Halstead comments on Impact Investing - A Viable Option for EAs? - Effective Altruism Forum

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Comment author: Halstead 11 July 2018 01:42:28PM *  6 points [-]

Thanks for getting the conversation going on this topic, which hasn't received enough systematic attention by EAs. An excellent treatment of this issue is given by Paul Brest here - https://ssir.org/articles/entry/impact_investing . This suggests that the prospects of achieving market rate returns and having social impact are dim. One may be able to have counterfactual impact by accepting below market returns or at the extreme providing a grant to a company. (Open Phil has invested in Impossible Foods, presumably accepting below market returns).

One observation I have is that there is a big step between showing that impact investing might work in some conditions and actually finding good opportunities. It seems like identifying good opportunities would take serious up a lot of serious research time - of the same order we would expect to identify a recommended GW charity. A glance through some impact investing platforms suggests they offer quite shallow analysis of enterprises that look unlikely to be effective. So, I think we should acknowledge that this space is worth exploring but be very sceptical about any particular opportunity, whether that be Wave, World Tree or whatever

Comment author: Naryan 11 July 2018 07:10:16PM 0 points [-]

I think you hit the nail on the head - the current offering of impact investment platforms and offerings for a retail investor is fairly uninspiring. Can they stack up against the best EA charitable causes? Odds are against it.

I did allocate some of my retirement funds (currently in equity) towards buying a few acres with World Tree, which I think is a step in the right direction - more impact, and likely higher returns (ask me again in 10 years). I know mental bucketing of finances is some kind of bias, but keeping my charitable donations separate from my retirement fund will lead me to a future of financial security, rather than donating everything to my favourite charity today.

From a utilitarian view - I'd love to hear more perspectives on the trade off between traditional investing vs charitable giving. Is this an optimization problem? Or is there a strong argument against one or the other?