This is an executive summary of our investigation into giving multipliers
We've written before about how the very best interventions and organizations are often hundreds or thousands of times more impactful than the median (Our Approach to Charity). On that basis, we focus our research on identifying and funding the highest-impact efforts to make progress against the world's most pressing problems.
We now think that it is possible to do even better than this by supporting programs that drive more money to the highest-impact funding opportunities available. We call these efforts and organizations giving multipliers: funding opportunities which, as their main output, cause more money to be given to high-impact interventions and organizations.
In this report, we outline how we evaluate giving multipliers as funding opportunities. In particular, we detail two helpful theoretical models. The first is the unitary community model in which the collective of impact-maximizing funders is modeled as a single agent which allocates its capital so as to maximize expected altruistic return. We show how this first framework, despite several discussed limitations, implies that we can think about giving multipliers in terms of how many dollars they raise per dollar spent once we account for the quality of the recipients.
The second is the three-factor model for calculating the “multiplier” that a given organization achieves. The best giving multipliers are those that achieve high "returns" — in the sense of money moved to impactful funding opportunities — relative to their costs. Abstractly, the multiplier is nothing more than the total counterfactual revenue divided by the total costs. We break this into three factors to create a simple multiplicative model. The gross multiplier is the ratio of money moved to money spent. Because there are opportunity costs as well as direct costs, the labor factor captures the opportunity cost of labor devoted to the giving multiplier. Finally, because the cost-effectiveness of the recipient organizations matters a great deal, the quality factor captures the quality of the recipient organization.
Funding the best giving multipliers presents effectiveness-minded philanthropists with a highly leveraged opportunity to make an impact by driving resources to the people and organizations who can help others the most.
We’ll add our funding opportunity recommendations for giving multipliers as we’re ready to share.