring conducted by our charities), we can serve our donors by making a public, vettable case for our recommendations and demonstrating their likely impact. We believe these are excellent, cost-effective opportunities for donors to help people alive today.
As John and Hauke note, GiveWell is not just focused on RCTs. We’ve expanded GiveWell’s focus to include new areas that may be more challenging to measure than the programs our current top charities implement,and we will therefore consider potential top charities that don’t have RCTs of their work. Our goal in expanding our focus is to identify programs that are more cost-effective than our current top charities (which we believe are highly cost-effective and difficult to beat). We wrote a blog post in February 2019 outlining our early plans for this work: https://blog.givewell.org/2019/02/07/how-givewells-research-is-evolving/.
We plan to expand our focus gradually, starting with areas in which we think we can make significant progress. We’re looking into health policy interventions—like alcohol control, ambient air pollution, micronutrient fortification in India, pesticide regulation, and lead paint regulation—based on our understanding of the existing research within these areas and our experience evaluating health interventions. From an institutional and research perspective, we think this is the right starting point for our expansion.
That doesn’t mean we’ll stop there. In that February 2019 blog post, one of the areas we listed as under consideration for future research was “Increasing economic growth and redistribution.” We hope to be able to deepen our understanding of this topic soon, although we don’t expect to do so in the very near future, so unfortunately don’t have substantive additions to the above discussion at this time.
Preliminarily, we guess that it might be particularly difficult to analyze giving opportunities in “economic growth” broadly because we perceive that growth is the result of a complex interplay between many different areas one could make grants in. These areas include infrastructure development, fiscal policy, monetary policy, industrial policy, peace and stability, individually-targeted programs, health, and so on. We haven’t yet done substantial work to map this space, but we expect that considering the more granular cause areas within the broad economic growth space will help us make progress on prioritizing further research.
We look forward to following the research that is done in this space and we are excited that other researchers are focusing on international development, as we think this will improve our research and recommendations in the long term.