Public Fundraising has Positive Externalities

By Larks @ 2023-12-26T14:39 (+82)

Epistemic status: revealed to me in a dream

Summary: fundraising from the public has positive externalities: it also functions as outreach and red-teaming. If organizations have not taken this into account they may have under-invested in public outreach and should do more of it.

A simplistic approach

Here is a simple model for how a normal organization might think about fundraising:

• A: Estimate how much money you expect to be able to raise from fundraising activities.
• B: Estimate how useful that money would be to you.
• C: Estimate the costs of fundraising (e.g. staff time).
• If B > C, do fundraising! If not, skip it for now.

My claim is this is a bad model for EA orgs, because it misses a significant fraction of the benefits.

Field-building benefits

Soliciting donations from the general public is generally quite hard. The skills required to do this are often quite different from those involved in running the organization’s core operations, and can be a significant distraction. It is hard to convince people what you’re doing is a good idea, and even those who agree often don’t donate. 

But this is not wasted effort: the difficulty in converting agreement into donations means that fundraisers are effectively subsidizing outreach. The people who read your work but don’t hand over their credit card details might be sold on the mission but skeptical of the team… so they donate to another org. Or they might be a student with limited liquid assets but willing to apply for jobs in the space in a few years. Or they might bring up the idea to their friends, or answer an online poll, or change their vote. Each of these seem pretty valuable - for example, it seems plausible to me that a large fraction of the value of SIAI’s fundraising efforts might have come from these channels, rather than via directly increasing SIAI’s budget.

Epistemic benefits

Fundraising can also be unpleasant because it opens yourself up to criticism. If you’re just doing your own thing with one or two large donors, you have little need to explain yourself to anyone else. You need to appeal to the big foundations, but you probably have a decent idea of what they want, and they’re also likely to be pretty busy. Even if they say no, they’re unlikely to send you a long message about how you are bad and your organization is bad and you should feel bad.

In contrast, having the audacity to run a public fundraiser naturally invites questions and criticisms from people who are skeptical of your effectiveness and theory of change. These critics have no obligation to represent a single perspective or agree with each other, so you may find yourself being attacked from multiple directions at once. 

However, this may be one of the only sources of feedback your org can get, especially if you are small. For the same reasons peer review, flawed as it is, is useful in science, your org can potentially benefit from feedback and questioning and critique of your assumptions, plans and execution.

Fundraising from the broader group of EAs can attract high quality criticism from similarly-minded people; raising from a broader audience could potentially attract feedback from a wider range of perspectives.

There is something of a principal-agent problem here; for the staff, criticism is unpleasant. For the organization, it is a mixed bag, because good criticism, even if harshly worded, can help them improve. And from the perspective of the broader movement it seems very good, because damning public criticism helps avoid grant misallocation. So my guess is that, from an impartial point of view, organizations under-invest in exposing themselves to public scrutiny. 

You could think of this argument as being somewhat analogous to the idea that startups should seek to produce a MVP quickly, and get feedback from actual customers, as even though it’s painful it is good to help you stop deluding yourself.

The main risk

The main downside I see is that soliciting funds from the general public encourages mission creep: rather than focusing on the most effective projects, organizations will instead be encouraged to focus on those that are easiest to raise money for.

This will be a larger concern for some organizations than others. I would speculate (with low confidence) that it is a larger risk if you are attempting to fundraise from a small number of large sources (who may have the bargaining power to extract significant concessions, and whose objectives are sufficiently transparent that you can modify yourself to become more congruent) than from the amorphous general public.

For some organizations this disadvantage might be so large, in conjunction with the cost of fundraising, as to outweigh the benefits. My argument is just that I think this disadvantage is relatively clear, whereas the advantages are more likely to have been overlooked.

What is the significance of this? 

My guess is that while this applies to all non-profits, this matters to an unusually large degree to EA, due the presence of very large funders allowing many organizations to almost completely neglect mass fundraising campaigns. Many orgs do not even post an annual fundraiser on the forum, let alone run ads on google, reddit and so on. 

If organizations respond to this rationally but selfishly (to the extent that makes sense for a non-profit) then they will under-advertise to the general public. 

I think this would be good if people did it more. Rather than (implicitly) all competing for the same pseudo-fixed pie of hard-core EA dollars, more orgs could try to appeal to the wider public. Up until now a lot of EA outreach has focused on selling the philosophy of EA first, but I think many of the individual projects can be justified without significant philosophical foundation-building, and it would be good to have some more concrete project-focused outreach.

One step towards this would be if grant-application-soliciting organizations included a field for a link to the organization’s public fundraiser, to increase the expectation that organizations would at least attempt to do so.

You could also imagine an organization that aimed to help multiple EA orgs fundraise, perhaps funded by taking a % of the money raised (this would align incentives but maybe deter donors so it is unclear to me if net good).

Thanks to all those who inspired this post and gave feedback.