Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Despite billions of extra funding, small donors can still have a significant impact, published by Benjamin Todd on November 23, 2021 on The Effective Altruism Forum.
I’ve written about how there’s now a lot more funding committed to effective altruism– about $50bn.
It’s natural to think this means small donors can no longer have much impact, and I’ve seen several cases of people saying they’re not sure whether their donations will do any good, because all the opportunities are being taken by large donors.
However, I think this isn’t right: more donations from small donors still have a significant impact. This means raising additional funding is still of value to the community, and I think earning to give and donating to e.g. the Long Term Future Fund, is a highly impactful thing to do – probably more impactful than the vast majority of careers.
I also think the increase in funding means there’s an opportunity to do even more good than earning to give, and that people earning to give currently should seriously consider switching to the kinds of opportunities flagged in my talk at EAG. But that doesn’t mean that small donations have no impact.
Instead:
What matters is not the total amount of available funding, but the current level of cost-effectiveness at the margin. This has likely declined, but is still high.
Small donors should be able to roughly match large donors in terms of cost-effectiveness by ‘funging’ with them.
Small donors can sometimes beat large donors in terms of cost-effectiveness, and I provide a list of some common ways to do this.
At the end, I’ll make some comments on where I think people should donate.
1. What matters is not total funding available but marginal cost-effectiveness
It’s true that as more funding becomes available, all else equal, we should expect more of the best opportunities to be taken, and for cost-effectiveness to decrease.
However, there is a force which limits the size of this effect: how quickly we’re able to discover new opportunities. Because effective altruism is still small and building capacity, it’s not obvious that cost-effectiveness will decline quickly.
While I think the very best opportunities involve taking a more hits based, longterm focused approach than GiveWell, their recommendations serve as a good starting point to examine these dynamics. GiveWell’s top recommendations probably constitute the ‘bar’ for neartermist work. In a recent post, Open Philanthropy’s Global Health and Wellbeing team expect to find many opportunities above this bar, but for marginal dollars to go to GiveWell.
Overall, GiveWell now seems to be targeting a cost-effectiveness of 8x GiveDirectly or higher for most donations, though about 20% funds will go towards opportunities that are 5-8x as cost-effective as GiveDirectly, and so additional donations should be about this cost-effective.
GiveWell is unsure whether the margin will be closer to 5x than 8x. In the same post, Open Philanthropy says “we currently expect GiveWell’s marginal cost-effectiveness to end up around 7-8x GiveDirectly”.
They also say they believe that GiveWell’s margin has been around 10x GiveDirectly in recent years, so if it declines to 7x, that will be a 30% fall – this is only a modest decline and still very high.
To illustrate, they estimate that donating $4,250 to a charity that’s 8x GiveDirectly is as good as saving the life of a child under five.
With a lognormal distribution of cost-effectiveness, there should be many more opportunities at the 5x level than the 10x level, so it should be possible to deploy a lot more funds as the bar lowers. (Even setting aside the possibility of discovering new highly cost-effective interventions.)
In a worst case scenario, billions could be spent on cash transfers at a level of cost-effectiveness similar to or only a little ...