Funds are a relatively new way for donors to coordinate their giving
to maximise their impact.
There's a bit of a cute response that would be fun to write, except
that it isn't quite true:
Donating through a fund that is able to put more time and effort into
evaluating charitable options is not a new idea, and is very natural
if you're thinking along EA lines. In fact, the idea goes back at
to the last time people tried to invent effective altruism, 150 years ago. While that
effort has been through a few names over time, at this point you know
it as the United
Way.
While this does have elements of truth, it implies historical
motivations were more similar to current ones than they really were.
As usual, history is much more nuanced.
The United Way is not a single grantmaker which will direct your money
to wherever they think it will do the most good. Instead, it's a
collection of local organizations, each responsible for their
immediate community. This organizational structure reflects one of
the larger differences between the Scientific Charity Movement
and effective altruism: the former had a strong local focus, while EAs
push for spending money wherever the impact is largest. This
structure also comes from how the United Way grew out of the Community
Chest movement, where each city had their own Community Chest fund.
Coming from a modern EA perspective you might guess that the
motivation was to improve the allocation of money within a city, even
if not between cities: instead of individuals needing to assess
competing community charities, a central fund could weigh their needs
and make informed tradeoffs. But reading about the development of
Community Chests (ex: Burleson 1926, Todd 1932 and discussion, Seeley
1957) the core problem Community Chests were solving was
duplicative fundraising.
For example, Todd (1932) writes about a "federation of givers who were
tired of miscellaneous appeals, and banded together for common
defense" and "this motive of protection against miscellaneous
solicitation on the one hand, and against serving in a constant
succession of philanthropic 'drives' on the other, is still dominant".
Instead of competing, charities could band together and more
efficiently (and less annoyingly!) fundraise jointly. This also let
these campaigns fill a role similar to the war effort fundraising of
the 1910s, where they were widely seen as legitimate and democratic, a
safe way for wealthy residents and business owners to contribute.
I do see a small amount of discussion on how centralized funding might
improve allocation, but it's pretty minor compared to fundraising
scale, and it's mostly seen as a potential opportunity, not something
currently done well:
One of the arguments frequently offered for organizing a community
chest is that it would give the directors of social agencies time to
consider the proper spending of their resources instead of having to
put in all their time in raising money. That is to say, the
competition would be shifted from finance to standards of performance.
Not all communities have by any means reached such an ideal
level. ... The process of accommodation frequently takes the form of
compromise. In order to secure, as large a constituent membership as
possible, the promoters of the community chest will admit agencies
whose standards may not measure up to the best levels of social work
in the community. (Todd, 1932)
And:
The Community Chest with its centralization of finance has a unique
opportunity to set up machinery for gathering the information
concerning the community and concerning the work of the agencies,
which would provide a more adequate basis for the social work of the
community. I am quite aware that this is no new idea. A number of the
chests have already made some excellent beginnings in setting up these
research bureaus, under one form or another. And there is rather
general lip service to the importance of fact-finding. Perhaps the
thirteen or fourteen years which represent the period of development
of the Community Chest movement, is too short a time in which to
expect the creation of elaborate research departments. (North, 1932)
Other places where we see a similar kind of centralized allocation are
large multi-focal charities (Catholic
Charities, Oxfam, IRC,
Red
Cross, etc). These are different in structure in that a lot of
their funding goes to running their own programs instead of
regranting, though they do some of both.
The history of charitable funding is complex, and I've only touched on
it here. But I do think EAs should be cautious about talking about
charitable funds as if they're something we invented. Instead, I
think they're better viewed as another iteration in a long history of
fundraising and allocation.
In the EA movement people will sometimes talk about charitable funds as if they are a new idea. For example, the recent Giving What We Can post " why we recommend using expert-led charitable funds" ( forum discussion) opens with:
There's a bit of a cute response that would be fun to write, except that it isn't quite true:
While this does have elements of truth, it implies historical motivations were more similar to current ones than they really were. As usual, history is much more nuanced.
The United Way is not a single grantmaker which will direct your money to wherever they think it will do the most good. Instead, it's a collection of local organizations, each responsible for their immediate community. This organizational structure reflects one of the larger differences between the Scientific Charity Movement and effective altruism: the former had a strong local focus, while EAs push for spending money wherever the impact is largest. This structure also comes from how the United Way grew out of the Community Chest movement, where each city had their own Community Chest fund.
Coming from a modern EA perspective you might guess that the motivation was to improve the allocation of money within a city, even if not between cities: instead of individuals needing to assess competing community charities, a central fund could weigh their needs and make informed tradeoffs. But reading about the development of Community Chests (ex: Burleson 1926, Todd 1932 and discussion, Seeley 1957) the core problem Community Chests were solving was duplicative fundraising.
For example, Todd (1932) writes about a "federation of givers who were tired of miscellaneous appeals, and banded together for common defense" and "this motive of protection against miscellaneous solicitation on the one hand, and against serving in a constant succession of philanthropic 'drives' on the other, is still dominant". Instead of competing, charities could band together and more efficiently (and less annoyingly!) fundraise jointly. This also let these campaigns fill a role similar to the war effort fundraising of the 1910s, where they were widely seen as legitimate and democratic, a safe way for wealthy residents and business owners to contribute.
I do see a small amount of discussion on how centralized funding might improve allocation, but it's pretty minor compared to fundraising scale, and it's mostly seen as a potential opportunity, not something currently done well:
And:
Other places where we see a similar kind of centralized allocation are large multi-focal charities (Catholic Charities, Oxfam, IRC, Red Cross, etc). These are different in structure in that a lot of their funding goes to running their own programs instead of regranting, though they do some of both.
The history of charitable funding is complex, and I've only touched on it here. But I do think EAs should be cautious about talking about charitable funds as if they're something we invented. Instead, I think they're better viewed as another iteration in a long history of fundraising and allocation.
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