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adom_hartell comments on Returns Functions and Funding Gaps - Effective Altruism Forum

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Comment author: adom_hartell 25 May 2017 02:10:14AM 2 points [-]

Hey Max, thanks for linking these.

I have a question about an argument for the benefit of reserves made in the second link:

Assuming that core programmes are roughly as effective next year, additional funding mostly reduces the funding needs of the organisation next year, thereby freeing up money for those donors who would have given next year. Assuming those donors still donate that money somewhere else, then their alternate donations are likely to produce at least almost as great value as this organisations’ core programmes.

I read this as saying that the benefit of donating to Organization A this year is that it will free up money for Organization B next year. But if Organization B is almost as good (as assumed in the quoted text), then why not donate to them directly this year?

On this reading, it seems like the impact of reserves for Organization A is whatever benefit Org A draws from the other arguments you offer (potential for capacity-building, freeing up staff-time from fundraising efforts next year) minus something like a discount rate / the cost of Organization B getting resources one year later. It's not obvious to me that this will always, or usually, be positive.

Am I missing something here?

Comment author: Maxdalton 25 May 2017 01:38:48PM *  2 points [-]

To disagree slightly with my co-author here... As I understand you, you are conditioning on A being able to expand capacity.

I think what is going on is that you are asking "Should we give to Organization A or Organization B?". I think your analysis is roughly right as a response to this question. We are not claiming that Organization A is more effective than Organization B.

Instead, what we're asking at this stage in the paper is more like "Is the total counterfactual impact of giving to Organization A steeply declining at any point?". We think that the answer is probably "No" for the reasons given. But note that this doesn't imply that one should always give to Organization A: if A starts off more effective, but returns gradually diminish, then there will still be some point at which it makes sense to start donating to organization B.

Overall, I think there isn't a disagreement here (although I may have misunderstood), but this is a sign that we should have been clearer in this section - I'll think about a rewrite.

Comment author: adom_hartell 25 May 2017 05:05:28PM *  0 points [-]

Ah, yes. Agreed. Thanks for the clarification.

Comment author: Owen_Cotton-Barratt 25 May 2017 10:24:17AM 1 point [-]

Fair question. This argument is all conditioned on A not actually having good ways to expand capacity -- the case is that even then the funds are comparably good given to A as elsewhere. The possibility of A in fact having useful expansion might make it noticeably better than the alternative, which is what (to my mind) drives the asymmetry.