Tactical Philanthropy:

Sooner or later, donors are going to start being willing to pay for advice on how to give. This will transform philanthropy.

I agree that donors should be willing to pay for advice on how to give. I certainly would have done so back when I was in the for-profit sector, if I could have found an advisor I had confidence in for a price I could afford.

But it’s conceivable that donors – especially small donors – will never have to pay for philanthropic advice, because someone else will pay to give them that advice. To give a simplified example: say that you care passionately about the cause of K-12 education, but know little about it. Now say that for $1,000, you can fund a philanthropic researcher to produce a report for other donors whose gifts to K-12 education charities will total $10,000. That means you have the choice of giving $1,000 directly to a K-12 charity (though you don’t have much to go on in picking one), or spending that $1,000 to “redirect” $10,000 of uninformed giving to the charities recommended by researchers.

The latter can be a pretty good deal. Unlike in investing, in philanthropy it makes perfect sense to pay for the privilege of redirecting other people’s money. (In fact, this practice is already widespread – large donors often fund fundraising campaigns, with the aim of raising money from others, and lots of people are happy to fund advocacy charities that are ultimately aiming to redirect government funding.)

Picture a world where some donors use philanthropic research for free, and other donors pay for that research with the knowledge that it’s redirecting the first group’s money. This isn’t the only, or necessarily the most aesthetically appealing, way for philanthropic research to get funded. But it’s a perfectly good deal for all parties involved (the donors that get the free research and the donors that pay to improve others’ giving). It’s a model that couldn’t work in for-profit investing, but when it comes to philanthropy where donors are seeking to create public goods rather than add to their own wealth, I see nothing unsustainable about this setup.

That’s the basic arrangement we’re currently pursuing. We are seeking GiveWell Pledges from donors who might be happy to use our research, but don’t necessarily want to pay for it. Meanwhile, a different set of donors pays our operating expenses, in the hopes that we’ll be able to move money from the first group.