# Update on GiveWell’s funding needs

We continue to seek operating support, and we’ve seen some confusion on the part of donors about whether we think that’s the highest-impact giving opportunity available. This post provides an update on our fundraising; it is aimed at close followers of GiveWell, particularly those who have a high degree of trust/alignment with us and are primarily seeking to make the highest-impact gift according to our (personal, admittedly biased) opinion. To be clear, our (the co-founders’) opinion is that for such people (as opposed to the bulk of our donors, who we feel place more emphasis on neutral recommendations, evidence bases, etc.), direct, predictable support of GiveWell represents the highest-impact giving opportunity, up to the point where we hit our excess assets policy (the further revenue required to reach this point would be only a fraction of our projected money moved). Details follow.

We wrote previously about GiveWell’s need for operating funding, stating:

our projected expenses have risen significantly, and we now have the largest projected funding gap in our history: we project ~$1.2 million in expenses over the next year, against ~$850,000 in revenue. We have about $900,000 of reserves available, so failing to close the gap would not mean insolvency, but it would mean drawing on our reserves, something we seek to avoid. So fundraising will become a significant priority until the gap is closed (and may continue until we also have a comfortable level of reserves on hand, i.e., ~12 months’ worth). Since then, we have reached out to the donors we felt were most likely to provide substantial support, and have also seen some interest in supporting us as a result of our blog post. As of this week, we are now projecting ~$1.1 million in repeating revenue (i.e., revenue that we expect to occur for both this year and next year), still about $100,000 short of projected expenses. We’ve discussed whether we would de-emphasize fundraising if another$100,000 came in, and we don’t think we should at this point. Our reserves remain below the 12-month level; we expect our expenses to rise substantially in the future; and since much of the revenue we’ve added in to date is from a few very large donors, we still feel we have major room for improvement in terms of diversifying our funding base.

We think a more appropriate target might be to fundraise up to the point where we hit our excess assets policy (at which point further revenue would be granted out to avoid excessive pile-up of reserves). We estimate that ~850,000 in further revenue would cause us to hit this point; that amount would be only a fraction of our projected money moved. There are some reasons that supporting us now might not be appealing. We are not in dire straits, and the benefits to improving our position further are admittedly highly intangible (though, we believe, real and important enough to be worthy of our continued effort). In addition, our attitude toward fundraising – particularly with regard to the question of what Good Ventures’s role should be – remains somewhat in flux, and we may change our aims and our policy again in the next few months (though if we do, we will certainly offer supporters a chance to ask that their donations be re-granted if it seems appropriate to do so). Our top charities have stronger evidence bases and higher likelihood of tangible, short-term impact, and we continue to promote these to the general public. With that said, we wish to be clear that our (the co-founders’) opinion is that direct support of GiveWell represents the highest-impact giving opportunity for donors with a high degree of alignment/trust in GiveWell. This is not a position we’ve always held (there have been times when we’ve actively discouraged or at least not encouraged direct donations beyond what we were already projecting) or a position we expect always to hold. Much of our thinking is that we expect many of the best giving opportunities we find (now and in the future) to be funded by Good Ventures or by other major donors that we encounter in the future, but the goal of “diversifying GiveWell’s donor base” is something that individual donors can accomplish and Good Ventures can’t. More on our funding needs at our October post on the subject. ### Comments • Ian Turner on December 24, 2013 at 10:41 pm said: Question: How do you feel the GiveDirectly match offered by Good Ventures alters the calculus regarding the utility of individual donors’ contributing to GiveWell vs GiveDirectly (if at all)? • Ian, it seems like the main question here is whether you think Good Ventures’s money will do more good if given to GiveDirectly this year than if saved and given later. My own view is the latter, and so is Elie’s (note that Elie requested that his own gift to GiveDirectly not be matched). Also note that part of the idea of the match is to attract new donors to GiveDirectly, so matching funds that are not accomplishing this do less good than the “average” matching funds. That said, not everyone will necessarily agree with me and Elie, and one could argue that triggering the match is a good thing. • William MacAskill on December 28, 2013 at 8:40 am said: I had a thought this morning about GiveWell’s funding needs and its relationship with GoodVentures, and how to overcome your problems. As I understand it, your reasons for wanting to diversify are because relying too heavily on GoodVentures has the following bad effects: 1. Risk of collapse, if GoodVentures no longer wants to support GiveWell. 2. Incentives that are misaligned with the wide array of individual donors who use GiveWell’s research. I think these are good reasons. Here’s a Proposed Workaround (the details of which can obviously be tweaked): GoodVentures places, say,5million into a separate fund, with a legal restriction as follows: the fund matches 1:1 every dollar donated to GiveWell, but no more, and does so until the fund is used up, or until GiveWell ceases to exist. (GoodVentures can add to the fund later if they wish; if GiveWell ceases to exist, then the money goes back to GoodVentures).

This alleviates problem (1), because you have an up-front guarantee of a certain amount of funding from GoodVentures (a commitment that they can’t go back on). This alleviates problem (2) because you are still reliant on donations from users of GiveWell in order to continue functioning. GoodVentures is saving most of its money anyway, so there’s little opportunity cost to \$5mn sitting in an independent fund (gaining interest). And it means that Holden and Elie don’t have to spend nearly as much time fundraising. (Moreover, the matching element would incentivise donations to GiveWell, and the usual reasons against matching schemes (i.e. that the money would be donated anyway) don’t apply in this context).

I can’t give details of how this could be implemented and be enforceable, because I don’t know US charity tax law, but I’d be very surprised if there wasn’t some way. So it seems this idea should be worth looking into.

Are there any problems with this idea that I haven’t seen? The obvious is if GoodVentures isn’t willing to effectively make a guarantee of support for GiveWell for several years into the future; I obviously don’t know about this aspect, but my impression was that the level of trust between GW and GV was very high.

• Hi Will,

Thanks for the suggestion.

The issues we’re trying to reconcile are that (a) we don’t want Good Ventures to constitute too high a fraction of our support if we can avoid it; (b) if we can’t avoid it, we at least want the option (without saying that this is necessarily what Good Ventures would opt to do) to get more support from Good Ventures.

Taken literally, this proposal could pose a problem in terms of (a), since 50% would be too high. Of course, the match could be adjusted downward to something like a 1:4 match. But doing so would worsen the situation on the (b) front, if accompanied by a commitment by Good Ventures not to spend outside of this mechanism. I.e., if we failed to raise enough money from individuals to trigger a sufficient amount of matching, this would leave Good Ventures with a commitment not to provide more support.

It seems to me that we’re better off – if we can do it – being open about our situation and asking people to give in order to help us avoid excessive dependence on Good Ventures. If this results in not getting enough donations from individuals, we will rethink the situation, and whether it’s worth taking a risk of having inadequate funding in order to diversify our funding base.