# An update on GiveWell’s funding projections

As little as six months ago, we were in the position of having more funding available than we could spend on opportunities that met our very high cost-effectiveness bar. Today, the opposite is true—we don’t expect to have enough funding to support all the cost-effective opportunities we find.

In this post we will:

• provide an update on GiveWell’s projected funding position,
• explain how we have been successful in identifying cost-effective opportunities, and
• share our initial thoughts about what this update means for GiveWell’s forward-looking grantmaking strategy.

## The state of funding

We wrote last year that we would roll over approximately $110 million in funding from 2021 to spend this year. We ultimately rolled over substantially less because we were imprecise in calculating our projected funds in and out (more details available on our mistakes page). But at a high level, it remained true that we received more money than we chose to spend on highly cost-effective funding opportunities. We expected to be in a similar position this year, rolling over approximately$110 million. We now believe that we will be funding constrained. There are two core reasons for this:

1. We found a lot more cost-effective opportunities that need funding. Based on our current research pipeline, we think we’ll be able to recommend up to approximately $750 million in grants that are at least 6x as cost-effective as cash transfers.1We compare charities (and funding opportunities within them) using multiples of our estimate for the impact of directly transferring cash to beneficiaries. For example, we describe an opportunity as “6x cash” to indicate that we think it’s six times as cost-effective as giving that amount in cash directly to the beneficiary. There’s an intuitive case for asking whether a program is better than what beneficiaries would buy for themselves using cash. If not, wouldn’t it be better to just give them cash instead? Any program we consider must exceed this standard and be multiple times better than cash in order for us to recommend it. Last year, we identified about$500 million in grants, most of which were at least 8x.
2. We think we will receive less money than we projected due to recent declines in financial markets. We currently expect to receive $500 to$600 million (though the range of possible outcomes is wide). This is driven by a revision in Open Philanthropy’s 2022 allocation ($350 million, up from$300 million in 2021 but down from the tentatively planned $500 million2Open Philanthropy made tentative plans to allocate$500 million to GiveWell’s recommendations in both 2022 and 2023. It now expects to allocate $350 million in 2022.), as well as expected declines from other donors. ## How we have been able to identify more funding opportunities Our researchers have identified more opportunities across two streams of work: 1. Core interventions: Core interventions are the programs we know best because we have recommended them for a long time (e.g., malaria nets, deworming, etc.). They are the most cost-effective programs that we know of and are often delivered at scale. This stream of grantmaking currently accounts for approximately three-quarters of our spending and is most commonly spent on top charities. We have been able to grow spending in this stream by encouraging organizations to expand their programs into locations that are underserved. For example, we supported the Against Malaria Foundation’s expansion into Nigeria, the country with the largest malaria burden in the world.3According to the World Health Organization, Nigeria accounted for more than one-quarter of all malaria cases and deaths worldwide in 2020. World Health Organization, World malaria report 2021, pp. xv-xvi. 2. New interventions: New interventions are programs that are newer to us and that we have funded for shorter periods of time. We source new interventions by reading academic papers, talking to subject matter experts, and hearing directly from organizations. We build cost-effectiveness models to determine how to prioritize further work, and make grants to a small number of programs that meet our cost-effectiveness bar. This stream of grantmaking currently accounts for about one-quarter of our spending. Some grantees in this stream may be on a pathway to become a top charity, but this is not the goal of this stream of work—the goal is to fund opportunities if their expected value reaches or exceeds our funding bar. We have grown the number of opportunities in this stream by adding research capacity to investigate more programs. In addition to considering programs we haven’t evaluated before, we have updated our views on cause areas following the release of new academic evidence (e.g., water quality). We have identified programs that lack implementation at scale and invested in incubation partnerships that may lead to future implementation (e.g., Evidence Action’s Accelerator). We have made grants that generate evidence, which may inform future grantmaking decisions (e.g., a grant to support a randomized controlled trial of Bridges to Prosperity’s program). We are proud that the research team rose to the challenge of identifying more excellent funding opportunities while maintaining the same rigorous standards expected of our research. But, having so many outstanding giving opportunities without the expected income to match it on the other side of the ledger presents a challenge for GiveWell. How should we shift our plans to account for this in a way that maximizes long-term impact? ## Our plans for the future This funding update impacts both our near-term and long-term planning. In the near term we will: 1. Increase our cost-effectiveness bar to 10x cash (current best guess, subject to change): Based on our current pipeline of spending opportunities and our projection of funds raised, we will likely increase our bar to 10x cash (up from 6x).4This means that our current pipeline of approximately$750 million of funding opportunities that are 6x cash will change. We will likely pause investigations that are clearly below our 10x bar, given that there is a low chance they will be funded. At the end of the year, if we end up raising more funding than we expect, we’ll either roll over funding (which we’ll do if we expect that we’ll soon find additional opportunities that are greater than 10x cash) or allocate these funds to opportunities we’ve already identified that are less than 10x cash.
2. Increase our fundraising efforts: Now that we are funding constrained and have identified highly impactful opportunities that will likely remain unfilled if we do not raise sufficient funds, we expect to increase the amount of fundraising we do. While we don’t intend to radically change our approach (don’t worry, we won’t be bombarding you with pleas and solicitations!), we do intend to very directly ask donors to consider increasing their support.

Over the long term we will explore ways to adapt our grantmaking model so that we can respond to a wide range of funding outcomes. Because it is difficult to predict our funds raised each year, we would like to be able to operate optimally in scenarios where we raise significantly more or significantly less than we project.

Some ideas we will explore include making grants that create options for additional future grantmaking (e.g., providing flexible funding to strong organizations today so that they can sustain operations and establish pathways for future scaling or program spending), and pursuing fundraising models that allow our outreach team to source funding after our research team makes a grant recommendation (rather than setting expectations with grantees that we will distribute funding as soon as we make a funding recommendation).

## Conclusion

There is still an opportunity to do a lot of good by giving to global health and well-being. Our impact in 2022 will be limited by how much money we’re able to raise from our generous community of donors to fund the excellent opportunities we have found—we hope this motivates you to increase your support this year and to share the idea of effective giving widely.

Notes

↑1 We compare charities (and funding opportunities within them) using multiples of our estimate for the impact of directly transferring cash to beneficiaries. For example, we describe an opportunity as “6x cash” to indicate that we think it’s six times as cost-effective as giving that amount in cash directly to the beneficiary. There’s an intuitive case for asking whether a program is better than what beneficiaries would buy for themselves using cash. If not, wouldn’t it be better to just give them cash instead? Any program we consider must exceed this standard and be multiple times better than cash in order for us to recommend it. Open Philanthropy made tentative plans to allocate $500 million to GiveWell’s recommendations in both 2022 and 2023. It now expects to allocate$350 million in 2022. According to the World Health Organization, Nigeria accounted for more than one-quarter of all malaria cases and deaths worldwide in 2020. World Health Organization, World malaria report 2021, pp. xv-xvi. This means that our current pipeline of approximately $750 million of funding opportunities that are 6x cash will change. We will likely pause investigations that are clearly below our 10x bar, given that there is a low chance they will be funded. ### Comments • Sindy Li on July 5, 2022 at 6:17 pm said: Thanks for sharing the update! Always appreciating seeing these from GiveWell. I have a question re raising the bar up to 10x cost-effectiveness of cash transfers. In footnote 1 you said “There’s an intuitive case for asking whether a program is better than what beneficiaries would buy for themselves using cash. If not, wouldn’t it be better to just give them cash instead? Any program we consider must exceed this standard and be multiple times better than cash in order for us to recommend it.” That makes a lot of sense. But the bar being 6x, 10x, or something else seems arbitrary, so I wonder why you’re raising it from 6 to 10. Is it because you have seen a lot of good opportunities lately and it updates you to there being more than previously thought above 6x? (“We found a lot more cost-effective opportunities that need funding. Based on our current research pipeline, we think we’ll be able to recommend up to approximately$750 million in grants that are at least 6x as cost-effective as cash transfers.1 Last year, we identified about $500 million in grants, most of which were at least 8x.”) And given the capacity of GiveWell you won’t be able to investigate them all, and hence raising the bar of what to focus on? Also curious about what you think is behind finding more good opportunities recently — expanding your research team, more academic research on these topics coming out, or something else? • Brian on July 5, 2022 at 10:07 pm said: I have a very basic question. When you say: ” Based on our current research pipeline, we think we’ll be able to recommend up to approximately$750 million in grants that are at least 6x as cost-effective as cash transfers.”

Do you mean in 2022, 2023 or over some other time period you have in mind?

• Katriel on July 6, 2022 at 4:13 am said:

Very exciting from the individual donor perspective that there will likely be GiveWell-approved giving opportunities with room for more funding. Woohoo! and thanks 🙂

Have you written anything explicitly about your rationale for funding the “new interventions”? In the past, GiveWell recommended “incubation grants,” but you note that the purpose of the “new intervention” stream is *not* to enable new top charities. You write that “the goal is to fund opportunities if their expected value reaches or exceeds our funding bar.” However, in one of Holden’s famous blog posts (https://blog.givewell.org/2011/08/18/why-we-cant-take-expected-value-estimates-literally-even-when-theyre-unbiased/), you articulate the flaws of relying on a naive expected value threshold. Is this “expected value” somehow different from the naive expected value calculations that Holden discusses?

In other words, when you say “10x cash”, do you mean *after* human adjustments to the explicit expected value estimate or *before*?

• Miranda Kaplan on July 6, 2022 at 10:44 am said:

Hi, Brian,

That’s the amount of grant opportunities we think we’ll be able to identify in 2022. Apologies that that wasn’t clearer!

Best,
Miranda

• Tyler on July 6, 2022 at 11:03 am said:

Hi there. I’m having some difficulty understanding cost-effectiveness in the context of GiveDirectly (one of your top charities). I know that you haven’t given to GiveDirectly in a long time but you continue to recommend it. Why?

• Miranda Kaplan on July 7, 2022 at 12:34 pm said:

Hi, Tyler,

We consider GiveDirectly one of the best programs we’ve identified—it’s very cost-effective when compared with the vast majority of giving opportunities out there, and it performs well on all our other traditional criteria. However, we do model its cost-effectiveness as lower than that of our other top charities, and for that reason, as you say, we haven’t recommended grants to GiveDirectly (other than incentive grants to compensate for their time spent engaging with us) in several years.

In part, this discrepancy is a legacy of GiveWell’s traditional role as a recommender of giving opportunities, rather than a funder. When the purpose of our research was primarily to inform a list of recommendations for where individual donors should give, it made sense to include all the organizations that met our traditional criteria, which GiveDirectly does. As our funding has grown in recent years, so has our role as a grantmaker, in which we assess individual grants to programs and either fund them ourselves or recommend them to another funder, such as Open Philanthropy. This has led us to focus more on explicitly comparing the cost-effectiveness of marginal dollars to different programs, to ensure that we’re maximizing the impact of our funds, and thus has resulted in the prioritization of other top-charity programs over GiveDirectly for receiving grants.

We understand that all this is confusing, and that we need to do a better job talking about this with our donors. For a long time, we didn’t prioritize that improved communication, because we still viewed ourselves mostly as a recommender of giving opportunities, but that is clearly not in step with how we’re operating now. We’re working on improving how we communicate about this topic, and we appreciate your patience in the meantime!

• Keyon on July 8, 2022 at 12:53 pm said:

You wrote that GiveDirectly “performs well” on GiveWell’s traditional criteria (evidence of effectiveness, cost-effectiveness, room for more funding, and transparency), though it’s less cost-effective than other “top charities.”

Is the implication that any charities that are not considered “top charities” that are more cost-effective than GiveDirectly, do not perform well on one of the three other criteria? Or are there charities that are more cost-effective than Give-Directly and perform well on evidence, room for more funding, and transparency?

If the latter is the case, why list GiveDirectly as a “top charity” but not more cost-effective charities?

• Miranda Kaplan on July 12, 2022 at 11:15 am said:

Hi, Sindy,

Thanks so much for following our work; glad you enjoy getting the updates!

The reason we’re raising our cost-effectiveness threshold for funding to 10x cash is because we expect to not have enough funding this year to fill all the 6x opportunities we identify. (Staff capacity for investigating new grant opportunities continues to be a bottleneck to our research work, but it’s not what motivated us to raise the threshold.)

At the beginning of the year, our bar was around 6x, and we thought it likely that we’d have more funding than needed to cover all the 6x funding gaps we’d find (which might then lead us to drop our bar lower and start funding the next most cost-effective opportunities, or lead us to roll over funds). Now the opposite is true—we think there are \$750 million worth of gaps out there that are at least 6x cash, but we don’t think we’ll be able to fill all of them. We fund grants throughout the year, so if we are funding-constrained but continue to fill gaps that are less cost-effective than 10x cash, we might get to the end of the year and find that there are 10x+ opportunities remaining that we don’t have funding for. Rather than spending sub-optimally throughout the year, we prefer to raise the bar for what we fund now.

You’re right that where we’ve set our cost-effectiveness bar has been somewhat arbitrary. In the past, we’ve tried to set the bar at a level that would allow our funds granted out to roughly match our funds raised. We think the obvious difficulty in trying to predict our annual funds raised, in the context of big swings in the markets, is an argument for setting a higher and firmer cost-effectiveness bar instead, and relying on rollover funds to help us smooth out inconsistencies from year to year.

Re: the factors that have helped us identify new grant opportunities, hiring more research capacity is one of them. Additionally, our core interventions research team (which analyzes potential grants to our top charities) has found new funding opportunities by filling gaps where other funders have withdrawn, supporting top charities to expand into new regions, and funding research, among other approaches. Our new interventions team (which analyzes potential grants to non–top charity programs) has funded research, looked for new opportunities in programs that are backed by evidence but haven’t yet been implemented at scale, and expanded the types of evidence it considers in order to broaden the scope of programs to potentially fund, among other approaches. We provide some examples in this section of our 2021 giving recommendations blog post.

• serhii Yatsenko on July 24, 2022 at 6:45 pm said: