What you get for your dollar January 2019 “Effective Altruism” — What it is, how philanthropic foundations use it and what are its risks and side-effects by Karolin Seitz In parallel to the debate on ‘Aid Effectiveness’ among Ensuring that charitable giving is used for the maximum donor and recipient countries, a new approach, labeled good, is a worthy goal. However, from a human rights “Effective Altruism” (EA) has gained traction in the de- perspective, several concerns arise concerning the un- bate on the impact of development aid. Unlike Aid Ef- derlying assumptions, the methodology and the conse- fectiveness, which involves donor and recipient govern- quences of the practical application of EA. ments, the new approach involves philanthropic institu- tions and their chosen (non-)governmental recipients and This briefing paper provides an overview of the approach explores ways in which funding can be used most effi- underlying EA, how and by whom it is applied and its ciently to have the greatest impact. Its proponents, in- problems and consequences. It concludes that policy cluding new philanthropic entities and so-called ‘venture makers, rather than be guided by its assumptions and philanthropies’ such as the Bill & Melinda Gates Founda- conclusions, must instead concentrate on understand- tion, claim that their funding decisions are based on evi- ing the confounding structural causes of interdependent dence-based results. However, such decisions are primar- global challenges and aim at their long-term solution, ily grounded in cost-benefit considerations, neglecting within an overarching human rights framework. social and cultural considerations and looking at prob- lems in isolation from the wider context. Since the beginning of international development Since then, however, this approach to Aid Effec- assistance there has been intense debate through- tiveness has lost political momentum. out the international donor community as to if, how and which forms of development aid can ac- In recent years, a new approach, labeled “Effective tually have the greatest and most sustainable impact Altruism” (EA) has asked for attention in the de- on people’s lives. In the last two decades, govern- bate on the impact of development aid. It is no lon- ments from donor and recipient countries met four ger focused on donor and recipient governments, times to discuss these issues, summarized under the but instead on individual donors, philanthropic in- theme of “Aid Effectiveness”. Meeting in Rome stitutions and their chosen charitable organizations. (2003), Paris (2005), Accra (2008) and Busan (2011), Players seek to determine how donations could be governments committed to a set of principles and used most efficiently—in terms of costs and time— joint actions that aim to enhance effectiveness of to have the greatest impact.1 development cooperation. In 2012, governments, civil society organizations and actors from the pri- 1 The label “Effective Altruism” is somewhat misleading. In fact, the vate sector established the Global Partnership for proper label would be “Efficient Altruism”, as it clearly is centered around how to achieve the greatest good with the smallest input Effec tive Development Cooperation, a multi-stake- possible. Were it to concentrate on effectiveness, it would concentrate holder forum to strengthen their respective efforts. not on input, but exclusively on outcomes. BRIEFING 2 Briefing January 2019 What you get for your dollar Proponents claim that their funding decisions are These and other advocates regard themselves as based on empirical evidence and rational thought members of a new “social movement”,4 one that rather than on allegedly ‘emotional’ decision mak- avoids governments and funds programmes or or- ing.2 Under the premises of “Effective Altruism”, ganizations directly. Local groups are active at uni- impact does not depend on what benefit is being versities such as Oxford, San Francisco, Melbourne achieved, but what difference it makes in the over- and Berlin. Prominent proponents of the concept all funding landscape. If the individual does not do- can also be found in the Silicon Valley, including nate for a specific purpose, would someone else do- the Tesla and SpaceX CEO Elon Musk, Google.org nate for it? A second aspect considers where such director Jacqueline Fuller, and PayPal and Palantir donations could have the greatest impact. Since the co-founder Peter Thiel.5 potential benefit per funding unit is usually greatest in developing countries where also need is greatest, The approach is used by a variety of actors, includ- most effective altruists donate to development pro- ing the so-called Foundation for Effective Altruism, grammes in these countries. Cost-benefit analysis based in Basel, Berlin and San Francisco, which also plays a role in programme selection. Donors promotes the ideas of Effective Altruism by orga- decide whether a desired outcome can be achieved nizing public events, issuing publications, found- more efficiently through, for instance, a health ing local groups and providing individual advice on measure or through an education programme. One how to spend most effectively. Similar activities are way to apply EA is to quantify and compare human undertaken by the Centre for Effective Altruism well-being through a metric called ‘quality-adjust- based in Oxford and Berkeley whose trustees are ed life years’ (QALY), which seeks to determine, William MacAskill and Toby Ord. for instance, to what extent a medical treatment in- creases the life expectancy or the quality of life of Giving What We Can, an initiative started by Toby a person, compared to a literacy or education pro- Ord and MacAskill, has built a community of peo- gramme. It is used to compare the cost-effective- ple donating 10 percent of their income to the sup- ness of different interventions.3 posedly most effective organizations. Another entity using the EA approach is the Open Philanthropy Project, founded in 2017 through a Origins and proponents of Effective Altruism partnership between GiveWell and GoodVentures, a non-profit group set up by Dustin Moskovitz, The philosophical basis of EA lies in the book co-founder of Facebook, and his wife, Cari Tuna. Famine, Affluence, Morality (1972) by Australian phi- In trying to identify the most effective grant oppor- losopher Peter Singer, a professor of bioethics at tunities, the Open Philanthropy Project states: “We Prince ton University and representative of classical believe economic development and technological utilitarianism. Initially regarded as a major thinker innovation have greatly increased human well-be- behind the international animal rights movement, ing. We’re optimistic that this trend will continue, he argues with regard to humans that all human and we hope to play a part in accelerating it.” 6 lives are equal and that people therefore have the same moral obligation to strangers far away as to There are also consultancy firms or evaluators that those close by. Based on this assumption, people advise philanthropists on how to spend their re- should direct their altruistic efforts wherever they sources most efficiently. One, PHINEO, received, will do most good. for instance, a 100 million Euro grant from auto maker BMW’s major shareholder Susanne Klatten William MacAskill, philosophy professor at Uni- to support a variety of organizations in Germany. versity of Oxford, is another key figure in the EA The so-called Skala-Initiative, provides grants only community, having published, inter alia, the book to organizations that have proven to have a social Doing Good Better — Effective Altruism and a Radical impact.7 Way to Make a Difference (2015). 4 See: https://ea-foundation.org/effective-altruism/ 2 See https://www.nytimes.com/2015/08/16/upshot/effective-altruism- 5 See: https://www.huffingtonpost.com/melody-y-guan/elon-musk- where-charity-and-rationality-meet.html and MacAskill (2015). superintelligen_b_7929960.html?guccounter=1 3 See: https://concepts.effectivealtruism.org/concepts/measuring- 6 See: https://www.openphilanthropy.org/about/vision-and-values healthy-life-years/ 7 See: https://www.phineo.org/themen/skala-initiative 3 Briefing January 2019 What you get for your dollar One of the most prominent of these consultancy An attractive approach for modern firms is GiveWell, a non-profit group based in San philanthropic foundations Francisco. Founded in 2007 by Holden Karnofsky and Elie Hassenfeld, two former hedge-fund ana- The adoption of EA or elements of it can be ob- lysts, the firm recommends a number of recipient served especially among newly set up philanthropic organizations that, according to their analysis, use entities. The new generation of philanthropic ini- the funds they receive in the most effective way and tiatives, including that set up by Mark Zuckerberg with a high impact and would thus be trustworthy and his wife Priscilla Chan,9 aspires to be more ef- recipients. ficient than more traditional foundations. So-called ‘venture philanthropies’ using business tools such For several years already charities have been rated as social impact investment and market-based ap- according to the ratio between their overheads and proaches like public private partnerships to increase the amount of funds transferred to beneficiaries. the efficiency of charitable interventions. While this way of assessing NGOs has been crit- icized as not taking sufficiently into account the The Bill & Melinda Gates Foundation is one of quality of programme