This year, I met my goal of donating 50% of my income. The donation was split as follows:
~77% undecided: instead of picking a recipient immeditately, I donated to a personal donor-advised fund, a type of charitable savings account that allows me to donate now and pick the recipient later.
21% to GiveWell’s top charities (to be allocated at GiveWell’s discretion).
~2% to support GiveWell’s operations.
(Update 2019-01-20: embarrassingly, I did the math wrong; I intended to do an 80-18-2 split. The rest of this post reflects that intention.)
The rest of this post explains my reasoning, how I’ve changed my views over the past year, and what I’m thinking about for the future.
Preface: criticism welcome
Since this is one of the most important decisions I make every year, I always love feedback! You can comment (either privately or publicly) using the comment box at the bottom of this page. For this post, Crocker’s Rules apply, i.e., I commit not to take offense at any suggestion or argument.
Choosing the amount
I considered lowering my donation target this year for a couple reasons:
It doesn’t seem like most of the top candidate organizations are particularly cash constrained right now, especially since the Open Philanthropy Project has started making large grants to so many places recently.
In some situations it can be useful to have a large buffer of liquid savings (e.g. buying a house, starting a company, being unemployed for a long time, or generally having more slack). I currently average about 6 months’ expenses in liquid savings—enough for most financial shocks but not enough to safely incur a huge expense like that.
However, the new tax bill meant that it would save money for me to donate more this year and less in future years. So even if I did decide to reduce my donation goal, it would make more sense to reduce it next year than this year. I’m still thinking about what my donation goal for 2018 should be.
Splitting and giving to GiveWell
I continued my strategy from last year of giving 20% of my donation to GiveWell and 80% to more speculative/weird things. This year I followed GiveWell’s top-line recommendation of donating 90% for re-granting at their discretion and 10% towards their operating expenses.
Giving to a donor-advised fund
A few things pushed me to defer my final decision this year:
Many organizations released their updates relatively late this year, so it was hard for me to understand who was raising how much for what.
Given how much Open Phil and GiveWell Incubation Grants have stepped up their funding, it doesn’t feel like there’s an obvious role for individual EA-aligned donors that is distinct from extending Open Phil’s last dollar.
- Even more than last year, I think most of my impact comes from my day job and I value being able to focus my attention on it as completely as possible. It seemed like it would be a big distraction to keep up with enough individual organizations to make donations that I was happy with.
Because of this, I didn’t feel like I had either the time or attention to make a high-quality donation decision in 2017, so I used a donor-advised fund to kick the can down the road.
Alternatives I considered
Last year I donated mostly to the EA Giving Group donor advised fund managed by Nick Beckstead. That mostly morphed into two of the Center for Effective Altruism’s EA Funds.
At the beginning of the year I was really excited about EA Funds—it seemed like it had the potential to be akin to GiveWell for causes other than global poverty. Unfortunately, the funds have been making grants very slowly, so it’s hard for me to evaluate their track record (and if I end up deciding to grant my DAF money there, the delay probably won’t be an issue).
Instead of deferring my decision with a donor-advised fund, I considered using a donor lottery to avoid it entirely (with high probability). But the lottery block size was small enough that I would still have had a ~50% chance of having to make a decision, which didn’t seem worth it.
It seemed like the EA Grants team made some pretty great grants, but also like they have great funding from the Open Philanthropy Project and Y Combinator.
I thought about (and am still thinking about) finding someone I trust to pick grants for me. That’s essentially what I did last year with the “EA Giving Group” donor advised fund. That fund basically became two of the EA Funds that haven’t distributed funds yet, and I haven’t thought of other good candidates to do this.
Questions for the future
Here are some things I’m thinking about for next year:
What is the role of individual EA donors given Open Philanthropy’s prolific grant-making? Should I just accept that my money is mostly interchangeable with theirs?
Given that I don’t think my donations are a very large component of my impact, is it worth continuing to think hard about this and write up my reasoning? Or should I just do something I know is mostly reasonable (e.g. the EA Funds)?
I originally decided to continue giving 20% of my donations to GiveWell based partly on making my giving more easily explainable to other people. Since I’m not doing very much explaining anymore, is it worth keeping this up?
Should I continue donating 50% of my income, or try to save up a larger cash buffer/more slack?
Coda: random logistics notes
For the donor-advised fund, I chose Fidelity because it looked like it required less paperwork to transfer to it from an outside bank account (it looked like Schwab and Vanguard required you to fax them forms sometimes—gross). If you already have other accounts with Schwab then Schwab would probably be simple also.
I screwed up my tax withholding (by under-reporting my expected donations) and ended up not having enough cash at the end of the year. I bridged the gap by borrowing money from one of my housemates, but it turned out to be really annoying for him to send me the money because of his bank’s transfer limits. The moral of the story is (a) get your withholding right, and (b) don’t use Bank of America.
I was worried about not having enough emergency cash until my tax refund came back, but I decided that in a true emergency I could probably use a 401k loan for anything really dire.
Embarrassingly, for the GiveWell donation I somehow misread their top-line recommendation as being 100% unrestricted, so I originally marked my donation as unrestricted and had to email them to ask them to change the allocation to 90% regranting, which they very graciously did. I felt really stupid and I hope I didn’t cause annoying accounting/budgeting problems.