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Take A Chance With Your Charity And Try A Donor Lottery

One large donation can have more impact than lots of small ones, so what if you pooled your money with a lot of friends and then chose one of you to manage the fund at random?

Take A Chance With Your Charity And Try A Donor Lottery

If you’re a small-time donor with a few thousand bucks to give back, odds are you may not spend that money as wisely as you think. That’s because donating well takes another kind of investment: time. At some point, the time it takes to learn about various causes and charities simply outweighs the amount you’re investing.

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It gets worse. Small donations don’t really make that big of an impact unless they can be grouped together. With just a small donation, you may not be giving whatever group you like that much of an advantage.

While pursuing his PhD in statistical learning theory at the University of California, Berkeley, Paul Christiano was bothered by both these issues, but then he came across someone who had, at least theoretically, solved them. Carl Shulman–a researcher at the Future of Humanity Institute at Oxford University and advisor for the Open Philanthropy Project, which tracks and analyzes which charitable causes make the most cost-effective impact (the group is associated with Good Ventures and the charity evaluator GiveWell)–had recently come up with something he called a donor lottery.

The donor lottery works like this: Many small-time donors put their sums toward the collective pot of a donor-advised fund, a philanthropic vehicle that lets people get the tax benefits of giving to charity and then decide where they’ll give the money after the fact. The National Philanthropic Trust describes them much like a charitable savings account: You can deposit as much as you like whenever you want without a set time frame for when exactly you’ll use it.

The amount that each person donated, compared to the total pot, would represent his or her probability of winning. Everyone could be assured their money will go toward a good cause, while at the same time their combined winnings would be big enough to actually make a difference wherever they got directed. For the one winner, the size of that sum would justify researching and deciding where to donate.

Christiano liked that logic and already had his own donor-advised fund at Vanguard Charitable. So he decided to put Shulman’s theory into practice. In December, he started a pool. Eighteen friends contributed a total of $45,650. Rather than proportion each donation into tickets, Christiano, given his graduate work, made some more complex arrangements about assigning chances of winning to each donor and choosing a winner. Suffice it to say, on January 15, Timothy Telleen-Lawton took sole control of the pool of cash.

The responsibility of donating everyone’s money now falls to Telleen-Lawton, who works at GiveWell. He donated $5,050 for an 11% chance of winning and ended up with roughly 10 times that. Coincidentally, he recently took a sabbatical, which is good, because he has quite a research project ahead.

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One early idea is to give to another donor-advised fund that often supports more so-called “effective altruism” causes, including more research into how the field itself can grow. (Telleen-Lawton has written a bit about that here.) Boosting the learning curve on what effective altruism methods work would seem a noble effort: The more you learn how about how to give effectively, the more those who come after you will likely do so, magnifying impacts even more.

Of course, Christiano hopes that his experiment has a broader inspirational payoff. “If we find something that works well and is doing good, then it’s reasonable to expect that at some point more people will use it,” he says. To that end, he plans to run another lottery later this year. There’s always the hope that others, or even a broader institution might try something similar.

In a way, this is the EA ethos at work. People like Shulman and Christiano aren’t just thinking about how to encourage more people to fund-raise—they’re piloting new systems for encouragement, which could be widely adopted. The nearly $50,000 his group raised is valuable, but what’s more valuable is proving that the model works. With a little tinkering, it could handle a way higher volume of money, generating millions or billions over time.

Other effective altruism thinkers are designing their own projects with long-term payoffs, like the Giving What We Can Pledge, which encourages people to pledge 10% of their income annually to cost-effective cause work. Initially that might not be a lot, but it multiplies with each raise.

Christiano seems pleased that Telleen-Lawton hasn’t yet allocated his winnings. “[That’s] sort of the point,” he says. ”If they have zero dollars to donate they don’t have to think about it much. They can just go on with their lives. If they have [all the winnings] then they can sit back and take the time and figure out what to do with it.” If such experiments ever do go mainstream, it’ll certainly be time well spent.

About the author

Ben Paynter is a senior writer at Fast Company covering social impact, the future of philanthropy, and innovative food companies. His work has appeared in Wired, Bloomberg Businessweek, and the New York Times, among other places.

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