Why Effective Giving Incubation - Report

By CE, Giving What We Can, Federico Speziali, Jacintha Baas, Luke Moore 🔸 @ 2023-12-19T13:16 (+79)

TLDR: At Charity Entrepreneurship, in collaboration with Giving What We Can, we have recently launched a new program: Effective Giving Incubation. In this post, we present our scoping report that explains the reasoning behind creating more Effective Giving Initiatives (EGIs). Learn why we think this is a promising intervention, which locations are optimal for launching, and for whom this would be an ideal career fit.

Quick reminder:
You can apply to the Effective Giving Incubation program by January 14, 2024. The program will run online from April 15 to June 7, 2024, with 2 weeks in person in London. 
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or sign up for the Effective Giving Incubation interactive webinar on January 4, 5 PM Singapore Time/ 6 PM Japan Time/ 3.30 PM India Time/ 10 AM UK Time/ 11 AM Belgium Time.
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CE is excited about launching EGIs in Ireland, Belgium, Italy, India, Singapore, South Korea, Japan, United Arab Emirates, Mexico, the US and France. We would appreciate your help in reaching potential applicants who are interested in working in these countries. Connect us via email at: ula@charityentrepreneurship.com

One paragraph summary

In 2024 we are running a special edition of the Charity Entrepreneurship Incubation Program in collaboration with Giving What We Can focused on Effective Giving Initiatives (EGI). EGIs are entities that focus on raising awareness and funneling public and philanthropic donations to the most cost-effective charities worldwide. They will be broadly modeled on existing organizations such as Giving What We Can (GWWC), Effektiv Spenden, and others. We have identified some possible high-priority countries where we believe they will be most successful. Depending on the country and what is most impactful, these initiatives could be fully independent or collaborate with existing projects.

Background to this research

Charity Entrepreneurship's (CE) mission is to cause more effective non-profit organizations to exist worldwide. To accomplish this mission, we connect talented individuals with high-impact intervention opportunities and provide them with training, colleagues, funding opportunities, and ongoing operational support.

For this scoping report, CE collaborated with Giving What We Can (GWWC) to better understand the opportunities Effective Giving Initiatives (EGIs) present as a high-impact intervention, what contributes to the success of such organizations, and where they might be best founded. GWWC was one of the first organizations to champion giving to high-impact nonprofits, has an extensive global network of people interested in effective giving, and more than a decade of experience operating an organization focused on promoting effective charities. EGIs are organizations or projects that aim to promote, typically in a specific target country, the idea of donating to cost-effective charities. They mostly engage in a mix of educational and fundraising activities, with the explicit aim of trying to move money to the most cost-effective interventions that aim to tackle the world’s most pressing problems.

This report builds on the experience of Giving What We Can, in-depth interviews with experts in the field and successful founders of EGIs, as well as quantitative & qualitative analysis of potential target areas. This report follows a somewhat different methodology than our regular research process used to identify high-impact non-profit ideas. Rather, it is intended to be a summary to help prospective founders and employees of EGIs understand why we think this is an impactful opportunity. It also serves the purpose of public accountability, by explicitly stating the theory of change we envision for this program. 

Acknowledgments

We are grateful to all the experts who so kindly gave their time and thoughts in interviews and surveys.

1. What is an Effective Giving Initiative (EGI)?

Effective Giving Initiatives are entities that focus on raising money for effective nonprofits and other high-impact funding opportunities. Often, they narrow their outreach focus to a particular geographic area or interest group in order to tailor their messaging to their specific audience. EGIs can be fully independent organizations, but can also collaborate in a variety of forms with existing giving organizations.

Many successful giving organizations operate on a national level. These national organizations seek to enable local donors – who otherwise would not have been exposed to these ideas – to learn about the principles of evidence-based and high-impact giving. They tend to accept donations on behalf of their recommended charities and regrant the money to these charities. Additionally, as a donation platform, these organizations facilitate the donation experience and provide tax deductibility (where possible) to their donors, even if the recipient charity is based outside of the donor’s country. By directing the gifts from these donors to the most effective charities and projects, EGIs can amplify the impact of individual donors, contributing significantly to solving the world's most pressing problems.

Through local language websites, EGIs are able to:

• Inform potential donors, particularly those who do not speak English as their main language, about effective giving in general.
• Present an up-to-date selection of high-impact giving opportunities.
• Provide practical ways to make (tax-deductible) donations to effective charities.
• Offer personalized donation advice.

Narrative examples

In early 2019 a new EGI called Effektiv Spenden was founded in Germany. Over the following 3 years, this small team was able to establish itself as an authoritative voice on evidence-based giving and high-impact philanthropy. They set up a website and started fundraising through their donation platform and philanthropic advisory services. According to Effektiv Spenden, they grew from €330.000 in donations in their first year in 2019 to having raised € 15.3 million from more than 9,000 donors in 2022 for some of the most effective charities in the world. As a result of this success, the team grew from <2 FTE in 2021 to approx. 7 FTE in 2023 to invest in further growth. 
 

Following in the footsteps of Effektiv Spenden, a new EGI called Doneer Effectief was founded in the Netherlands in 2022.  They started an online donor platform on October 1st, 2022. In their first operating year, they’ve already raised €1.4 million. In addition to more established fundraising techniques, Doneer Effectief has pioneered using local ambassadors to promote effective giving (for example working with bestselling author Rutger Bregman) and appearing in many newspapers, magazines, public radio, podcasts and television shows.

2. Why is this promising?

a) There is still a lack of funding for effective charities

Over the last couple of years, many new highly impactful charities have gotten started to solve the world's most pressing problems. However, as we have previously written about, there are still significant gaps in funding for these charities, which pose a significant risk to their survival and impact over the long term. Even many established highly impactful charities (in particular global health charities) have significant room to absorb more funding effectively (see AMF room for more funding as an example). 

b) EGIs are a proven effective way to raise these funds

Our review of existing EGIs’ impact reporting shows that these kinds of giving organizations can raise substantial funds and direct them to highly impactful causes. Further, we find good evidence that the percentage of money raised that is counterfactual (i.e. would not have otherwise been donated) is about 50% of the total raised. For example:

• Effektiv Spenden (Germany) has raised €37 million between 2019-2022. They estimate that for the amount of money spent on their operations, they were able to direct 13 times as much to high-impact nonprofits that would not have otherwise been donated in the last three years (2020-2022).
• Giving What We Can (Global, registered in the UK and USA) estimates that for the amount of money spent on their operations between 2020-2022, they were able to direct 30 times as much to high-impact nonprofits that would not have otherwise been donated. Extremely conservatively, this could be as low as 9 times as much, which would still be impressive.
• RC Forward (Canada) raised $2.14M CAD (~$1.58M USD) in 2019 and has moved $6.7M CAD (~ $4.93M USD) in total since 2017. They estimate that for the amount of money spent on their operations, they are able to direct 4-10 times as much to high-impact nonprofits that would not have otherwise been donated.
• Doneer Effectief (Netherlands) raised €1.4 million in its 1st year of operating. It is still too early to assess the proportion of this fundraising that is truly counterfactual, but we have no reason to believe that it would differ significantly from the estimates of similar EGIs.

c) EGIs can improve funding diversity for effective charities

Extra funding from EGIs can help diversify the funding sources for highly effective charities, which is a benefit over and above increasing the amount of money available. At the moment, funding for effectiveness-minded charities is concentrated in the hands of a few large donors. However, diversified donor bases are good for the health of individual organizations, to avoid being overly dependent on any one donor. Furthermore, large funders often have a cap on how much of an organization’s funding gap they will fill. This leaves room for other donors to fill in the funding gap.

d) New EGIs can leverage the work of others

Established EGIs have developed a deep repository of knowledge, resources, systems, and processes that new actors can build off of as a foundation. This has two large benefits: New EGIs will (a) have a significantly higher chance of successfully launching and (b) be able to move faster and have impact sooner than they would if they were starting from scratch. GWWC and ES are open to various forms of collaboration with new EGIs that have similar target audiences. 

e) CE could help create successful EGIs

CE has an excellent track record of launching highly impactful organizations and has industry-leading expertise in incubating and training charity founders. CE also has a solid network and pipeline of excellent applicants which will ensure good candidate selection.

Expert interviews on the main contributors to success revealed a number of factors that could plausibly be provided by a CE Incubation Program:

• Interviewees most strongly emphasized the importance of having excellent potential founders, who receive seed funding allowing them to focus on building and growing their organization full-time.
• Interviewees suggested success might have been accelerated by things such as practical help on legal structures, support on back-end software to manage donations, advice on how to manage High Net Worth donors, and more knowledge on marketing.
• Overall, the experts interviewed were largely enthusiastic about an incubation program for more EGIs.

f) Relevant external stakeholders are invested in ensuring the success of the program

GWWC and other relevant effective giving organizations have expressed their excitement for this new initiative and have offered to support its development and implementation, as well as to keep coordinating and collaborating closely with the new EGIs after the program. This includes facilitating a mentorship program to help these new organizations learn from more established effective giving organizations.  

g) EGIs can monitor impact by measuring funds moved

Effective giving organizations have a strong track record of encouraging donors to give more, and more effectively, and of measuring the impact of this (see for example the work of GWWC, Effektiv Spenden, and Founders Pledge). This means that new EGIs will benefit from shorter feedback loops enabling them to measure which strategies work and which don’t and to more quickly pivot and adapt.

h) EGIs may have other positive indirect effects

Apart from the direct effects of encouraging donations to cost-effective causes, promoting effective giving can also have indirect effects - such as promoting more evidence-based, impact-driven, and transparent thinking in the philanthropic sector. Research also suggests that donating to effective charities is a significant entry point into more effective actions. For example, in the 2020 Survey run by the Centre for Effective Altruism, 21% of respondents reported that Giving What We Can was important for them getting involved in Effective Altruism, with ~14% of respondents reporting that GWWC was one of their three largest influencers for their ability to have a positive impact.

3. Top recommended target countries

Although we think there is a case for a lot of different approaches within effective giving (e.g. career-based groups, pledges, geographically focused groups) we think one of the most promising avenues is regionally focused effective giving projects. In terms of target countries, a few stand out as uniquely promising, based both on the donation potential and tractability. To estimate the donation potential, we modeled funds raised from existing EGIs and extrapolated to new countries based on a number of metrics that appear to be relatively predictive of potential donations raised, such as population and GDP. A limitation of this approach is that the data we have on existing  EGIs is in Western countries, with specific populations and wealth ranges. It is less clear that our model predicts donation potential as well for other regions in the world or other demographic settings.  

For the tractability assessment, we used several proxies such as the World Giving Index ranking, the size of the Effective Altruist community as a proxy for impact-mindedness, as well as expert interviews with people from these countries. We have excluded countries that from our analysis seem to be fully covered by existing EGIs, but included some where activities might be substantially expanded. The results of this can be found in Appendix A: Country Analysis.

Based on this analysis, we are particularly excited about new EGIs in the following countries. However, we are also open to people presenting a strong case for countries that are not on the list.

4. Theory of change

5. Risk analysis

6. Founder personal fit

From our experience of launching somewhat similar organizations and meta charities, we believe that generalist skills, rather than any specific experience or formal credentials are especially important to be a good fit. 

What all our founding teams do have in common is…

• A deep dedication to doing as much good as possible
• Ambition to make rapid progress and achieve results
• Open-mindedness and the drive to always keep learning
• The determination and creativity to keep going even in the face of difficulties
• Diverse and complementary skill sets

Specifically for this program, we think that ideal co-founders could additionally have strong skills in communication & relationship building. They would combine this with a strong focus on impact and results. They may also have previous experience in fundraising or strategic marketing, though this is not a requirement. 

Having a strong cultural connection to the identified top countries (for instance from currently living in this country or having lived there for several years previously, or for other reasons), as well as speaking the language, is preferable for at least one of the co-founders. However, we encourage applicants of all nationalities to apply.

At least one co-founder would be conscientious and detail-oriented, and be quick to learn how to ensure that the organization remains compliant with local charity law. At least one co-founder would be willing to learn more about doing public outreach, such as speaking to the media, speaking at events, or similar.

An ideal founding team would feel positive about the impact that can be achieved through donations, which is high leverage, but also one step removed from direct interventions. Research skills seem to be less necessary for this kind of charity, though the founding team would need to be good at and/or interested in learning more about how the impact of charities is evaluated.

7. Program design

Our research to date suggests that founding an EGI requires many of the same skills that we look for in all our charity entrepreneurs. We, therefore, believe that a program could build on Charity Entrepreneurship’s existing Incubation Program complemented with additional training and support specific to launching EGIs. This might include, but is not limited to: 

Co-founder Pairing

• The core of CE’s Incubation Program is to match each participant to an idea (in this case to start an EGI) and to a talented and complementary co-founder. Our experience is that this co-founder pairing process is crucial to the organization's launch and growth. Better people, better matched tend to lead to better outcomes. 
• Throughout the program participants will co-work in various pairings on trial tasks, testing their fit with various partners. As the program progresses they will narrow in on their best pairing and present a proposal for funding as a duo. 

Nationally relevant strategy: Research and Planning 

• The different recommended locations for EGIs have very different strategic opportunities. In some regions primarily targeting “retail” donors may be most applicable, while in others, high fidelity partnering and advising of high net worth individuals may yield better results. In others, becoming a spokesperson for the idea of effective giving may take priority. Exploring these different strategic options per the different locations and the skills of the potential founders will be a key element of the program.  

Training on Outreach & Marketing Strategies 

• Learning what works in terms of outreach, PR, media, social media and relationship building from existing EGIs will be practical and valuable aspects of this program. Existing organizations will share what’s worked in the past, what hasn’t and what lessons can be learned. 

Evaluating potential donation opportunities

• The endline effectiveness of an EGI is largely dependent on the extent to which they direct the received donations to the most counterfactually high-impact opportunities worldwide. 
• EGIs tend to defer to professional and reputable charity evaluators to assess which donation opportunities are most impactful. In this program, we’ll learn how to assess their work, which evaluators work in which topic areas (for example, some evaluators are experts in Global Health and Development while others have expertise in Climate Action). A key aspect of this program will be to understand whose research to put credence in and how much to defer to their work and why. 

Practical, legal, administrative and technical support

• EGIs will likely confront similar operational challenges, such as setting up a legally compliant structure for receiving and sending donations; building a public-facing website that has a functional software back-end; and making sure the administrative processes are in place. We believe an incubation program could provide a platform for organizations to learn from each other and make use of common resources.  

Appendix A: Country Analysis

Category A: Top recommended countries

We believe that the following countries are both promising and tractable:

Ireland

Belgium

 Italy

India

Category B: Promising, but Challenging

In this section, we cover countries that seem quite promising but also present some challenges. Success here could be more counterfactual than in other countries and could open brand new areas to the ideas of effective giving. However, we also imagine that there might be more obstacles to overcome in these locations.

Singapore

South Korea

Japan

United Arab Emirates

Mexico

Category C: Potential for expansion

In this category, we cover countries that already have a registered organization in which we believe there is room for additional growth and acceleration. Initiatives there will most probably collaborate closely with the existing organizations.

United States

Nb. Giving What We Can is currently active in the US. Given the size of the ‘market’, however, we think it is plausible that more initiatives could be developed. We foresee that close collaboration with GWWC is important to avoid duplication. GWWC is available throughout the incubation process to explore a variety of options with potential incubatees.

France

Nb. Acceleration in France would mean potentially becoming a co-CEO for an already existing organization: Don Efficace. We are not considering setting up a new organization in France. 

Appendix B. Optional additional support from GWWC

GWWC will provide ongoing support to these new EGIs so they don’t need to build infrastructure from scratch and can learn from best practices in the effective giving space. In addition to offering general advice, support, and mentorship, GWWC can also provide its brand and product (website, donation platform, and pledge infrastructure) in some cases. If new EGIs wish to take advantage of these optional offers of additional support, there are currently 2 clear ways to further collaborate with GWWC, although other options can be discussed:

Option 1: Brand Partnership

Under this arrangement, organizations would have the ability to use GWWC's brand with slight modifications if desired. However, there would be a condition that organizations using GWWC's brand would likely be limited to raising funds for charities endorsed by the GWWC research team in consultation with expert evaluators. While there may be some possibility to raise funds for other charities, it should be made clear that the level of research conducted on them is not as extensive as the core recommendations. Even in this case, the ability to do so would be at the discretion of GWWC.

E.g. Ayuda Efectiva – GWWC provided a brand partnership and Ayuda Efectiva acts as the community for their members in Spain with their Executive Director being an Ambassador for Giving What We Can.

Option 2: Brand partnership and product license

In addition to using the GWWC brand, organizations may also be able to use the GWWC product. This includes the technical infrastructure of GWWC, such as the admin interface, business intelligence tool, website and content management system, donation platform, pledge platform, and end-of-tax-year tax receipts. Currently, GWWC does not have plans to develop a white-labeled product. Therefore, organizations wishing to use GWWC's product would have to also use GWWC's brand, along with the associated conditions.

E.g. Don Efficace – GWWC provided some funding, governance and legal support, access to their website and donation platform, and mentorship for the founding team.

Program details

• 2 months of full-time, cost-covered online training: April 15 to June 7 (with 2 in-person weeks in London in early May). 
• ~$100,000 in unrestricted seed funding (to get your initiative up and moving)
• Stipends to cover living costs during and up to 2 months after the program. 
• Learn: 
  • Key skills of effective giving
  • Best practices for advising high net-worth individuals
  • Frameworks to critically assess world-class donation opportunities
  • Monitoring and evaluation, theory of change, and cost-effectiveness analysis
• You don’t need any specific type of work experience or higher education to apply.
• We encourage applications from all nationalities as only one co-founder may need relevant cultural experience per region/initiative.
• The application process will consist of five stages. We encourage everyone to apply to Stage 1 as it’s the best way to test your fit. 
• Deadline: January 14, 2023
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