Discretionary grant making and implications for donor agency

A few weeks ago, we wrote:

[…] we are recommending that donors split their gift, with 75% going to [the Against Malaria Foundation (AMF)] and 25% going to [the Schistosomiasis Control Initiative (SCI)], or give to GiveWell for making grants at our discretion and we will use the funds to fill in the next highest priority gaps.

We’ve gotten some questions about what the difference is between giving according to our recommended allocation (75% to AMF and 25% to SCI) and giving to GiveWell for making grants at our discretion. This post explains the difference.

How we will use discretionary grant funds

In the past, we allocated grants to top charities either in line with our most recent recommendation to individual donors or, if we had tracked enough funding to hit the targeted amounts recommended to individual donors, we would allocate grants to top charities where we judged them to be most needed. (See this post for a more in-depth description of this process.)

For the next set of grants we will make with discretionary funds, in February or March 2017, we plan to:

• Ask top charities for an update on their total revenues from all sources; and
• Use this information to update our views on which remaining funding gaps are most valuable to fill, and grant the funds to that gap.

AMF currently has our highest-ranked funding gap for individuals, followed by SCI. (We are recommending that individuals give 75% of their donation to AMF and 25% to SCI, instead of 100% to AMF, because we expect donors following our recommendation to give more than it would take to fill AMF’s highest priority gap and it would be difficult for us to coordinate a quick change in our recommended allocation as soon as AMF’s highest-ranked funding gap was filled.)

Note that, using the plan described above, we would likely not allocate exactly 75% of our grant to AMF and 25% to SCI. If the AMF funding gap we are prioritizing is still sufficiently large in February or March when taking all of AMF’s revenues from all sources into account, it’s likely that we would allocate 100% of the grant to AMF. If AMF’s gap were already filled (or could be filled with only part of the grant), we may allocate the funds to SCI or another top charity that we judge to have the most valuable funding gap.

We are uncertain whether we will continue to use this full process for other grants we make in the future. If we decide to not reassess charities’ funding gaps before making a grant, we will plan to allocate the grant according to our last public recommendation to individual donors.

What implications does our approach have for donor agency

It is almost always the case in charitable giving that donors that give after you will be affected, in expectation, by your gift and may reduce their gift to the organization of your choice as a result. There are some specific ways in which that dynamic plays out as a result of the allocation decisions we have made:

• For donors who give to our top charities, but not the one(s) that we recommend on the margin, those gifts will affect how much funding we expect those organizations to get next year. The funds may also affect how quickly the organization is able to scale in the next year, which could increase how much we think they can use productively in the following year. Both these factors (working in opposite directions) could affect how much funding we recommend donors give to them next year. (See our review of Deworm the World for an example of how we calculate room for more funding based on past revenue.)
• For donors who give to the charities we recommend on the margin (AMF and SCI currently), their gifts increase the chance that the funding gaps we have prioritized are filled and that we reallocate funds to other charities. The reallocation could happen as soon as February/March, when we plan to make our next round of grants.

We would guess that many of our donors would be happy to learn that these decisions allow us to play a “coordinating” role, in which we direct some additional funding to where we believe it’s needed most. However, donors who disagree with us to some degree may decide to give to top charities we haven’t prioritized on the margin. For example, donors who feel strongly about giving to deworming over malaria prevention (because, say, they disagree with how steeply we’ve discounted the evidence for deworming or because they value lives improved over deaths averted more than we do), may choose to give to the END Fund, whose funding gap is GiveWell’s highest priority deworming gap that is unlikely to be filled, rather than SCI. Donors who feel strongly about supporting malaria prevention over deworming, they may decide to give to Malaria Consortium over AMF, for the same reason.

For a full list of the funding gaps we seek to fill and in what order, see this spreadsheet.

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