Giving What We Can is fundraising. When I last checked, they had only reached £70,000 of their £150,000 target.

Last year, more than $28m was donated to Give Directly, AMF, SCI and Deworm the World – the charities recommended by GiveWell and Giving What We Can.¹ In contrast, Giving What We Can (GWWC) spent under $200,000. My claim in this post is that if you donate to these top recommended charities, you’ll have even more impact (at the margin) if you donate to Giving What We Can instead.

GWWC is closely affiliated with 80,000 Hours, so I’m likely to be biased in GWWC’s favour. However, I feel strongly enough that I think it’s worth writing on the topic anyway.

Here’s three reasons why to donate to GWWC.

1. It’s very likely that $1 donated to GWWC yields more than $1 of value to top recommended charities.

GWWC recently released a new evaluation of their cost-effectiveness. They found that GWWC has spent about $440,000 as of the end of 2013, while GWWC members had donated an extra $2.4m to GWWC recommended charities which wouldn’t have been donated otherwise. Moreover, at the end of 2013, GWWC had raised a further $146m+ of pledged future income (today the figure is over $400m!). After adjusting for drop out from the pledge, money that would have been given anyway, and time-discounting, GWWC estimates that these pledges have a net present value of $26m to top recommended charities. So GWWC’s overall historical leverage ratio is about $60 of value added to top recommended charities per $1 spent. Moreover, there’s plausible arguments the leverage ratio is well over 100.

If the leverage ratio remains this high, then each dollar you give to GWWC now represents about $60 going to high-impact charities, so it’s 60 times higher-impact to donate to GWWC than directly to top recommended charities.

Of course, whether the leverage ratio will remain this high as GWWC continues to expand is a difficult question. At some point we expect all the good opportunities to convince people to become members will be exhausted and the ratio will go down. However, I think that’s a long way off.

Some have suggested GWWC may already be at the point of strongly diminishing returns. The version of this argument I hear most often is that all the pledges comes from the initial impact of setting up GWWC (i.e. making the website, defining the pledge, getting press coverage) and that activity created a stream of benefits that’s being collected today.

If that were true, however, we’d expect the growth rate to be decreasing. Instead, the growth has increased – over 2013 it was 42%, while over 2014 it was 117%.

I also think it’s implausible if you look at where new members are coming from. Most new members are clearly tied to activities undertaken by the team, such as setting up new student groups, getting new press coverage and speaking to people who’ve shown interest. If you’d like more detail, I’d encourage you to speak to the GWWC team. You can also see an explicit estimate of the marginal leverage ratio on p28 of the fundraising prospectus. They actually found the marginal ratio was higher than the historical ratio, perhaps due to economies of scale or greater word of mouth growth. (And this is what you’d expect from economics – generally organisations go through a period of increasing returns at the margin before they hit diminishing returns).

To think the marginal leverage ratio is less than 1, you have to be very pessimistic. GWWC is only spending a couple of hundred thousand dollars each year, and last year gained about 500 new pledges. If one person sticks with the pledge, that’s worth about $10,000 per year. So you’d only need 2 of those 500 people to stick with the pledge for 10 years to break even. In other words, you’d need to think something like 98% of people end up reneging, and there’s no evidence that dropout is this high. You can make your own estimates using GWWC’s calculator.

Another way to approach the question is to ask yourself, “what’s the probability that 80% of people stick with it?”. 80% retention seems unlikely to me, but wouldn’t be that surprising either. Suppose I put a 10% probability on that scenario, then the expected overall percentage of people who continue must be at least 8%, otherwise I’m being inconsistent. And that would already mean the leverage ratio is way over 1.

2. The leverage ratio dramatically understates GWWC’s impact

The leverage ratio only includes giving by members, but it would be surprising if GWWC hadn’t influenced other people to give more and to give more effectively. For instance, 1000 people have donated via GWWC’s trust, but only 200 are members, suggesting there’s at least 4 ‘influenced’ people for each actual member.

GWWC helps to promote the idea of cost-effective giving more broadly. For instance, staff at GWWC have advised at Number 10 downing street, the DCP, the WHO, and many other top international organisations. It’s plausible the value of helping these groups allocate funds more cost-effectively could yield many times the impact of the money directly given by GWWC members. The GWWC team would also be happy to speak to you more about this if interested.

GWWC does research into charity cost-effectiveness – you can read about some of the benefits in this thread.

Finally, GWWC is building a strong community of people who believe in trying to make the greatest difference, and put their money where their mouth is. I expect this community to go on to achieve many great things beyond donating money. For instance, 80,000 Hours wouldn’t exist if it weren’t for GWWC, and I suspect the same is true for many of the other effective altruist organisations.

3. GWWC has the potential for massive upside

I think taking the GWWC pledge is plausibly about as demanding as becoming vegetarian. About 1% of the developed world is vegetarian – about ten million people – whereas only 1,000 people have taken the GWWC pledge. This suggests GWWC has only reached 0.001% of its addressable market.

That means 99.999% of the potential upside of GWWC lies in the future.

This makes strong concerns about diminishing returns look a bit petty. Indeed, it’s not clear the marginal cost-effectiveness ratio over the next year matters much at all. Rather, what matters is the chance that GWWC can one day figure out a way to reach and convince a much larger fraction of the audience in a cost-effective way.

In fact, having a high marginal cost-effectiveness ratio could even be bad. GWWC should be investing as aggressively as possible in growth, driving up short-run costs, and decreasing cost-effectiveness over the next year. Demanding GWWC already have a high overall cost-effectiveness ratio is like demanding that Google be profitable in its first couple of years – you’re sacrificing long-run growth (where all the value is) for small profits in the short-run.

Rather than looking for a high short-run leverage ratio, what we should be asking is questions like:

1. Has GWWC shown it has methods of cost-effectively persuading new people to take the pledge? (Yes)
2. Do these methods work at the margin? (Less obvious, but I think yes, GWWC could be easily several times as large just using current methods such as student groups)
3. How quickly can GWWC expand the delivery of these methods at the margin and grow? And is GWWC’s growth living up to its potential? (GWWC’s growth over the last year has been impressive, but I think it could be even faster going forward if GWWC has more funds).

Demanding that Giving What We Can (and similar organisations) have a high and positive short-run leverage ratios may be one of the biggest mistakes currently being made by the effective altruism community.

Conclusion

Donating to GWWC yields more money to top recommended charities than giving to top recommended charities directly, and you get many other benefits, and you increase the chance of massive long-run upside.

The main reason remaining not to donate could just be that if you don’t donate, someone else will instead. This is likely true to some extent, but GWWC’s marginal donor would probably give to top recommended charities if they didn’t give to GWWC itself, so at worst your donation frees up someone else to donate to top recommended charities instead of you. Moreover, by giving quickly rather than trying to wait and see, you’ll save GWWC time spent fundraising and make it easier for them to plan for the future.

To see more discussion, see these threads on the Effective Altruism Forum: first, second.

You can donate here and receive 1:1 matching.

A previous version of this post incorrectly said that 1% of the developed world is about 1m people rather 10m.