Donations 2020

I.

I recently took the Giving What We Can pledge, committing to donate 10% of my income to causes that I think will do the most good in the world. There was neither pomp nor circumstance, and I imagine the only surprise to many of my friends is how long it took me to actually take the pledge.

I wanted to take the pledge at a time when I had a clear picture of what my professional life would look like. So, I decided to do it at the start of my professional career rather than as a student. This is a serious commitment, and I am happy I did it with my eyes open and mind clear. That said, the pledge makes a ton of sense for me, and I never really doubted that I would take it.

I chose 10% because it’s a nice round number, I feel I can donate that much without material hardship, and it’s enough that I feel it will meaningfully improve the world. It doesn’t hurt that 10% is a natural coordination point for much of the effective altruism community, which I’m happy to signal boost.

I don’t think there’s anything magical about the number 10%. For someone struggling to make ends meet, 10% of your income is a lot of money, whereas for the richest people in the world, 10% of your income is barely noticeable (to you). If you’re interested in a progressive calculator for donations as a function of income, The Life You Can Save pledge seems like pretty reasonable reference point. That said, it’s still a somewhat arbitrary suggestion; it might make sense for some people but be too little or too much for others. I considered also taking the Life You Can Save pledge but decided against it. In general, I expect to give more than either pledge recommends, so the gesture would be largely symbolic, and I think one symbolic pledge is enough for now.

II.

A. Donor Advised Funds

(If you’re familiar with DAFs, feel free to skip to the next section.)

In practice, I plan to do most of my charitable giving through a Donor Advised Fund (DAF). My brother, Ross Rheingans-Yoo, did a writeup of DAFs a few years ago:

Here’s an example of how a DAF works:

I open an account, “The Ross Rheingans-Yoo Fund”, at Vanguard Charitable. I am the ‘advisor’ of the Fund, though not its owner (it’s owned by Vanguard Charitable, a charitable organization).

I donate assets (cash, appreciated stock/mutual fund shares, and any more exotic assets I care to) to The Ross Rheingans-Yoo Fund, and deduct those donations from my 2017 tax bill.

At any later time, I can ‘advise’ the Fund to make a grant to a charity that I specify. So long as the specified organization is actually a charity, Vanguard Charitable will make a grant as advised. Even though I have control over where the dollars are going, this isn’t considered a donation from me​, since I’ve already turned the assets over to a charitable fund (and taken my deduction at that earlier time).

(…)

The main benefit of a DAF for me is to simplify charitable giving. Many charities accept appreciated stock or other securities, which saves you paying capital gains tax on those shares. However, it can be a bit of a logistical pain, and donating those shares to a DAF can simplify the process a lot. Similarly, for tax reporting purposes, I only have to keep track of donations to my DAF. These simplifications make the end of year rush to get donations in less hectic.

A secondary benefit of a DAF is to allow me to donate now and decide later. In general, I expect to grant money within a few months of donating it to my DAF, but having this added flexibility could be helpful if I want to donate next year’s donation this year (perhaps my marginal tax rate this year is higher).

B. Donor Lotteries

(If you’re familiar with donor lotteries, feel free to skip to the next section.)

In practice practice, the bulk of my 2020 grant money will go to donor lotteries. I’m a fan of this explanation by Ben Hoffman:

Let’s say that your charity budget for this year is $5,000, and your best guess is that it will take about five hours of research to make a satisfactory giving decision. You expect that you’ll be giving to charities for which $5,000 is a small amount, so that they have roughly constant returns to scale with respect to your donation… In particular, for the sake of simplicity, let’s say that you think that the best charity you’re likely to find can add a healthy year to someone’s life for $250, so your donation can buy 20 life-years.

Under these circumstances, suppose that someone you trust offers you a bet with a 90% probability of getting nothing, and a 10% probability of getting back ten times what you put in. In this case, if you make a $5,000 bet, your expected giving is 10% * 10 * $5,000 = $5,000, the same as before. And if you expect the same impact per dollar up to $50,000, then if you win, your donation saves $50,000 / $250 = 200 life-years for beneficiaries of this charity. Since you only have a 10% chance of winning, your expected impact is 20 life-years, same as before.

But you only need to spend time evaluating charities if you win, so your expected time expenditure is 10% * 5 = 0.5 hours. This is strictly better – you have the same expected impact, for a tenth the expected research time…

Of course, if you’re giving away $50,000, you might be motivated to spend more than five hours on this. Let’s say that you think that you can find a charity that’s 10% more effective if you spend ten hours on it. Then in the winning scenario, you’re spending an extra five hours to save an extra 20 lives, not a bad deal. Your expected lives saved is then 22, higher than in the original case, and your expected time allocation is 1 hour, still much less than before. 

(…)

Importantly but perhaps unintuitively, you don’t need to assume the other lottery participants will donate the money wisely if they win. Even if they burn the money, your expected impact is still the same or greater, because when you win, they burn less money. The only way donor lotteries can backfire is if participants donate money less effectively upon winning than they would if they didn’t enter at all. And this seems unlikely unless the lottery amount becomes so large that diminishing returns kicks in.

III.

This year, I am donating some long-term appreciated assets to my DAF, for granting early in 2021. The largest grant by far will go to a donor lottery run by the Centre for Effective Altruism. I believe there are cause areas, including but not limited to Artificial Intelligence safety, that are simultaneously extremely important and difficult to evaluate. For this reason, I believe a donor lottery to be a particularly good tool for maximizing my 2020 giving, allowing me to concentrate my time spent on evaluation in the worlds where I win the lottery.

I also plan to make two relatively small grants, mainly as an exercise in thinking about giving. I intentionally skewed my evaluation toward organizations doing work that can be realized in the near-to-medium future and who have more of an evidence base to evaluate. This slanted my process against far future speculation that I consider important but difficult.

As such, I am making a small contribution to GiveWell’s unrestricted funds for use in combating global poverty. GiveWell is a charity evaluator who recommends a short list of charities they think will help the most humans per marginal dollar, using metrics of lives saved and economic impact created. I have passively followed their publications and recommendations for a few years, and I have been impressed with the transparency and rigor of their methods. I believe that GiveWell’s top charities, which are mostly efforts to combat global poverty and disease, represent some of the best evidence-supported opportunities to help humans living in the world today.

I’m donating unrestricted funds to GiveWell, rather than funds earmarked for specific charities. GiveWell splits unrestricted funds between supporting its own operations and re-granting to the charities they think can use them best. I’m happy to defer to their judgment on this, at least for now.

I am also making a small contribution to the Good Food Institute (GFI). GFI is a US-headquartered nonprofit aiming to replace industrial animal agriculture with alternative protein as the mainstream consumer protein choice. GFI has been one of Animal Charity Evaluators’ “top charities” for five years in a row (since GFI’s inception). My thoughts about GFI have been heavily influenced by my brother’s recent write-up of his donor lottery grants to GFI’s Europe and Asia-Pacific affiliates. To summarize, GFI’s approach focuses more on economics than persuasion; they believe mainstream consumers will only switch to alt-protein when it is cheaper and/or tastier than meat. GFI’s initiatives are designed to make that world a reality as quickly as possible.

I agree with my brother that the efficacy of this approach is underestimated by effective altruists interested in animal welfare, primarily because such people will generally overestimate the effectiveness of moral suasion. After all, moral suasion is likely what moved such donors to support animal welfare in the first place. Thus, I expect GFI will be well-funded (it is one of ACE’s top charities) but still under-funded.

IV.

A. Some Open Questions

As I touched on in the previous section, I believe some cause areas are extremely important yet difficult to evaluate. This includes work meant to avert global catastrophic risk, efforts to grow the effective altruism movement, early funding of certain types of scientific research, and more. Much ink has been spilled on this topic, but it remains unclear to me what interventions, if any, are effective now.

I’ve been thinking more about when to donate money. Until recently, I had thought that donating earlier was always better because of ripple effects that create a high “return on giving”. 2020 has made me reconsider. I believe there were high-impact, time-sensitive giving opportunities related to Covid-19, meaning that dollars could be donated more effectively in 2020 than in 2019 or 2021. I think similar but smaller effects may exist outside of global pandemics. While individuals with financial slack can move up the timetable on future donations, past donations are gone. Further, the giving landscape may change fundamentally at some point in the future. For example, one of my difficult-to-evaluate cause areas could become easy to evaluate, making donation dollars higher in value from then on. On the other hand, I still believe in return on giving, so it’s unclear how much, if at all, I should change my donation timing.

And as always, the most important cause area or idea may be one that is not currently on my radar. After all, effective altruism is a question, not an answer.

B. Summary (and links to donation pages):

4 thoughts on “Donations 2020

  1. Thanks for sharing! I’d add that the number 10% goes all the way back to the Old Testament–many Christians are already in the habit of giving 10% in tithing, which also makes it a nice number to commit to. It’s much easier to convince someone to change where their tithe is going than to get them to donate money they were keeping before.

    Liked by 1 person

  2. Excellent post! This is the first time I have read about donor lotteries and the idea is quite clever. While it is true that the expected impact can only increase, it does feel like the variance of impact increases; something that you might be uncomfortable with if you think some % of the pool burns money or donates to causes you don’t support.

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    1. Yes, it’s certainly true that the variance of impact increases. Personally, I’m comfortable with that as long as it’s buying additional expected impact. I imagine not everyone is, though.

      Like

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