They want to stick with registered US charities for this initial round, to keep the grantmaking logistics simpler.
I believe down the road, when FF has built up some grantmaking experience, they’d like to widen things up.
TLYCS’s experience definitely suggests growth, not stagnation. Between 2014 and 2019, money moved increased at a compound annual growth rate of 75%. Web traffic did flatten out, but mostly after we started focusing more on offline fundraising.
I asked my contact at Fugue Foundation about this, and here’s their response:
We list information about our corporate structure on our website at the link below. We are incorporated in Arizona and await word from the IRS regarding our 501c3 application. Indeed, as a private foundation, and one that specifically lists privacy protection as one of our core principles, we do try to maintain a certain distance with online identities. I will certainly speak with any of the organizations that are selected to receive the grant.https://fuguefoundation.org/docs/mission.html#incorporation
We list information about our corporate structure on our website at the link below. We are incorporated in Arizona and await word from the IRS regarding our 501c3 application. Indeed, as a private foundation, and one that specifically lists privacy protection as one of our core principles, we do try to maintain a certain distance with online identities. I will certainly speak with any of the organizations that are selected to receive the grant.
Thanks to everyone who voted and commented! It was helpful to learn more about how EAs think about multiplier orgs, and I hope it was helpful to hear my perspective from inside one of those orgs.
Here are my biggest takeaways from the discussion, apologies that it took me so long to post this:
Somebody is likely wrong: either multiplier orgs are pursuing strategies that don’t work, or those strategies do work and donors are missing out on leverage. If EAs can learn more about which statement is true, there’s a real opportunity for improvement. In theory there could be a middle ground where multiplier orgs are pursuing strategies that work at their current scale and marginal multiples are close to one, but it seems unlikely that all/most multiplier orgs fall into that category.
If you look at the history of multiplier orgs in EA, I think it’s clear that at least for some of them the model has worked. REG seems like a pretty clearcut case study of an organization that has spent very little money to move a lot of money to highly effective charities from donors who almost certainly never would have heard of those charities without REG.
By a large margin, people’s biggest objection to multiplier orgs is that they don’t trust the multipliers those organizations are reporting. People mentioned a variety of concerns about the reported numbers, including that they aren’t counterfactually adjusted and that they think the marginal return on new donations is likely to be lower than the historical average return. And this may create a reinforcing dynamic, where EAs aren’t excited about multiplier orgs because they get the sense that other EAs aren’t excited about them.
There are very high barriers to entry to getting a better understanding of the multiplier space (In other words, I think this area is quite vetting constrained.) There are a lot of different organizations, lots of different methodological considerations, and inconsistent reporting across multiplier orgs (e.g. money moved numbers may or may not be counterfactually adjusted). It would be hard enough for one person learn enough to make an informed decision; it’s completely unreasonable to expect everyone to learn this much on their own. (Note: it’s not clear to me that comparing multiplier orgs is harder than, say, comparing movement building orgs; my sense is that both areas are vetting constrained.)
The most sophisticated potential funders for meta orgs (Open Phil and the EA Infrastructure Fund) have actually supported about a dozen different multiplier organizations. However, it’s unlikely that these two funders alone can support a thriving ecosystem of multiplier orgs, given that Open Phil only considers a narrow subset of multiplier orgs and that the Infrastructure Fund’s funding capacity is quite low relative to the what a thriving ecosystem would need.
The multiplier ecosystem is diverse enough such that there may well be an organization out there that addresses your biggest concerns about the space. For example, if you’re worried that people might not keep the GWWC pledge, Founders Pledge’s legally binding pledge could be interesting. Conversely, if you’re worried that FP’s founders will give to ineffective charities, GWWC could be a good option. REG is extremely efficient but is relatively hard to scale, while TLYCS has a more scalable model but is willing to sacrifice efficiency in pursuit of that scale (i.e. TLYCS is more likely to pursue a strategy we think will cost $10 million and move $100 million [10x leverage] than we would be to pursue a strategy that would cost $1k and move $100k [100x leverage].) I’m not trying to argue here that one model is superior to the other, my point is that the universe of multiplier orgs is broad enough to appeal to a lot of different types of donors.
I get the sense many EAs don’t realize just how terrible a “minimum viable product” is, and how significantly an MVP can be improved with dedicated work. In the context of multiplier organizations, I think there’s a misperception that a basic website with limited maintenance is good enough, and that this misperception drives the concerns people have about marginal impact being lower than average impact. The empirical evidence is at odds with the preference for MVP models, based on the experiences of orgs like RC Fwd, GWWC, and TLYCS. TLYCS is a pretty clear example because we essentially used the website + volunteer model from ~2009 through mid-2013, before switching to paid full time staff. When we made the switch, web traffic (which had been flat for 4 years) started increasing and continued to do so, and money moved has steadily grown ever since (and is probably >25x higher than it was in the MVP years).
Outcomes I’d like to see going forward:
I’d love to see someone write up an overview of the multiplier space, similar to Larks’ annual AI Alignment Literature Review and Charity Comparison. Consolidating information would make it much easier for donors to engage with the space. Something as simple as a list of organizations with a few sentences about their work, their multiplier data, and links to more info would go a long way. (Ideally this would be done by someone who doesn’t work at a multiplier org; I’ll post this as a volunteer project on EA Work Club.)
I’d hope that overview would encourage more EAs dip their toes in the water by making a small donation to one or more multiplier orgs and/or subscribing to their mailing lists (I just did this to put some skin in the game). This is less about the actual money, and more about making it more likely you’ll stay informed about their work going forward. The more you do that, the more you’ll be able to make your own informed decision about whether their model is working.
A final note… While I’d love to see more people donating to multiplier orgs, I’d hate to see donors naively donating to the organization with the highest multiplier or otherwise incentivizing multiplier orgs to prioritize maximizing their short term multiplier. Ideally, both donors and organizations will prioritize strategies that maximize long run impact, and prioritize the magnitude of that long run impact (money moved – expenses) rather than the efficiency of that impact (money moved / expenses). For donors, I’d recommend asking 1) “do I believe in the strategy?” and 2) “do I believe the team can execute the strategy?”
There’s also an EA classic available as an audiobook: The Live You Can Save (the fully updated 10th anniversary edition) is freely available (in audiobook or ebook format) making it a book to share with people you think might find it interesting.
Search engine optimization.
Based on my very limited understanding, links are critical for SEO (though not as important as a few years ago). So conventions like “EA blogs should generally have blogrolls (i.e. lists of links to related blogs)” or “references to organizations (e.g AMF) on the EA Forum should generally link to them” would probably help the entire community.
These sophisticated donors’ support of such a wide range of multiplier orgs supports the idea that there could be a lot of leverage out there to be had. If that’s true, it also has some interesting implications for the “it’s hard to get a job at an EA org” discussion that’s been going on for a while, most recently here.
Here’s a simplified thought experiment. Let’s say you invested $1 million in the orgs listed above, allocated proportionally to their current size (not all that far off from what the infrastructure fund has actually done, but we’ll use stylized numbers to keep the math simple). Salaries are typically the biggest expense for multiplier orgs, so let’s say $800k flows through to hiring new people. Assume $100k/year per new person and that’s 8 new hires. If 75% of those jobs go to people in the EA community, that’s 6 EA’s getting the sorts of jobs that are immensely desireable and immensely scarce.
If the multiplier model really works, $1 million will be a small fraction of what’s needed to build a flourishing system multiplier orgs with models spanning research (e.g. GiveWell, ACE), fundraising for targeted causes (e.g. TLYCS, OFTW), fundraising for targeted donors (e.g. Founders Pledge and REG), and country-level organizations that provide tax deductible giving (e.g. RC Forward, EA Netherlands). If you built that ecosystem, you’d quickly create dozens of new roles. So if the multiplier model works at scale, you’ll move a ton of incremental money while also making real headway on the issue of EA jobs being scarce. (To be clear, I don’t think we should fund multiplier orgs so EAs will be able to get the jobs they want, I’m just saying that would be a nice added benefit if the multiplier model works and another reason to investigate whether it does work.)
Thanks for this data point Luke! It’s a good reminder that counterfactuals work both ways for multiplier orgs. Sometimes we count money that would have been donated counterfactually (overestimating our impact), but sometimes there are donations we don’t count that wouldn’t have happened if we didn’t exist (underestimating our impact).
Also worth noting that sometimes the spillover effect is in an area that isn’t the multiplier orgs main focus. For instance, I’d also expect the book relaunch to help 80K which gets a nice discussion, but that’s not anything TLYCS will capture in its metrics.
Yeah, that makes sense.
My sense is that most individual donors aren’t excited about multiplier orgs because they find them complicated, don’t have time to dig into the leverage numbers to really understand them, and therefore don’t trust those numbers. And I think that’s a pretty reasonable strategy for most individuals. But it does seem telling that funders that have the resources to do more vetting have supported such a wide range of multiplier orgs.
Also, they [Open Phil] could fund TLYCS through their global health and poverty program instead. They’ve funded One for the World. The EA Infrastructure Fund has also funded TYLCS among many other multiplier orgs.
To get funded, One for the World had to change the recommendations to use only GiveWell’s research. That was also a precondition of any discussion with GiveWell about funding for TLYCS, which was not a strategic compromise we were willing to make.
As you say, the EA Infrastructure Fund has funded a lot of multiplier orgs. But aside from Founders Pledge, the grants have been pretty small- at the organizational level, I think they’re all under $30k in almost 4 years the fund has been operating. That’s definitely helpful, but not really a sustainable funding source for an organization.
I think this is a really important point.
To give you some updated numbers, in 2019 TLYCS raised over $6 for AMF for every dollar we spent on operations plus another $7 for other recommended charities. If you look only at GiveWell recommended charities, our multiplier was 10X.
As I mentioned to HStencil, if these multiplier numbers are remotely accurate, there’s a huge margin of safety. You could believe that donations to any charity other than AMF are totally worthless AND that TLYCS overestimated donations to AMF by 3x, and you still would have doubled your impact by giving to TLYCS. And our multiplier is going to be even higher this year. (I’m talking about TLYCS because that’s what I’m familiar with, but I also recall seeing strong multipliers from e.g. RC Forward and REG.)
Really appreciate that you spelled out your thinking so clearly- thank you!
I think intermediaries make more sense for more casual donors, unlike people like yourself who are putting lots of thought into where to give.
Glad it helped! Thanks for the great questions, I’m sure you’re not the only one who had them!
I think it’s preferable to have people give through intermediaries, so that the message is “give to organizations the experts think is best” vs. having every charity try to argue for its own impact and having donors try to make sense of it all.
That message gets undermined if the recommendations aren’t independent, which is a serious problem with having the recommended charities fund the multiplier org.
Interesting discussion! One of the things I find striking is how much stronger the case for multiplier organizations is now than it was a couple of years ago when that post was written. There are a now a bunch of organizations now have significantly higher multipliers than the ones discussed in the post, and also have an established track record of providing those multipliers.
Thanks for sharing your thinking on this! Hopefully this exercise will shed some light on whether that lack of excitement is warranted, or whether it could represent an untapped opportunity.
I don’t think most people I know in the community (myself included) really understand what you do.
I agree there’s a lack of understanding of our work, and hope this discussion helps clarify some things. And we haven’t done a great job of reaching out to the community to explain our work. One difficulty in operating a multiplier charity is that it can be tough to promote your own organization since your whole purpose is to promote other charities.
I was even unaware of how high your estimated multiplier is (if you had asked me to guess prior to your comment, there’s no way I would’ve gone higher than 4x).
FWIW, I think most (maybe all) multiplier organizations report multipliers well above 4x.
1. Why have TLYCS’s expenses tripled since 2016? Other than the website overhaul and the book launch, what have you been spending on? Are you aiming to engage in similar (financial) growth again in the near term? If not, would you be if you had more support from small donors?
Most of the increase was due to the book: expenses were around 300k in 2016 and 2017, ~450k in 2018, and a bit under $1m in 2019 as we ramped up for the book project. The increase in 2018 was due to adding a bit of headcount (by far our largest expense) and rationalizing some very low salaries that had been in place at the outset.
Going forward, we’d very much like to be able to grow our operational budget and would do so if we had more confidence in our ability to raise the necessary funds. Off the top of my head (definitely not an official organizational response) I’d say something like 30% annual growth would be manageable.
2. What do you mean by “communicate with more donors?” What does that involve? How costly is it on a per-donor basis? How scalable is it?
I meant this very broadly- it covers a lot of things, and the cost of those activities likely varies a lot. Over the past few years we’ve done things like: building out a CRM system to manage our donors and leads, personally emailing and/or calling more donors to thank them and build a relationship, have more one on one conversations with large donors/prospects, hold more donor/fundraising events, and add customization to our newsletter/email communications (so that, for example, donors and non-donors receive different newsletters.) The common thread is that this all involves work, and you need to pay someone to do that work.
I think there is enormous room to scale this stuff.
3. When you spend more money (beyond your basic operating expenses: salaries, office space if you have it, etc.), and that spending seems to be associated with an increase in donor interest in your recommended charities, what do you think generally explains that relationship, and how do you determine that such an increase in donor interest was counterfactually caused by the increase in spending?
Salaries account for the vast majority of our budget (meaning increased spending typically means increased headcount). We try to assess if our strategy and execution are working, and the details depend on the project. Sometimes we add expenses that don’t immediately impact donations, like hiring an accountant. We didn’t try to model out that ROI, we just knew we had grown beyond the point where it was feasible to operate with a volunteer accountant. When we overhauled the website, we were able to look at a lot of quantitative metrics (conversion rates, engagement rates, etc) and see that they improved a lot right after the change. When we launched TLYCS Australia, we didn’t have to watch the donations that came in for very long to know it was going to be a big success.
FYI our 2018 annual report has a good discussion of how we pivoted our strategy then assessed that change.
4. More generally, and this may be an extremely dumb question/something you have explained at length elsewhere, how do you arrive at your “money moved” estimates, and how do you ensure that they are counterfactually valid?
Thanks for asking- this is something most people probably don’t know.
It’s pretty simple: we count money that’s been donated to TLYCS to be regranted to our recommended charities + money donated to those charities (and reported back to us) where the donor indicates that we influenced the gift.
We’ve discussed counterfactuals in detail in the appendix to our 2017 annual report. There are definitely a lot of considerations, but I generally think counterfactual concerns are becoming less of an issue over time (TLYCS’s role in producing the new book really mitigates concerns that we’re measuring Peter Singer’s impact rather than the organization’s.)
One place we have made a counterfactual adjustment (which I think speaks to our attempts to be reasonable in our metrics) is with a specific family that has donated several million dollars over the past 5 years. We think it’s very likely those gifts would have been made without our involvement, so we’ve only counted 5% of their value in our numbers. FWIW, the charities involved told us they thought we should take full credit.
I don’t really know what TLYCS’s exact multiplier would be if you had perfect information and could account for all the counterfactuals. But I’m highly confident it’s well above the threshold of providing significant leverage. In 2020, even if our true impact is only 10% of our reported money moved figure (which I believe is conservative), we’d still provide >50% leverage. There’s a very large margin of safety (which you wouldn’t really have if you had a mental model that our multiplier was 4x or less per your comment above).
5. Do you personally believe that TLYCS will hit diminishing marginal returns on investments in growing its base of donors to its recommended charities sometime in the near or intermediate term?
Personally, I think TLYCS is just getting started. The new book is a powerful asset, and by getting free copies (and excerpts, video summaries, etc) in many people’s hands, I’m confident that our money moved will grow significantly over the long run. We know the first book influenced a ton of people (including Cari Tuna), now we have a book that will have a much wider reach and has an organization behind it.
I know our multiplier will go up in 2020, but after that I’m not really sure. We focus more on “Net Impact”, which is our Money Moved minus our expenses, rather than our multiplier which takes the ratio of those numbers.
I think Peter Hurford originally suggested the Net Impact metric back in the day, and it makes a lot of sense to us. We’d much rather spend $1 billion to move $5 billion than spend $1,000 to move $10,000. So potentially there could be diminishing marginal returns (i.e. a falling multiplier), but I don’t think that’s necessarily a problem if you’re trying to build an organization that does as much good as possible instead of one that’s as efficient as possible.
Interesting talk- thanks for sharing!
Stefan’s framework (which I largely agree with) would argue that the potential funding base for multiplier organizations is quite small due to their complexity, and is probably limited to the EA community (or a subset thereof). So I’m trying to do a little market research to learn more about what that audience thinks about multiplier organizations.
The talk also argues for focusing on the largest donors, which in EA usually means Open Phil. But that’s less of an option for multiplier organizations as Open Phil’s EA “program does not fund organizations focused primarily on raising money for effective charities or organizations primarily focused on animal welfare or global poverty (though organizations in these categories might qualify for support under another focus area, e.g. farm animal welfare).”
Thank you! This was exactly the sort of thoughtful explanation I was hoping for.
For what it’s worth, in my experience at TLYCS it takes a lot more than just a website to move money. When I look at the things that seem to have driven our growth over the years, a lot of it is simply having the capacity to do basic things like communicate more with donors. And the relative steadiness in TLYCS’s multiplier (between 9x and 13x from 2016-2019) as expenses more than tripled suggests that there’s not a huge difference between the marginal multiplier and the average multiplier (and that if anything, the marginal multiplier might be higher).
I do think your “step function” argument is getting at something interesting (though I’d say you’re overestimating the availability and willingness of large donors to fund these transformative initiatives). There have definitely been discrete steps up in TLYCS’s history, most recently last year when we had a major launch of the updated book, overhauled our website, and more than doubled both money moved and expenses. The investments paid off: this year expenses will be down slightly and money moved will be up a lot, so the multiplier will break out of its recent range.
As you note, multiplier charities don’t get much scrutiny. Part of the motivation for this post is trying to figure out whether adding more scrutiny could be a good investment. After all, if additional vetting could make donors feel confident that multiplier organizations were offering legitimate 2x multiplier (let alone 10X or more), that would be a huge source of leverage for the EA community.