Rollover Funding FAQ

This page provides more detailed information on how long it takes donations to have an impact, especially as it relates to GiveWell rolling over funds in years when we raise more than we choose to immediately grant cost-effectively. A brief overview with more context is available in our blog post: We aim to cost-effectively direct around $1 billion annually by 2025.

Table of Contents

Why GiveWell is rolling over funding into 2022

What are rollover funds?

Rollover funds are funds that we raise in a certain year but choose not to spend in that year. We instead “roll them over" to the following year because we believe those funds will have a greater impact if spent in the future.

What is room for more funding (RFMF) and how does it work?

Room for more funding is the sum of the giving opportunities we've found that meet or exceed a specific cost-effectiveness bar. We change this bar in response to the availability of funding and cost-effective opportunities. For more on when and why we change our bar, see: Does GiveWell limit how much money it grants annually?

We compare charities (and funding opportunities within them) using multiples of GiveDirectly’s cash transfer program. For example, we might describe an opportunity as 8x cash, indicating that we think it is 8 times as cost-effective as GiveDirectly. We compare programs to GiveDirectly because its program is excellent, and it could utilize enough funding that we’re unlikely to fund anything less cost-effective than GiveDirectly in the foreseeable future.

We typically define our total room for more funding as the sum of all giving opportunities that meet a certain cost-effectiveness bar. For example, in a given year we might recommend funding all the opportunities that we believe are at least eight times as cost-effective as cash transfers.

For example, imagine we identified only the following three opportunities in a year:

  • $5 million to distribute malaria medication in Chad at 8x cash
  • $5 million to distribute malaria medication in Burkina Faso at 8x cash
  • $20 million to distribute cash transfers in Nigeria at 1x cash

Using a cost-effectiveness bar of 8x cash, our total room for more funding that year would be $10 million. After that, we wouldn’t have clear opportunities to spend further funding in a highly cost-effective way.

Because our RFMF only includes funding opportunities that pass a certain cost-effectiveness bar, some charities we recommend may have additional capacity for funding that doesn’t meet our cost-effectiveness bar. We don’t consider this part of our RFMF.

Our RFMF in 2020 was about $200 million.1 In previous years, we haven't clearly tracked the amount of room for more funding we've identified that meets a certain bar. Instead, when we've talked about the room for more funding we've found in a certain year, we've simply defined it as the total funds we directed in that year.

Our estimated room for more funding excludes funds to GiveDirectly, because we've set our bar above our estimate of GiveDirectly's cost-effectiveness. More on this in: Why is GiveDirectly still a Top Charity?

Does GiveWell limit how much money it grants annually?

We don't have a limit on how much we grant each year; there are several factors that affect the amount of money we grant (or recommend be granted by others, such as Open Philanthropy).

Each year, we estimate how much money we expect to raise and grant (or recommend that others grant) to charities. We use this to set internal targets for our research team — specific goals for how much room for more funding (RFMF) we would like them to identify.

We set targets based on:

  • How much money we expect to raise from donors and, therefore, how much we could grant
  • How much room for more funding we expect we’ll be able to identify that meets our bar for cost-effectiveness.

Our targets are relative to a "bar" of cost-effectiveness, and we adjust this bar based on the factors above. If we have a very limited amount of funding, we’ll maintain a very high cost-effectiveness bar. If we have more funding than we’re able to grant at our current bar, we’ll consider lowering the bar to make it easier to find additional opportunities.

It's important that we have targets for how much RFMF to find because our research is guided by these decisions. We optimize our research process and prioritize funding opportunities based on our RFMF targets and our cost-effectiveness bar.

The uncertainty about how much we’ll raise in a year —as well as the uncertainty in our research process — means we might not find enough RFMF to spend all our funds raised at our desired cost-effectiveness bar in a given year. In that case, we would choose between lowering our bar, rolling funds into the following year, or a combination of both.

Why are GiveWell’s estimates for funds directed to different buckets of cost-effectiveness in 2021 uncertain?

We expect to find $400m of funding opportunities that we estimate to be 8 times as cost-effective as GiveDirectly's program (8x) and $50m of funding opportunities that we estimate to be 5x-8x. However, these are uncertain estimates based on our best guess projections of grants we haven't yet finished investigating. It's likely that our projections will change as we learn more about opportunities.

Our current principle is that we'd be willing to spend up to $100m on 5-8x on opportunities we currently believe to be at least 8x that turn out to be 5-8x after further investigation. If we identify more than $100m of 5-8x RFMF, we would either (i) not fund opportunities that exceed the $100m budget, or (ii) the Program Officer leading the investigation would make a case to increase the budget for 5-8x opportunities.

We would make that decision based on our assessment of whether we would be able to identify more cost-effective opportunities by holding funds for longer. That assessment would be based on our latest view of the cost-effectiveness of opportunities that we are investigating or planning to investigate and our latest projections of funds raised.

Making decisions about whether to direct more funding to opportunities below our current bar of 8x involves a significant amount of uncertainty, because it relies on our subjective view of the opportunity costs involved at the time the decision is made. We believe we can have more impact by building flexibility into our process, while also holding a default expectation that we will limit the amount of funding we spend at levels of cost-effectiveness below 8x.

Why does GiveWell still seek and accept donations if it has to roll some donations over into future years?

Our goal is to maximize the impact of donations we direct. We expect to be able to direct new donations to more cost-effective opportunities than they’d likely go to otherwise. (More reasons to give — and not give — to GiveWell below.)

This may not be true for all donors. Some donors may have special insight into other causes or may have a worldview that values different kinds of impact than GiveWell does. We share the fact that we have rollover funding, and our plans for it, so donors can make informed decisions about where they give.

We expect to increase room for more funding (RFMF) significantly within a few years. We think that pausing our fundraising for a year or two would harm our long-term ability to raise funds and, therefore, our long-term impact.

Givewell is scaling up its ability to both raise those funds and direct them well. Our goals are ambitious: we aim to find and fund $1 billion annually in cost-effective giving opportunities by 2025.

It's unrealistic to expect that our growth in fundraising and RFMF will happen in sync. If we paused fundraising entirely, we'd likely be leaving some impact on the table, even in the short term.

While we prefer impact now to impact later, all else equal, we believe we’ll find meaningfully more cost-effective opportunities in the next couple years than we are available to fund on the margin now.

Why has GiveWell’s room for more funding (RFMF) grown so quickly in recent years?

Like our money moved, our room for more funding has grown rapidly. There are a few reasons we've been able to achieve this.

The biggest reason we’ve been able to grow RFMF quickly is due to the growing size of our research team. We had ten researchers in 2017, seventeen in 2019, and we have twenty-two researchers today. Having a larger team lets us do more research.

We also have a more experienced team. As we complete more research, our team becomes more skilled and more efficient in their work. In the past few years, we’ve also hired more senior staff with previous experience, rather than our past practice of primarily hiring and training relatively junior staff.

GiveWell’s growing influence also makes research easier. Large organizations are more willing to engage with us when they know we have hundreds of millions of dollars at our disposal and could make grants that meaningfully affect their operations.

We’ve also increased our focus on quickly finding more RFMF. In the past, we expected that our fundraising would grow relatively slowly. Given that, we focused on finding opportunities that were more cost-effective than our top charities, even if those programs only had room for a small amount of funding. Our assumption was that the best way to grow GiveWell’s impact was to have more impact per dollar with the funding we already had.

Since seeing our funding increase, we’ve shifted our focus to finding opportunities that meet the cost-effectiveness bar we've set and can absorb the large amount of funding we expect to raise.

In other words, when our primary constraint was fundraising, we were searching for opportunities that were more cost-effective than our top charities, because every dollar we directed elsewhere was a dollar that wouldn't go to those charities. Now that our primary constraint is finding cost-effective opportunities, we're no longer making the same trade-off between funding other opportunities instead of our top charities: we're now looking for the best opportunities to fund in addition to our top charities.

What are GiveWell’s long-term forecasts for growth?

We have rough estimates for how much we expect to raise through 2025, as well as targets for how much room for more funding (RFMF) we’d like to identify:

RFMF and Funds Raised Forecast, 2021 - 2025 (values in millions)

Year Total funds available Total funding needs identified
2021 $560 $450
2022 $870 $740
2023 $950 $1,000
2024 $890 $1,250
2025 $960 $1,500

We aren’t very confident in these numbers. Because our fundraising has grown surprisingly quickly, we think it’s especially challenging to predict future growth. We see a similar problem with RFMF — it’s grown quickly, but we’re unsure of what new challenges may emerge as we continue to scale. Nevertheless, we are sharing these estimates to give donors a better sense of our decision-making process and goals.

We try to be conservative in our estimates and ambitious in our goals. If we’re able to raise funds significantly faster than we've forecast, we will prioritize finding additional RFMF to meet those funds.

Why is GiveWell confident it will find cost-effective opportunities on a larger scale?

We recently announced that we aim to cost-effectively direct around $1 billion annually by 2025.

In summary, we’re confident we’ll be able to find additional room for more funding (RFMF) because:

  • In 2021 we shifted our focus to increasing RFMF by finding opportunities that are about as good as (instead of better than) our current top charities.
  • In our first year with this new focus, we were able to more than double our expected RFMF (as compared to our 2020 RFMF).
  • We expect the approach we used to increase RFMF in 2021 will continue to work.
  • But we still think it will take some time to drive that increase, because it takes time to do good research and identify or create giving opportunities.

We share more details below.

First, some overall context on our history and targets:2

A note on terminology: By "room for more funding" (RFMF), we mean giving opportunities that meet or exceed a certain bar — currently, we direct funding to opportunities that we estimate to be at least five (and usually more than eight) times as cost-effective as cash transfers.

We aim to direct funding where it can save or improve lives the most per dollar, so we only consider an opportunity to be part of our room for more funding if it meets a given bar. See more information here.

In 2021 we shifted our focus to increasing our room for more funding.

Before 2021 we had more limited funding and prioritized finding new opportunities that were more cost-effective than our top charities. In 2021, anticipating growth, we shifted to also search for opportunities about as cost-effective as top charities (excluding GiveDirectly), or even somewhat less cost-effective — a much wider focus.

With this new focus, our expected RFMF more than doubled from 2020 to 2021.

We've found more great opportunities than we thought we would this year. We expect to double RFMF from ~$200 million in 2020 to an estimated $450 million in 2021, without drastically lowering our bar for cost-effectiveness (we expect most opportunities we direct funding to in 2021 to be 8x cash or better).

The bulk of our RFMF growth comes from directing additional funding both to our top charities (a forecasted ~$120 million more than last year) and to new interventions (a forecasted ~$125 million increase).3

Here are just a couple examples:

  • Malnutrition treatment programs are an important example of a new intervention: It's too early to be sure, but we might direct hundreds of millions of dollars to malnutrition in the future, at an estimated cost of $2,000 to $18,000 per life saved. We think this is substantially more cost-effective than cash transfers. More here.
  • Among our top charities, we're both supporting continued programs and funding program expansions. For example, we recommended a $28 million grant for Malaria Consortium to distribute long-lasting insecticide-treated nets (LLINs) in Nigeria — our first grant to Malaria Consortium for net distributions and one that we estimate is 13x to 19x cash.

We expect that our research approach will continue to yield more cost-effective opportunities.

We don't think we've come close to exhausting all our available options; we believe we'll continue to find cost-effective opportunities next year and beyond. Malnutrition is just one area we're looking into, and we think it may offer significant RFMF.

Funding opportunities generally don't appear to us fully-formed, but instead develop from conversations and initial research into programs. The $28 million nets grant to Malaria Consortium was the result of an earlier and much smaller scoping grant. We also recommended a $1 million grant in January 2021 to the Alliance for International Medical Action (ALIMA) for its malnutrition treatment program before recommending larger grants in malnutrition later this year. We see likely opportunities to scale up programs to which we've already recommended funding in areas like malaria and malnutrition in the future.

We're also optimistic that some of the opportunities currently in the early stages of our research process will lead to large grants in the future. (More on our program review process here.) To give a few examples, our New Interventions team is looking into programs in the following areas, among others:

  • Malnutrition treatment
  • Prenatal and child nutrition
  • Water chlorination or filtration
  • Incentives for childhood immunizations
  • Community-based maternal and neonatal care
  • Tuberculosis treatment and prevention
  • COVID-19 therapeutics

We expect that we'll recommend grants in some of these areas going forward, but will likely also deprioritize others as we learn more.

We haven't run out of programs to investigate — far from it! And we've seen over the course of 2021 that we were able to make a lot of progress once we focused our attention on finding large opportunities similar in cost-effectiveness to our top charities. We think it makes sense to expect that next year's growth in RFMF will look more like this year's growth than previous years'.

It will take time to find hundreds of millions of dollars of more RFMF, because it's time-consuming to do good research and identify or support the creation of cost-effective giving opportunities.

It will require both time and increased research capacity to identify and cultivate cost-effective opportunities. As mentioned above, we often increase funding to programs over time as we learn more about them and work with organizations to find promising opportunities for expansion.

Our growing research team has been key to our progress. With more people (and people who are more experienced) we can investigate a larger number of programs from our long list of potentially promising opportunities. We now have 22 researchers, up from 8 researchers in 2017. And, we want to hire more!

Finally, a few caveats to the above:

  • Our estimates of RFMF and funds raised in 2021 are forecasts based on internal data on year-on-year growth in funds raised, and our best guess of what opportunities currently in our process we'll end up recommending.
  • We want to be transparent by sharing our best guess. But, a lot of our grantmaking and fundraising happens at the end of the year. Because of these uncertainties, it's hard to precisely match funds raised and funds directed in a given year; that's one advantage of having the option to roll over funds if needed.

Why roll over funding instead of spending it on less cost-effective things?

We compare charities (and funding opportunities within them) using multiples of GiveDirectly’s cash transfer program. For example, we might describe an opportunity as 8x cash, indicating that we think it’s 8 times as cost-effective as GiveDirectly. We compare programs to GiveDirectly because its program is excellent, and it could absorb enough funding that we’re unlikely to fund anything less cost-effective in the foreseeable future.

To this point, we’ve typically4 funded opportunities that pass a relatively high bar: eight (or more) times as cost-effective as GiveDirectly.

We do expect to lower our bar somewhat this year. We’ve budgeted up to $100 million to spend on opportunities that are between 5x and 8x more cost-effective than GiveDirectly. But we don’t want to spend more on these opportunities this year. We’re lowering our bar gradually because we want to avoid overspending on less cost-effective opportunities, which may lead us to not have enough to spend on more cost-effective opportunities later.

Because the difference in cost-effectiveness between charities (and funding opportunities within them) is so large, it only makes sense to lower our bar for cost effectiveness if:

  • We don't expect to find more cost-effective opportunities relatively soon; and
  • We think holding on to funds will reduce our impact more than directing them to less cost-effective opportunities.

We think there’s a good chance we’ll find many additional cost-effective opportunities relatively soon. We think that the biggest obstacle to finding room for more funding (RFMF) at our current cost-effectiveness bar hasn’t been a lack of good opportunities, but our lack of research capacity to identify them (we encourage you to think about people in your network who could be researchers!). We expect that the opportunities we will identify in future years will be sufficiently cost-effective that they will (substantially) outweigh the costs of holding funds for longer (see more below).

Why doesn’t GiveWell just add more top charities?

GiveWell hasn’t prioritized adding new top charities. We typically have to do more work to add a new top charity than to make a grant to any individual funding opportunity. We direct money to charities in two ways:

  • We make grants to specific funding opportunities, either from our Maximum Impact Fund or by recommending grants to Open Philanthropy, other individual donors, or EA Funds.
  • Donors choose from our top charities list and give where they like.

We have major open questions about how we ought to frame the charities we recommend and those we grant to.

Going forward, we aren't sure how "top charities" should be defined in relation to other grantmaking we do, and we're hesitant to add new top charities while we're in the process of resolving that. Given the amount of room for more funding (RFMF) we wanted to find, we decided to focus on making grants this year instead of addressing those questions. You can read about this in more detail in: Why is GiveDirectly still a Top Charity?

Why aren’t you just directing the extra money to GiveDirectly?

GiveDirectly is one of the best charities we’ve identified in our years of research. But — even among our top charities — we aim to direct funding where we believe it will do the most good, not just a lot of good.

We compare charities (and funding opportunities within them) using multiples of GiveDirectly’s cash transfer program. For example, we might describe an opportunity as 8x cash, indicating that we think it’s 8 times as cost-effective as GiveDirectly. We compare programs to GiveDirectly because its program is excellent, and it could utilize enough funding that we’re unlikely to fund anything less cost-effective than GiveDirectly in the foreseeable future.

We’ve typically funded opportunities that pass a relatively high bar: eight (or more) times as cost-effective as GiveDirectly.

This year we’re unable to grant all available funds at our current bar for cost-effectiveness because we raised more funding than we've identified funding opportunities that meet our bar of 8x cash. While we plan to lower our bar somewhat to spend additional funds, we don’t yet think that we should grant funds to GiveDirectly.

Granting funds to GiveDirectly makes the most sense if we don’t have any better opportunities. However, we think we’ll be able to find many funding opportunities that are multiple times better than GiveDirectly within a few years. We expect that the opportunities we will identify in future years will be sufficiently cost-effective that they will (substantially) outweigh the costs of holding funds for longer (see more below).

In the coming year, we plan to prioritize research that could cause us to update our estimate of GiveDirectly's cost effectiveness. Read more about these plans in: What could change our cost-effectiveness estimate of GiveDirectly's cash-transfer program?

Why is GiveDirectly still a Top Charity?

Historically, GiveWell has directed funds to charities in two ways:

  • GiveWell as a recommender: Donors choose from our top charities list and give where they like. Our top charities meet GiveWell's traditional criteria; they are organizations that (a) implement a program that is backed by significant evidence, (b) are cost-effective (in the sense that they accomplish a lot of good per dollar donated), (c) can utilize additional funding effectively, and (d) are transparent with us so that we can be transparent with the public.
  • GiveWell as grantmaker: We direct funds to specific opportunities, either from our Maximum Impact Fund (if granting to top charities) or by recommending grants to specific donors like Open Philanthropy. We recommend specific grants based on cost-effectiveness, aiming to maximize the total impact of the grants we make. We have directed the majority of grant funding to our top charities,5 but we’ve also granted some to organizations that are not top charities.

GiveDirectly performs very well on our traditional criteria for top charities, but GiveDirectly hasn’t been cost-effective enough to qualify for grants in recent years.

We recognize that this distinction is confusing. We haven’t prioritized improving communication around the distinction between our recommending and grantmaking roles before, because grantmaking played a relatively small role for much of GiveWell’s history. However, in recent years, we have begun to direct much more money through grantmaking due to increases in funding from Open Philanthropy, donations to our Maximum Impact Fund, and unrestricted donations.

We plan to improve how we communicate about our recommendations to donors in the near future to avoid ongoing confusion. We’ll share further updates in 2022.

In the meantime, we’re maintaining GiveDirectly as a top charity. It's one of the best charities we’ve identified, it excels on our traditional criteria for top charities, and donations to GiveDirectly will do an outstanding amount of good compared to most charities. For donors who do want to maximize their impact, we recommend giving to our Maximum Impact Fund.

What could change our cost-effectiveness estimate of GiveDirectly’s cash-transfer program?

Right now, GiveWell models cash transfers to be 5-8x less cost-effective than our marginal recommended grants.

In the coming year, we plan to prioritize research that could cause us to update our estimate of GiveDirectly's cost effectiveness. In particular, we plan to investigate whether GiveDirectly could be more cost effective than currently modeled if cash transfers delivered by GiveDirectly:

  • Cause significant reductions in child mortality, especially in areas with particularly high child mortality. We currently include a small upward adjustment for potential impacts on child mortality in our cost-effectiveness analysis of GiveDirectly, but this adjustment is speculative. We are aware of one small study showing a large decrease in child mortality as a result of large (~$500 per beneficiary) cash transfers, but we have not reviewed this study in depth.
  • Are targeted to households with lower baseline consumption or more members. GiveWell models baseline consumption based on data on household consumption from Kenya as reported in Haushofer and Shapiro, 2013. Because GiveWell values the same absolute increase in consumption more highly at lower baseline levels, we’d consider transfers targeting worse-off households to be more cost effective, all else equal. Relatedly, we assume recipient households have an average of 4.6 members. We would estimate that transfers to larger households with the same total household consumption would have larger benefits.
  • Positively affect the consumption of non-recipients through spillover effects. We model cash transfers as exclusively benefitting recipient households. As we indicated in the March 2021 update here, we understand that evidence is now available consistent with positive effects of cash transfers on consumption of non-recipient households. We have not reviewed this evidence in detail or incorporated it into our model.

Does GiveWell believe there are currently no good opportunities for individual donors in global health and development?

We plan on rolling over $110 million of funds this year because we expect this $110 million will be able to help more in a few years. But the fact that we’re rolling over funds doesn't mean there aren't needs in global health and development that are worth funding. The reason we're rolling over funds isn't because we think there aren't great opportunities right now; it's because we think we can find even better opportunities in future years.

Despite substantial improvements in quality of living over the past 20 years, there is still extreme suffering in the world:

We think there are great opportunities to help people in low- and middle-income countries that either fall below GiveWell's current bar for cost-effectiveness or we haven't yet identified or fully investigated. We expect GiveDirectly in particular is likely substantially more cost-effective than most opportunities to help people in higher-income countries.

However, for donors who want to have the most impact, we still recommend giving to our Maximum Impact Fund.

How GiveWell is managing rollover funds

How does the process of receiving or guiding funds from Open Philanthropy work?

When do funds come in?

Open Philanthropy decides how much they'll give to GiveWell prior to the end of the year and makes that funding available to us. We first make grants with the funding we raise from other donors, and then fill the remaining funding gaps with the available funds from Open Philanthropy. Open Philanthropy has tentatively committed to giving $500 million in 2022 and 2023 each.

What is held back for later?

Funds we choose not to spend in a given year (for the reasons mentioned above) will be held as rollover funds.

What happens to money we don’t immediately re-grant?

It remains in Open Philanthropy's accounts, bindingly committed to GiveWell’s recommendations, for later spending.

What goes into GiveWell’s accounts vs. held elsewhere.

Open Philanthropy maintains control of the funds, though those funds are bindingly committed to GiveWell’s recommendations. In almost all cases, Open Philanthropy makes grants directly to recipient programs, so the money does not pass through GiveWell's account.

How does Open Philanthropy decide how much money to give to GiveWell?

Open Philanthropy has shared their reasoning in this blog post: 2021 Allocation to GiveWell Top Charities: Why We’re Giving More Going Forward

Is there a cap on how much funding GiveWell would roll over before lowering the bar for cost-effectiveness?

We don’t have a rule in place. This is the first year we’ve rolled over funding, and we’ve focused on making a good decision this year rather than deciding on a long-term rule.

We intuitively think it’s bad to roll over a large portion of the funds we raise. For the next couple years, we expect to make annual decisions about whether to roll over funds and, if so, how much. Rather than commit to a rule at this time, we plan on sharing our plans for rollover funding each year (as we are now), so that donors can make informed decisions about their own giving.

Which donations will be rolled over?

Our expectation is that we’ll only be rolling over Open Philanthropy's donation, and we will direct other donor funds on the same schedule we have followed in the past.6 We think this is an especially good fit because:

  • It's easiest to coordinate with one large donor;
  • We have a good existing relationship;
  • They are especially well-invested, so the money they hold will have higher investment returns than funds that we hold in the Maximum Impact Fund (though those returns will not be mechanically directed to GiveWell, more on this below).

If you give to GiveWell's recommended programs – including the Maximum Impact Fund – this year, your donation will be granted as usual to the outstanding giving opportunities we've identified.

Because money is fungible, additional donations to GiveWell’s top charities (excluding GiveDirectly) will effectively take the place of money that Open Philanthropy would have granted this year. This will cause GiveWell to save more of Open Philanthropy’s donation for future use. We discuss fungibility and rollover funds because we believe they affect the ultimate impact of donations to our recommendations, even though they don't affect how your literal donation is processed and allocated.

The following types of donation will effectively cause us to roll over more of Open Philanthropy’s donations:

  • Donations to GiveWell’s Maximum Impact Fund
  • Donations to our top charities through GiveWell’s website
  • Donations directly to our top charities and reported to GiveWell
  • Donations directly to our top charities but not reported to GiveWell7

The true impact of those donations will be realized once we are able to spend all funding available on extremely cost-effective opportunities. See here for more on how fungibility affects your donation.

Where are rollover funds saved?

We expect to only roll over funds donated by Open Philanthropy. Open Philanthropy will maintain temporary control of funds it has allocated to our recommendations but that we recommend be rolled over into a future year, though these funds are bindingly committed to GiveWell’s recommendations. Open Philanthropy will maintain control of the funds largely because it expects to earn a higher rate of return than GiveWell would.

Open Philanthropy will be earning investment returns on funds it maintains control of; those returns will accrue to Open Philanthropy and will not be mechanically passed on to GiveWell.

Does GiveWell’s savings earn interest, and does GiveWell make money off that investment?

GiveWell's assets are invested fairly conservatively and, therefore, generally earn a rate of return that is lower than market rate. We intend to change this in the future to enable us to earn higher investment returns on substantial amounts of funding that we might hold for a significant period of time.

Open Philanthropy will be earning investment returns on funds it maintains control of; those returns will accrue to Open Philanthropy and will not be mechanically passed on to GiveWell. However, Open Philanthropy has cited growth in its assets among the factors that motivated its larger allocation to GiveWell recommendations this year and going forward, so continued growth in Open Philanthropy’s investment returns could result in increased funding for GiveWell recommendations in the future.

How long will it take to use rollover funds?

Practically, we expect to grant new donations this year as we typically do and to only roll over Open Philanthropy's donation.

But new donations (once we’re over the amount needed to fully fund all the sufficiently cost-effective opportunities we’ve identified) will effectively cause us to roll over more funding from Open Philanthropy. We'll have truly used up our rollover funds when we no longer have any rollover funding, regardless of whose actual donation we are saving until then.

We don't have a confident estimate on how long we will have rollover funds. Our current best guess is that we will accrue approximately $110 million in rollover funds in 2021. We anticipate we’ll roll over a similar amount (around $130 million) from 2022 to 2023 as well. We expect to draw down those rollover funds in 2023.

However, those estimates are highly sensitive to assumptions about how much we'll raise in 2022 and how much room for more funding we'll be able to find. Our ability to find more room for more funding is especially uncertain because we might spend a lot of time on an opportunity and then decide it's not cost-effective enough to fund. This is an expected and standard part of our research process — we need to research even good-seeming opportunities to understand if they meet our cost-effectiveness bar.

Increases in the total rollover funding we hold will have some additional effects even before we ultimately grant them. Our room for more funding goals are based on our expectation of how much we will be able to spend, so the most immediate impact of your donation would be to marginally increase (in expectation) our room for more funding goals. If we raise enough money, we may also decide to lower our cost-effectiveness bar and make grants more quickly. See above.

Do rollover funds trigger your excess assets policy?

Rollover funds will not trigger our excess assets policy. Our excess assets policy is intended for donations to GiveWell's operations. Because rollover funds are already earmarked for granting, not GiveWell operations, this policy does not apply.

How much is impact reduced when funding is held for a year?

We don't have a confident position on the effect of delaying giving by one year.

However, even if the impact of giving opportunities were declining by 10% per year (which we think is implausible once investment returns from holding funds are taken into account),8 it would take over 15 years for an opportunity that was 5x now to decline to 1x.9

How does rollover funding affect donors?

Why should (or shouldn’t) I keep giving to GiveWell

We think it would be reasonable for some donors to decide not to engage deeply with issues around fungibility and instead to be satisfied with the fact that donations given to our Maximum Impact Fund will, in a literal sense, continue to be granted out as usual.

We also know that to some of our donors, issues around the presence of rollover funds (and the impact it has on the ultimate impact of their donations) are very important. This discussion is geared toward the latter set of donors; below, we discuss why we still think giving to the Maximum Impact Fund is likely to be the best option and some reasons why donors might choose not to.

Why you should continue to give to GiveWell

We still believe that giving to the Maximum Impact Fund is a great choice, and is the best choice available to many donors.

We grant funds from our Maximum Impact Fund with the goal of doing the most good possible. This doesn’t mean that we will always hit a specific threshold of cost-effectiveness, but that we will grant to the most cost-effective opportunities of the choices available. Our research team of 20+ staff works full time on finding cost-effective giving opportunities; the opportunities we ultimately grant to are more cost-effective than opportunities we expect most donors will be able to find on their own.

While new opportunities may be less cost-effective than prior Maximum Impact Fund opportunities, they’re still excellent compared to other options

It’s more compelling to give to the Maximum Impact Fund (MIF) when we have found clear, short-term needs for more funding. We think it’s reasonable to see giving to the MIF as less cost-effective than if we weren’t planning on rolling over funds at all.

However, we don't think this is the best comparison — the right comparison is the cost-effectiveness of the Maximum Impact Fund relative to the impact of other choices. We expect donations to the Maximum Impact Fund will be more cost-effective than most donors' other options.

Our rapid increase in funding may also lead to reduced cost-effectiveness in the future as our donors fund the most cost-effective funding opportunities. However, we still expect that the opportunities we fund will be more cost-effective than donors’ likely alternatives. Our staff spends over 20,000 hours per year working to identify the charities where donations will save or improve lives the most.10

For donors who are aligned with GiveWell’s worldview, donations to our Maximum Impact Fund — even if they take a year or two longer to have their true impact — are probably multiple times better than other options we expect are available. If you are trying to maximize your impact within GiveWell’s criteria, we think this is still the most cost-effective place you can give.

Additional donations will influence GiveWell’s research and planning

Donations this year will also help us better understand demand for GiveWell's recommendations. This helps us plan better and make better decisions about how to prioritize our work.

GiveWell's goal is to allocate the funds we receive (and expect to receive) so that those funds have as much impact as possible. We expect additional donations will lead to more total impact by giving us better information about the size of the portfolio we should be seeking to allocate.

Practically, if you give to Maximum Impact Fund we will increase our guess at how much funding we’ll raise in total. This leads us to increase our room for more funding (RFMF) targets. An increase in our RFMF targets has already had a number of effects:

  1. We have been scaling up our research capacity to identify new funding opportunities. We expect this capacity to help us find more RFMF.
  2. We expect to fund some opportunities in 2021 that don't quite meet our cost-effectiveness bar,11 and we may lower our bar in the future. We have incrementally lowered our bar for identifying cost-effective funding opportunities and may do so more in future.
  3. We expect to reduce the time we spend investigating opportunities before making a recommendation. We currently believe we can reduce this time without a major decrease in the quality of our recommendations.
  4. We are prioritizing identifying larger funding gaps that can have more total impact, rather than smaller funding gaps that may be more cost-effective. For example, we have allocated more capacity to finding opportunities to scale cost-effective evidence-based programs (where we believe there are larger funding gaps) relative to high-leverage opportunities (where we believe there are smaller funding gaps).

Taking those steps as appropriate helps us maximize our overall impact.

The best reasons to not give to GiveWell

We’ve shared our best guess of the reasons that GiveWell-aligned donors may choose not to give to GiveWell this year:

You don’t prioritize cost-effectiveness as highly as GiveWell does

We make our granting decisions based on where donations will help the most. But there are other factors donors may take into account that would suggest they give elsewhere. For example, donors may believe that:

  • Putting funds to use quickly is more important;
  • Giving program participants control over how they’re helped is more important than maximizing cost-effectiveness, in which case they may favor giving to GiveDirectly;
  • Being able to choose the program where their donation has impact is especially important and that giving to GiveWell, where their donation may be redirected as part of a larger pool of funds (either directly or through funging) is unappealing.
You value improving lives much more than GiveWell does, relative to averting deaths

Our cost-effectiveness model relies on subjective philosophical values—for example, how to weigh increasing a person's income relative to averting a death.

If you value improving lives much more than GiveWell, you may believe GiveDirectly is relatively more cost-effective than GiveWell does. GIveDirectly isn’t the only top charity that improves lives — our model suggests that deworming improves lives much more cost-effectively than GiveDirectly. However GiveDirectly does have immediate funding needs, while we have filled the needs at the deworming organizations we recommend.

You want to wait and give to GiveWell when there is an urgent need.

We’ve addressed this in Should I delay my donation to GiveWell?

You want to wait a year and see if GiveWell can deliver on finding more excellent funding opportunities

We’re rolling over funding (rather than spending on GiveDirectly) in part because we expect to significantly increase our room for more funding in the coming years. But donors may be skeptical that we can make that change and may want to wait to see more proof that GiveWell can increase our room for more funding before giving.

You believe GiveDirectly is more cost-effective than GiveWell does.

We’ve addressed our own open questions here: What could change our cost-effectiveness estimate of GiveDirectly's cash-transfer program

You have special insight into particular causes or giving opportunities or plan to spend a lot of time trying to find underfunded, cost-effective opportunities

We have a team of 20+ researchers working to find cost-effective programs, so we think it would be challenging for donors to find cost-effective opportunities that GiveWell would consider, but has missed. However, some donors may have special insight due to their expertise or experience that allows them to identify excellent opportunities we’ve missed.

Should I delay my donation to GiveWell?

If you're confident that you plan to give GiveWell additional funding in the future, we'd rather receive that funding now. As mentioned above, it's helpful for us to know what level of funding to expect in the future; we can make better prioritization decisions if donors give reliably than if donors don't give one year but then give twice as much the following year.

We think the most compelling reasons to delay giving would be if you want to see if we successfully draw down our rollover funding over time or if you want to monitor whether you think the impact of our recommendations or research quality declines such that you no longer believe GiveWell is the place that can do the most good with your donation. We believe that we'll be able to allocate your donation well, but we understand that you might not share our confidence.

Some especially well-invested donors might also wish to keep their funds invested rather than giving them, since marginal donations this year will in effect not be spent until next year.

How rollover funding impacts the cost-effectiveness of donations

We believe that holding on to funds for a few years has a minimal impact on the cost effectiveness of donations, especially compared to the differences in cost-effectiveness between different programs. More in: How much is impact reduced when funding is held for a year?

But cost-effectiveness is affected by the sharp increase in donations that has led to GiveWell rolling over funds.

We expect that cost-effectiveness is going to decrease as we raise more funds. Our guess is that maintaining a bar of 8x (or higher) over the long-term is unlikely. We’re snapping up the best funding opportunities as quickly as we can identify them (and then snapping up the next-best). Over time, this reduces average cost-effectiveness. That’s a great outcome—saving lives shouldn’t be cheap, and it’s a sign the world is getting better.

But we’ll still share the most cost-effective funding opportunities we can find with our donors. While these may have lower cost-effectiveness in the future, they’ll still be the best ways available to save and improve lives that we’ve been able to find.

Will my donation take longer than before to have an impact?

We expect to grant all donations this year on our typical schedule, with the exception of Open Philanthropy's donation, part of which we will roll over.

But the true impact of additional donations this year will take place when we grant the last of our rollover funds. Funds typically take a while to be used even in the absence of rollover funds – for example, we generally look to provide our top charities with funding for the next three years, so organizations may not be spending the funds we allocate until a few years after our allocation. The act of rolling over funds adds to the time between allocation and use.

Our current best guess is that we can scale up our giving such that we'll begin drawing down rollover funds (and stop rolling over additional funds, at least for the time being) in 2023.

What is funging, and how does it affect the impact of my donations?

We discuss funging generally here. In a year where we roll over funding, the true impact of a donation to any of GiveWell’s top charities (excluding GiveDirectly) will be the same. All these donations will effectively be causing an increase in rollover funding, which will be spent on cost-effective opportunities in the future.

However, we think that would be too narrow a way of thinking about the donation; it's a bit more complicated than that. Because we expect to revisit our room for more funding (RFMF) targets based on funds raised, a marginal donation would marginally increase our targets (in expectation), which would lead us to direct funding to charities more quickly (in expectation).

This is because the more our RFMF targets exceed the RFMF we're able to find, the stronger the argument becomes for lowering our cost-effectiveness bar, hiring additional capacity, and prioritizing finding opportunities with greater room for more funding.

If I don't give to GiveWell, what are my other options?

We spend thousands of hours per year looking for the most cost-effective opportunities we can find, through which we believe that your donation can save or improve lives the most per dollar donated.

We don't have any other recommendations for donors who want to maximize their impact; if we knew of opportunities we thought were better than giving to the Maximum Impact Fund, we'd allocate funding to them. Of course, reasonable people might disagree with our assessment of our recommendations compared to other opportunities.

For donors who prioritize funds going out relatively quickly over maximizing impact, we recommend GiveDirectly.

Can I donate to a top charity and direct my donation to opportunities that GiveWell isn’t funding, even if those opportunities are at a lower cost-effectiveness than GiveWell would fund?

It might be possible to do this, but we think it would be challenging. Excluding GiveDirectly, a relatively small proportion of opportunities at our top charities are below our cost-effectiveness bar. It’s also unclear how you’d go about restricting your donation to only fund these opportunities.

We ask our Top Charities to report their funding needs over the next three years (for a discussion of why we consider funding a charity's work up to three years in the future, see this blog post), and we make or recommend grants to fill funding gaps that meet or exceed our cost-effectiveness bar.

Our best guess is that any additional donations you make to our Top Charities will either support funding gaps in the next three years that are below our cost-effectiveness bar and that we have consequently declined to fund (this includes GiveDirectly—see: Why aren’t you just directing the extra money to GiveDirectly?) or will support funding gaps at all levels of cost-effectiveness beyond the next three years, i.e. funding gaps four years or more in the future.

In the latter scenario, some or all of those funding gaps may be at a level of cost-effectiveness that GiveWell would fund in the future. Those donations would effectively "funge" with GiveWell, and their true impact would be wherever GiveWell granted the funds that GiveWell would have spent on the future opportunity you funded.

This funding will have the same effect as donating and telling GiveWell. When we calculate room for more funding, we include all funding our recommended charities receive, whether it's designated as influenced by our recommendations or not. We ask for information from our recommended charities about their finances each year and we use their financial information to calculate room for more funding.12

GiveWell's relationship with Open Philanthropy

Who is Open Philanthropy / Good Ventures?

Open Philanthropy began as a partnership between GiveWell and Good Ventures (a philanthropic foundation founded by Cari Tuna and Dustin Moskovitz, one of the co-founders of Facebook and Asana). Open Philanthropy became an independent organization in June 2017. Today, Open Philanthropy is a large research and grantmaking organization primarily funded by Tuna and Moskovitz. You can read more about the relationship between Open Philanthropy and GiveWell here.

What’s GiveWell’s history with Open Philanthropy?

How much has OP given historically compared to other donors? How do we expect that to change?

Cumulatively from 2012 to 2020, Open Philanthropy made up about half of the funds GiveWell raised, and other donors comprised the remainder. We're currently projecting that Open Philanthropy will make up about 50% of funds raised in 2021 and about 60% in each of 2022 and 2023. However, we've historically found it difficult to predict future funds raised, and we view these estimates as very rough.

How has OP's money been prioritized against donor funds historically? Which funding gaps does OP fill, and which do other donors fill?

Historically, most Incubation Grants have been funded by Open Philanthropy. EA Funds and specific donors have funded some of them, but we haven't recommended them more widely to other donors because they are often more uncertain than our top charity recommendations. Because we work closely with Open Philanthropy, we can discuss these grants in detail, including any risks they pose, so that Open Philanthropy can make a fully informed decision about whether to fund them. We generally recommend that donors fund our top charities unless we know that they have an interest in riskier or more uncertain opportunities.

Open Philanthropy has also been a major funder of our top charities. For example, in November 2020, Open Philanthropy gave nearly $70 million to our top charities at our recommendation.

What prompted this change from OP?

Open Philanthropy has shared their reasoning in this blog post: 2021 Allocation to GiveWell Top Charities: Why We’re Giving More Going Forward

Will OP increase their giving in the future?

Open Philanthropy has shared their reasoning in this blog post: 2021 Allocation to GiveWell Top Charities: Why We’re Giving More Going Forward

  • 1See this blog post for more detail on how much money we moved in 2020. Note that the $200 million listed here differs from the ~$244 million total listed in the blog post. This is because for the purposes of this page, we are excluding ~$40 million in funds donated to GiveDirectly, which does not meet our bar for cost-effectiveness and is, therefore, not included in our RFMF total.
  • 2

    Note: Room for more funding for the years prior to 2021 are rough estimates made by taking the total funds we directed to our recommended programs and subtracting funds to GiveDirectly, which is below our cost-effectiveness bar. For more on our cost-effectiveness bar, see above.

  • 3

    The estimate we provide for growth in funding to "new interventions" here does not include opportunities identified through our high-leverage research, a specific area of research (not part of our "New Interventions" team) to find programs that have harder-to-measure effects (see more here).

  • 4

    We have occasionally funded top charity programs that were modeled as <8x because our model had recently changed, pushing them below 8x, and either:

    • (a) the grants were small and to organizations where we had a history of grantmaking. Because these organizations had planned around GiveWell's funding, we chose to make some of these small grants to be a good partner. This also gives us more time to plan a withdrawal of funding that is minimally disruptive to our partner organizations, or
    • (b) there was specific additional work we wanted to do on the model that we thought might push it above 8x and we wanted to keep the program going until we had done that work.

  • 5See here for a list of all grants we've made or recommended since 2014, including those made to top charities.
  • 6It takes time to allocate donations. We typically grant donations to our Maximum Impact Fund on a quarterly basis. While most donations are granted in the same calendar year we receive them, donations from October to December of any given year are typically granted by the end of the first quarter of the following year.
  • 7This is the case for all donations to top charities, other than donations to GiveDirectly and possibly donations to other top charities that will fund opportunities that do not meet our cost-effectiveness bar. See here for more detail.
  • 8

    For economic outcomes, we use a discount rate of 4% in our cost-effectiveness analysis, which roughly approximates the value of someone receiving the same increases in consumption one year later.

    For health outcomes, we do not use a discount rate. However, we expect disease burden to decline each year (with a proportional decline in cost-effectiveness for preventative interventions). Historically, malaria has declined about 4 percentage points per year between 2003 and 2019.

    This isn't a full accounting of the relevant considerations. For example, we expect some unmodeled "social return on investment."

    However, the calculation also doesn't include strong reasons in favor of saving to give later. In particular, it doesn't include investment returns from holding funds to donate in future years.

    Once these considerations are taken into account, we think it's implausible that the opportunity cost of holding funds is 10% and expect it to be much lower than that.

  • 95x cash x (1 - 0.1)15 = ~1x cash
  • 10See more details on this calculation here. Note that we only had fifteen researchers on staff when we calculated this estimate. We now have twenty-two.
  • 11Our current cost-effectiveness bar is 8x. We expect to spend $50 million on opportunities we estimate to be 5-8x this year. For more, read here.
  • 12For example, see our Q1 2021 room for more funding calculations for Malaria Consortium here.

Source URL: https://www.givewell.org/rollover-funds