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This is: Investing to Give: FP Research Report, published by SjirH on the AI Alignment Forum.
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See below for the executive summary. The full report can be found here.
For context, see also our previous forum posts on our plans to set up a Long-Term Investment Fund and the early stages of this research project.
Investing to give
In 1784, the French mathematician Charles-Joseph Mathon de la Cour wrote a parody of Benjamin Franklin’s then-famous Poor Richard’s Almanack. In it, Mathon de la Cour joked that Franklin would be in favour of investing money to grow for hundreds of years and then be spent on utopian projects. Franklin, amused, thanked Mathon de la Cour for the suggestion, and left £1,000 each to the cities of Philadelphia and Boston in his will. This money was to be invested and only to be spent a full 200 years after his death. As time went by, the money grew, and in 1990 Boston received an impressive $5 million and Philadelphia $2.3 million, which was spent on charitable causes on behalf of Ben Franklin.[1]
Benjamin Franklin is one of the first people we know of who practised investing to give: purposely investing funds at one point in time in order to have more impact later. This report investigates how promising this strategy is today, and whether we could do even better than Franklin did. In particular, we are trying to answer whether, if we want to maximise our impact as philanthropists, we should do one of two things: either give to the highest-impact opportunities available now, or invest in order to give even more impactfully at a later date.
At Founders Pledge, we are considering launching a Long-Term Investment Fund for our members who would like to invest to give for maximum long-term impact.[2] This Fund would take contributions from members, invest them, and disburse the resulting funds to nonprofits at those times when the long-term impact of doing so appears highest, whether this is in five years or in 500 years. This research project on investing to give is key to our ongoing decision process on whether we should create such a Fund. Therefore, this project’s primary purpose was to evaluate investing to give from a long-term impact perspective, but we have also looked into its potential from the perspective of benefitting the current generation, and from the perspective of averting animal suffering in the near term.
In this summary, we highlight the key findings of our research project and their practical significance. For a more detailed and exhaustive explanation of our approach, our model, and the evidence and reasoning supporting our findings, we refer the reader to our full report.
1. Mary and our proxy model
We start by answering a proxy question, featuring the fictional Founders Pledge member Mary. Mary cares deeply about others regardless of where or when they live. She has $1 million that she wants to spend on making the world a better place in a way that has the highest expected long-term impact: she is open to opportunities that have a high chance of failing but would yield an outsized reward if successful. So, how can Mary best achieve this impact? Should she allocate her $1 million to a Fund which invests her money and then gives to the highest-impact funding opportunity Founders Pledge is able to find?
Importantly, for this proxy question, we choose to disregard what we call investment-like giving opportunities. We also fix the timeline of investing to give at 10 years, and assume equity market index funds as our investment strategy. The implications of releasing these restrictions are discussed later.
In order to answer the question, we estimate Mary’s expected impact of investing to give relative to her expected impact of giving today. We identify three key factors:
The financial returns we are able to achieve in 10 years: ...
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