Why you should give to a donor lottery this Giving Season

Sam Deere & Jonas Vollmer

November 17, 2020

Summary

  • The 2020/2021 EA Funds Donor Lottery is now open, entries close Friday 15 January 2021 at 4pm UTC. There are $20,000, $100,000, and $500,000 lotteries.
  • A donor lottery allows you to turn your donation into a larger donation with some probability, while holding the expected donation amount constant. E.g., you can trade a $1,000 donation for a 1% chance of allocating $100,000 worth of donations. Your expected donation size stays constant at $1,000.
  • If you win, it will be worth the time to think more carefully about where to allocate the money. Because extra time thinking is more likely to lead to better (rather than worse) decisions, this leads to more (expected) impact overall, even though your expected donation size stays the same.
  • For this reason, we believe that a donor lottery is the most effective way for most smaller donors to give the majority of their donations, for those who feel comfortable with it.
  • If you win, we can put you in touch with experienced grantmakers who can help you with the decision.
  • You should only participate in a donor lottery if you think there’s a good chance you (or someone who you trust) will spend additional time thinking about your donation if you win.
  • We also think there’s a good case for continuing to make some fraction of your donations directly, to keep engaged with EA donation opportunities.
  • You can participate anonymously if you like.

Enter the donor lottery 

You can also enter the lottery through the EA Giving Tuesday Facebook Match (base donation only; any matched funds can be allocated to a Fund or non-profit of your choice). See this document for more information about entering the lottery through EA Giving Tuesday.

Donor lotteries can increase the impact of your donation

With Giving Season around the corner, many people in the effective altruism community will be getting ready to make their year-end donations. However, choosing where to donate is not a simple task, and can require a non-trivial amount of time and research effort to think through questions. For smaller donors, time-intensive research doesn’t make much sense.

Let’s say you have $1,000 to donate. You want to find the most effective place to give, so you do some research, reading blog posts and charity websites, maybe even emailing some organizations to ask about their expected funding gaps. Maybe you’d spend an hour or so of your time trying to make a good decision.

However, if you were choosing where to allocate, say, $100,000, you’d probably feel like it was worth spending considerably more than an hour thinking about where to donate it.

The nice thing about spending more time on a problem is that you can come to understand the problem better. You can build upon your existing knowledge, you’ll ask better questions of experts, you’ll consider more speculative ideas, you can think about donating to things that aren’t registered charities, and so on. You might also think more thoroughly about your values and your worldview, which could cause a big shift in your cause prioritization. So if you increase the amount of time you spend thinking about your donation, you can (hopefully) greatly increase the impact of your donation.

A donor lottery is a way to make it worthwhile for you to think carefully about where to give your money.

Here’s how it works.

Let’s come back to the example of having $1,000 to donate. After doing your initial research, you decide where to give. Let’s say this donation purchases one unit of impact. (Hopefully in real life your donation will lead to something a bit more tangible than ‘units of impact’, but we’ll sidestep the issue of what you can actually buy with $1,000 for now.)

Alternatively, let’s say that you instead put $1,000 into a $100,000 donor lottery. Your chance of winning is proportional to the size of your donation, so, in this case, you have a 1% chance of winning the whole pot. In 99% of possible cases, you lose the lottery, and so you don’t end up spending any time thinking about where to donate (see below for more on this). However, in 1% of cases, you get to allocate $100,000.

The expected value of your donations is the same in both worlds – in both cases, you expect to choose where $1,000 is donated (i.e. either you’re directly donating $1,000, or your 1% chance of $100,000 works out to $1,000 in expectation).

However, in the second world, you have an incentive to think more carefully about your donation. This careful consideration and deliberation means that you’re multiplying your $100,000 (or $1,000 in expectation) by the increase in donation quality. Assuming you found things that were twice as effective as your previous top pick, the final expected value of your donation is now **two units of impact **[1].

Visual explanation of how a donor lottery works

Obviously, this depends on you being able to reliably improve your impact through spending more time on research. Based on our experience talking to previous lottery winners, we think this is likely. 

One way of improving your donations is to consult with experts. If you win the donor lottery, we can put you in touch with experienced grantmakers if you’d find it useful. A group of grantmakers across different cause areas (including fund managers from all four EA Funds) have already agreed to assist, and we can also put you in touch with other people who have experience in specific areas. 

Other benefits

More places to donate

Being a bigger donor also means that you get access to many more options, which can also improve the effectiveness of your donation. With $1,000, you can probably only expect to make a contribution to an existing registered charity. With a hundred times that amount, you could provide seed funding for a brand new high-impact charity startup, fund novel research, or help an existing charity expand their operations significantly. While you still only have $1,000 to give in expectation, the scope of projects you could contribute to increases, which means that you can now access options that (quite possibly) include higher-impact opportunities.

Improving community discourse and knowledge

In addition to the direct benefit of your donation, taking the extra time to figure out where to donate a larger amount of money may have positive externalities, both for you and for the EA community. You could learn a lot more about a particular problem, and you could build skills required for good grantmaking, which might be useful if you ever want to do more of that in the future. As one example, Adam Gleave (who won the first EA Funds donor lottery back in 2017) now serves on the Long-Term Future Fund committee.

If you decide to publish the reasoning behind your grantmaking, you’ll also be contributing to the store of knowledge in EA, about both the cause area you researched, and the specific organizations or projects you recommend grants to. While a lot of research is done by people for whom ‘being a researcher’ is a full-time job, a huge amount of EA research has also come from thoughtful, interested individuals who took the time to do a deep dive into an issue.

To be clear, there’s no onus on you to publish anything if you do win (or even to have the fact of your win made public) – this is just a potential side benefit if you do. So if the idea of publishing a report seems stressful, don’t let that put you off entering. Having more participants in the donor lottery seems good for the community even if they don’t share their thinking.

Some drawbacks

A donor lottery doesn’t have the same ‘warm fuzzies’ you might get if you were to know with 100% certainty that you had, for example, bought a certain number of bednets, or contributed directly to a cage-free campaign. In the case where you don’t win (which happens most of the time), you won’t have the knowledge of having directly contributed to a cause you care about. Hopefully this is offset by the knowledge that, in expectation, your donations are more effective than they would have been otherwise, but it’s understandable if this doesn’t feel as satisfying as donating directly.

There’s also a risk of feeling less invested in your donations, and not being as engaged with the current state of EA research. Having lots of people taking an interest in donating effectively, and examining a wide range of donation opportunities, is a good thing for EA.

To address these issues, we recommend that most people still make direct donations with some fraction of their donation budget. You can put most of your donations towards the donor lottery, and use the rest to donate wherever you would have if there wasn’t a donor lottery.

Common questions, objections, and misconceptions

We’ve been running the donor lottery for a few years now, and there are a few questions and misconceptions that often come up. Here’s our attempt to run down a few of these:

Your decision whether to participate should not depend on what others plan to do if they win.

Some people think that they should only participate in the donor lottery if other lottery participants would make their donations wisely. The intuition is that you want your money to go somewhere good, and that this might not happen if there are other donors who would allocate their winnings poorly. However, whether you participate or not, others will have the same odds of winning, and will be able to make the same decision if they win. Your decision can’t change that – neither for better, nor for worse [2]. 

This means that you can simply evaluate the lottery from your personal perspective: Would it be helpful to trade your donation for a smaller chance of winning a larger amount, so you can think more carefully about it? If so, you can safely assume that participating is helpful for you, and won’t change the expected outcomes for anyone else.

Doesn’t EA Funds already solve the problem of donors needing to do individual research?

EA Funds does solve this problem to some extent. However, donating to the donor lottery doesn’t preclude you from recommending the money go to an EA Fund. In fact, participating in the lottery has additional benefits, though, as it allows you to think about questions like: How good is the grantmaking of each EA Fund? Which one works best for your beliefs and values? How does it compare to other donation options? We think it’s very valuable for EA Funds to have more of this kind of independent scrutiny.

Put differently, the donor lottery just gives you free option value – in the default case, you can grant the same amount of money (in expectation) to your preferred EA Fund, but you also have the additional option to look into it in more detail if you win.

I don’t really want to spend a lot of time investigating where to grant the money, and would like someone else to allocate the money instead. 

The effectiveness of the donor lottery relies on you planning to spend additional time investigating high-impact donation opportunities. However, if you don’t have the time or expertise to investigate the most effective use of the money yourself, that’s fine – you can always defer to someone else whose judgement you trust. For example, you could recommend that the money be distributed by one of the EA Funds, or ask an independent researcher that you trust to make the recommendation instead. We can also put you in touch with experienced grantmakers who can advise you if you like.

Of course, you could do this already before entering the donor lottery, but you may be willing to invest a bit more time working out who to defer to if you have a larger amount to donate (and others may be more willing to spend time to help you out). If you don’t have the time yourself, and you don’t want to defer to someone else, then you should probably just donate directly instead of entering the donor lottery.

I might want to donate to something speculative, or something that isn’t traditionally considered to be effective by the EA community.

That’s fine; we’ll do our best to help you find a way to support your preferred option.

The lottery is administered by EA Funds, which is a project of the Centre for Effective Altruism (CEA). CEA can only make grants that are within its charitable objectives, and retains sole discretion over where the final grants are made. This means that we won’t make grants that run counter to broad altruistic principles, or to projects that don’t satisfy our regular due diligence requirements. For practical purposes, we should be able to make grants to any registered charity in most parts of the world (provided we can easily verify their registration status). If you want to recommend the money be given to a project that is not currently a recommended charity, that’s probably OK, but the project will need to demonstrate that they’re providing a genuine public benefit, and pass our regular due diligence checks. We also can’t grant to organizations that are directly involved in politics.

If you’d prefer that this decision wasn’t in CEA’s hands, you can also choose to set up a Donor Advised Fund in the US or the UK in your name [3] (note that this means that instead of being subject to CEA’s processes, your recommendations will instead be subject to those of the DAF provider, which we generally expect to be more restrictive).

For more information, please see the *Caveats and Limitations *section of the donor lottery page.

Practical information about the 2020/2021 EA Funds Donor Lottery

The EA Funds Donor Lottery is open now. The lottery will close to new entries on Friday, 15 January 2021, 4pm UTC. Any payments not confirmed by EA Funds by Friday, 22 January 2021, 4pm UTC will not be accepted as entries [4]. 

The lotteries will be drawn starting at Friday, 29 January 2021, 4pm UTC (drawings for each block size will be spaced a minute apart). You can click through to any of the open lotteries below to see these dates displayed in your local time.

There will be three block sizes:

Which block you decide to enter is up to you (there are no minimum entry sizes on any of the blocks). If you’re not sure, we suggest that you aim to enter with a 1%-30% chance of winning. So if you have $500 to donate, we suggest the $20,000 lottery; if you have a $20,000 entry, we suggest the $100,000 lottery or the $500,000 lottery.

Donations are tax-deductible in the US, the UK, and the Netherlands. However, if you live somewhere else, you should still consider entering if you think the expected value of the lottery (including the potential to allocate winnings to projects that are more effective than the most effective charity that’s tax-deductible where you live) is a larger value-add than tax-deductibility.

It is possible to participate anonymously, such that your personal details will only be visible to EA Funds and CEA operational staff, even if you win. By default, all grants will be made public, unless winners or recipients request otherwise.

For more in-depth information about the lottery process (including the important Caveats and Limitations section), please see the donor lottery website.

EA Funds Giving Tuesday now supports the donor lottery

Participants in the EA Giving Tuesday Facebook Match can also enter the donor lottery. Please read this document for detailed information about how to enter. Note that your donor lottery entry will only be for the value of your base donation, and won’t include any matched funding (because we won’t necessarily be able to confirm which donations are going to be matched before the lottery is drawn). If your donation is matched, you can allocate the matched funds to any Fund or organization supported by EA Funds.

Past donor lottery grants

Past winners of the EA Funds donor lottery have so far recommended over half a million dollars in grants:

  • Beth Barnes (2019, $500,000):
    • €34,000 ($40,430.45) to EA France, to employ Adam Shimi for a year to continue AI safety research
  • Anonymous (2018, $500,000):
    • $366,400 worth of grants recommended to four organizations working on various aspects the COVID-19 pandemic, and one organization working on farmed animal welfare. A full report will be published in the near future.
  • Adam Gleave (2017, $100,000):
    • $100,000 split between ALLFED, Global Catastrophic Risk Institute, AI Impacts, and Wild Animal Suffering Research (read full report here)
  • Timothy Telleen-Lawton (winner of the original 2016-17 donor lottery, not administered by EA Funds): CZEA + EpiFor (read full report here)

Acknowledgements

Thanks to JP Addison, Owen Cotton-Barratt, Aaron Gertler, Andrew Leeke, and Julia Wise for helpful input on this post, and Daniel Rüthemann for help with the infographic. Any errors or omissions remain those of the authors.

Footnotes

  1. The actual increase will depend a lot on the kind of updates you make as you investigate where to donate. For example, if you simply pick a more effective organization within an area, you might get closer to a 25% increase in impact (which is still very good). If you change your cause prioritization, the multiple could be much larger; for example, if you switched from a developed-world health charity to a global health charity, it might be greater than 10x. For more discussion, see: Why Charities Usually Don't Differ Astronomically in Expected Cost-Effectiveness.

  2. The lottery block size is fixed by a guarantor, who ensures that there’s enough money to pay a potential winner, even if there’s only one entrant in the lottery. This means that, whether you participate or not, others will have exactly the same chance of winning. Similarly, if you enter, it doesn’t make a difference whether other people also participate in the lottery, or whether you’re the sole entrant. If you don’t win, you’re essentially just subsidizing the lottery guarantor (and making it easier for us to continue to run donor lotteries in the future).

    Of course, subsidizing the lottery does mean that the money you’ve put into the lottery system may end up eventually being allocated by a winner whose values don’t align with yours. But under this framing, you can just treat the issue as being symmetrical: If others win, they might spend your money poorly. But if you win, you get to spend the money of those (supposedly) unwise donors more wisely. In expectation, the effects cancel out.

  3. By default, we’ll set up a DAF with Tides Foundation in the US and Prism the Gift Fund in the UK.

  4. If this happens, we’ll give you the option to allocate your donation to any of the Funds or organizations supported by EA Funds.