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This is: A Case and Model for Aggressively Funding Effective Charities, published by aaronhamlin on the AI Alignment Forum.
[This is cross-posted from my Medium account and referenced on my personal website. I've pasted the article in its entirety (plus images to keep the reader going) here for convenience. Special thanks to those who gave early feedback on this article.]
Here’s the common wisdom from the nonprofit sector: Avoid providing or taking significant funding that comes largely from one source. But is that always good advice?
If it is good advice, then no one told the larger nonprofits. Their funding is undeniably concentrated with funding from few funding sources within the same domain. This is how most nonprofits get large. Further, nonprofits who get their primary income from either individual donations or institutional funding—where we tell nonprofits to go—comprise just 8% of nonprofits. Unless the nonprofit is a good candidate for government grants or in-kind corporate donations, then it’s unlikely to grow significantly.
Also, being underfunded as a nonprofit and unable to pick up the remainder brings its own frustration. That’s because a failure while being underfunded makes it hard to tell whether a nonprofit’s intervention was inherently ineffective or if it just didn’t have the funding it needed to succeed. No funding, on the other hand, provides no useful feedback.
Given how funding currently takes place—quite conservatively—perhaps we should encourage a more aggressive approach. I’d like us to consider the main goals of both the nonprofit and funders—referring particularly to funders with $100M+ resources. Then, appreciating any constraints that are present, let’s consider an alternative funding model—one that includes concentrated funding of greater than half, or even much more, of a nonprofit’s income.
Charitable Goals
Just so we’re on the same page, let’s be clear on what each groups’ goals are.
Funders’ Goals
Funders—like typical nonprofits—generally have a vision of what they set out to do, a particular problem (or class of problems) they want to solve. They want to have the greatest impact possible with their funds. They must factor in a number of issues concerning their grant recipients, including their ability to achieve the sought outcomes.
Nonprofits’ Goals
Nonprofits—the ones getting the funding—also have a vision. But unlike funders, these are the organizations that do the lifting to get the work done. Most nonprofits have the constant issue of making sure they bring in enough money to do the work that moves them closer to their organization’s vision.
When is significant funding too concentrated?
Of course, there are some real cases when concentrated funding actually is bad.
1. The funder mandates conditions that compromise the nonprofit’s work.
It may also make sense for a nonprofit itself to refuse concentrated funding. If a funder compromises a nonprofit’s ability to carry out its mission, then receiving concentrated funding is bad. We might see this with a funder that puts heavy restrictions on funding or adds unreasonable obstacles. This can keep the nonprofit from being as nimble as it needs to be—particularly smaller or newer nonprofits. In any case that a funder substantially compromises a nonprofit’s ability to advance its mission, that’s a valid reason for the nonprofit to refuse funding.
2. The nonprofit has many existing funding sources.
If there are multiple sources of funding for a nonprofit that are easily within reach and sufficiently large, then it may not make sense for a funder to provide especially concentrated financial support. A smaller grant may make sense here—particularly if the nonprofit doesn’t have significant room for extra funding. Technically, this means a nonprofit isn’t that neglected. If the organization can ...
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