[Added August 27, 2014: GiveWell Labs is now known as the Open Philanthropy Project.]

We previously announced GiveWell Labs, a new arm of our research process that will be open to any giving opportunity, no matter what form and what sector. Here I share a bit more of the thinking behind why we’re doing this.

Our goals are twofold:

Find better giving opportunities. When we laid out our main goals for 2011, #1 was finding more great giving opportunities, and our possible strategies for doing so involved (a) broadening our scope (b) considering project-based funding. With GiveWell Labs, we are doing both simultaneously.

• We’ve previously come across groups that might have been able to offer great giving opportunities, if we had selected a specific project and provided all the funding necessary to carry it out. However, we couldn’t recommend them to individual donors, not knowing whether $1000 or $1 million would come in as a result. Now, we’ll plan to go back to these groups, open to anything. If we do end up wanting to raise specific amounts of money, this will be a more complex endeavor than simply publishing a recommendation on our website and saying “Give here,” but we now have enough connections to major donors and enough sense of our audience of smaller donors that we think it will be worthwhile to try.
• We’ve previously come across interesting funding opportunities that didn’t fit neatly into the causes we had chosen to focus on. This won’t be an issue for GiveWell Labs.
• Examining opportunities with the above qualities (project-based and/or outside the sectors we’re experienced in) will be hard to do systematically, and will be by nature a bit experimental. That’s why we’re allocating only 25% of our research time to GiveWell Labs, with the remainder allocated to carrying out our existing research process (which has some restrictions but is more established and systemized). However, we expect the things we learn through GiveWell Labs to eventually shape the evolution of our more systemized research process.

Position ourselves to advise seven-figure donors.

When analyzing our own impact, we’ve noted that it comes disproportionately from large donors. (We influence more $100 donors than $10,000 donors, but the ratio is far under 100:1, so the $10,000 donors end up accounting for the lion’s share of our money moved.)

This seems logical to us, when considering that GiveWell is a “niche product” – we don’t appeal to large interconnected groups of people, but the rare people who do resonate with our work resonate very strongly with it, and give a lot based on it. The logical implication is that our greatest potential for impact may come from very large donors – and we need to be positioned to be useful to these donors.

The research we’ve done to date – recommending direct-aid charities that can absorb arbitrary amounts of funding – seems best suited to those giving under $1 million per year. When we encounter people who give more, they generally are interested in funding whole projects at once, which gives them options that simply aren’t open to our standard research process. That means our current product is a poor fit with the people who may represent our most potentially impactful audience.

We need to address this issue, and GiveWell Labs will allow us to do so. The $1 million in pre-committed funding is coming from large donors who will be able to give more if we find them great opportunities. More importantly, GiveWell Labs will allow us to move closer to having the same universe of options that seven-figure donors have, which will hopefully improve our ability to connect with and influence seven-figure donors.

GiveWell Labs is issue-agnostic, i.e., we are not restricting our work to particular areas of philanthropy (such as international aid, climate change, etc.) We will focus on what we consider the most promising areas, but we will be potentially open to anything.

There are clear disadvantages to issue-agnostic giving:

• The more different sorts of projects we allow ourselves to consider, the greater the challenge of sorting through them in a coherent, principled, systematic way. It will be particularly challenging to make sure we are applying principles consistently, rather than giving based on whims.
• There are conceptual advantages to “specializing” in particular sectors over time. Doing so means having the ability to
  • Learn from past successes and failures in an area.
  • Make contacts in an area.
  • Gather evidence about the most promising approaches in an area, particularly informal/qualitative evidence (e.g., site visits).

However, issue-agnostic giving has advantages as well.

• First and foremost is that when you’re new to giving, you can’t tell where the best opportunities are going to be. Picking a “sector” could be the dominant determinant of how effective your giving will be; taking a guess and sticking with it, therefore, seems very dangerous for a donor seeking to maximize impact. (Note that I’ve changed my view of the most promising cause as I’ve learned more about the different causes we’ve studied.)
• Even when you’re not new to giving, the highest-impact sectors can change rapidly and chaotically as new philanthropists come on the scene. Choosing to focus on developing-world-oriented medical research may have been a great idea before the Gates Foundation came along, but I’m guessing that opportunities in this area have fallen drastically since, as the Gates Foundation has attempted to fund the best ones.
• There may be outstanding opportunities that get overlooked by other funders because they don’t fit neatly into a particular “sector.” I think this is possible in today’s environment, simply because issue-agnostic giving is so rare.
• Regarding the above-mentioned advantages of specialization:
  • We are hoping for a relatively “low-touch” approach to funding: we seek people with ideas but not funding, and we seek to provide funding and not other kinds of support. We hope this approach will diminish the need for us to become “experts” in any given sector.
  • We hope to be very communicative with other funders and people with relevant expertise/experience. We won’t recommend a funding opportunity without getting as many relevant opinions as we can. If people with different specialties are open and communicative with each other, it mitigates the need for funders to have all the expertise themselves.
  • In practice, we will probably find ourselves focusing on certain sectors – not out of a pre-commitment, but because these sectors appear particularly promising to us. This is especially true in light of the fact that we prefer (as we always have) to fund things we can understand well – our past experience and established knowledge do matter. So being issue-agnostic doesn’t actually preclude specializing; it just means that any specialization will happen gradually and out of a desire to maximize impact, rather than being driven by up-front choices of particular sectors.

Bottom line – at this point in our development, we think the advantages of issue-agnostic giving outweigh the disadvantages for us.