Eva Vivalt on Give Later

One of the more important things I’ve changed my mind about recently is the best cause to donate to. I now put the most credence on the possibility that the best option is donating to a fund that invests the money and disburses strategically in the future. I will refer to this as “giving later”, though I actually support giving now to a donor-advised fund set up to disburse in the future, for the value that donating now can have for encouraging others to donate (and because of the risk that even if one thinks one will donate later, one will at some point change one’s mind).

There are several reasons why I prefer a fund that disburses in the future. First, I believe people currently discount the future too much (see hyperbolic discounting, climate change). If people discount the future, that causes the rate of return on investments to always be higher than the growth rate (else people would not be willing to invest). In economics, the Ramsey equation is often used to determine how much a social planner should discount future consumption. It is specified by r=ηg+δ, where r is the real rate of return on investment, η is the extent to which marginal utility decreases with consumption, g is the growth rate, and δ represents pure time preferences. Unless one personally puts a particularly high value on δ, it makes sense to invest today and spend later to take advantage of the gap between the real rate of return on investment (~7%) and the growth rate (~3-4%).

…A second reason that I prefer a fund that disburses in the future is that I think we have very limited knowledge today and that our knowledge is increasing. I am concerned about the problem that research results do not generalize all that well, but with respect to economic development I am optimistic that the situation can improve. With respect to technological change which could bring huge benefits or risks, I think we know even less about the problems future generations will face and may be able to understand them better in the future. It seems unlikely to me that we are at the exact moment in time, out of all periods of time from here on out into the future, that we actually have the best opportunity to do good. We may not recognize the best moment when it comes, but that just pushes the argument back a step: I also think it unlikely that we are at the best moment, out of the whole foreseeable future, to have the best combination of knowledge and opportunity to do good.

Interesting throughout, here is the link, and in sum:

I think it appeals psychologically to many people – myself included – to think that we are living at a particularly important time. However, I recognize that people have thought this throughout history. As more time has passed, I have become increasingly confident that my gut antipathy to the idea that it’s better to “give later” is just a cognitive bias.



Wait until you have nearly complete knowledge of the current situation. Like now, the boomers are retiring and dying off, they quit doing stuff. So take a look at what they have done and price it, then invest in the new generation.

Your interest charges at any given moment is determined by how well loans and deposits make a complete match. When loans are well matched to deposits then you can assume lenders and depositers all agree on what's to be done. That condition is a complete sequence, all parties have done their rescaling, no party is looking way farther in the past nor way ahead to the future. Everything is repriced by revision as best we can determine. Currency risk is minimal.

And, i almost forgot, the tree trunk is round. Your currency banker has the corridor (fixed channel) well packed, the market making risk for the currency banker is minimal. You see, no party is attempting to sneak a wad of stuff through the channel suddenly.

I could not make a lick of sense from your post. I thought I had a seizure or something.

Matt is the millenial version of mulp. millenial mulp.

Wait... what?

' I now put the most credence on the possibility that the best option is donating to a fund that invests the money and disburses strategically in the future.'

Especially when you can combine that with a tax break and being paid interest. At least one public policy institute would be more than pleased to explain the details of how you can profit from 'donating' to them.

My impression was that wealthy Americans often donate to causes that will provide cushy jobs for their descendants. Have I got that right?

Among other things. For example, Peter Thiel seems to have discovered a clever way to garner favorable notice for charity while collecting profit generating ideas, and taking a tax break by donating the money used to support that collecting to a foundation that then turns around and donates it to a public policy institute.

Never underestimate the 'charity' business in the U.S. - it is big money, particularly in a place like DC, where it supports a surprisingly large amount of lavish living for those in the proper position to take advantage of it.

Where would Ridgewell's be without all the donations to non-profits, after all? 'Founded as a family business in 1928 Ridgewells Catering has been setting the bar on the Washington, DC social scene for over 85 year. They are more than caterers of delicious gourmet cuisine. Their visionary team is in the business of making memories, building relationships, and most of all creating beautiful celebrations.' Of course, they are also used by institutions like the IMF or World Bank too - standards need to be maintained.

Though one can safely assume that Prof. Cowen is at a minimum familiar with them, they are not really the sort of caterers that would ever do anything in a strip mall. However, it would not surprise me if at least a third of Ridgewell's revenue comes directly from non-profits who would not be caught dead without appropriately well dressed (and well screened) servers bearing freshly brewed pots of Kona or Blue Mountain coffee to those enjoying another charity event.

Most people have no idea what a scam 'non-profit' generally is in a DC context - and considering how difficult it is to get them to understand that in a single particular case using facts and figures and quotes, one can assume it is a hopeless effort to undertake.

Give the people of Hong Kong freedom now! The US must find its balls to once again defeat communism! Brazil is ready to defeat Red China!

Did you read the other thread? When totalitarianism is staring libertarians in the face, they'd rather bend over than grow a pair and fight back.

Maybe you better scale up your gun fantasies to include private air forces. Then you might actually hold off those tanks.

did any sociologists out there notice that
last nights episode of sen. warrens" nonviolent" drug crime Philadelphia edition doesn't fit sen. warrens narrative about mass shootings?

Yeah. A third world country has never held off a first world country without an air force.

> It seems unlikely to me that we are at the exact moment in time, out of all periods of time from here on out into the future, that we actually have the best opportunity to do good.

Why not? If we extend this range to all of human history, the optimal time to make a difference was probably hundreds or thousands of years ago, due to compounding effects. The present is as close as we can get to that point so it wouldn't be surprising if now is the best (still) possible time.

Yeah, agreed.

I don't think this strategy follows from "other people discount the future too much", either. If that is true, then investing now toward the future problems that are being inadequately addressed likely makes more sense. For example, if you believe climate change is a huge crisis that is being ignored, spending money to address that now is much better than saving money for later.

Also, won't the future people who decide how to spend your money suffer from the same problem? Donating based on the short-term thinking of 50 years from now doesn't seem better than donating based on short-term thinking now.

Her other point, "We will know more in the future", is a potentially valid reason to wait to spend. However, I think you have to be very pessimistic about your current ability to identify a good charitable investment, and very optimistic about that changing in the future, for this to make sense.

And even if you take this viewpoint, probably investing all your money now in robust evaluation of charitable activities is better than saving it, as again, there would be a huge compounding effect.

"For example, if you believe climate change is a huge crisis that is being ignored, spending money to address that now is much better than saving money for later."

I had the exact same thought. Arguing that the future is overly discounted implies that we should be investing now, not later, because you're purchasing future benefits at an overly cheap price.

We're essentially arguing about what is better, an ounce of prevention or a (compounded) pound of cure. I don't think there's a generic answer to that question; it's simply a judgement call on what compounds faster, the benefits of spending now or capital sitting in an investment account. That will vary from problem to problem depending on any number of variables. Both investment returns and philanthropic returns are difficult to pin down, but with real interest in negative territory and economic outlook looking wobbly, I'd actually be biased toward investing in "cheap" philanthropic solutions now rather than buying low yielding or risky financial assets.

Also, the decision criteria seems a bit off. "If people discount the future, that causes the rate of return on investments to always be higher than the growth rate (else people would not be willing to invest)." If that's the case, would one at any point in time disburse money at that particular time? So she is basically just waiting until the time r < g. If feel there was a whole debate around that idea a couple of years ago. Hmmm...

Saving lives today will accelerate knowledge production, meaning that the point at which we will know the optimal causes for giving will arrive sooner, allowing us to optimise actual giving sooner. Ergo saving lives (and doing things that increase cognitive ability, like reducing parasite load) today is the optimal cause!

Would/should the idea be to invest in good stuff, eg green energy, socially beneficial start ups, or just invest to make as much money as possible?

If Ms. Vivalt knows where she can invest at real 7%, without taking extraordinary risk (the risk that the actual return will be much lower, possibly negative), please ask her to tell me. The real return on Treasury bonds is 0% and on stocks it's probably about 4% - I can make the case for 5% if pressed. I am a professional investment manager.

Cannot speak for Ms. Vivalt, but you may just want to contact Neil Eckard at the Mercatus Center, since unfortunately the information is no longer directly available on the web (no reason to let anyone read how various games are played in the donor supported public policy institute world).

At least in the past, there were exciting possibilities (tax breaks are there to be used, after all) involving planned giving - ask about 'Charitable Gift Annuities,' it looked quite attractive in the past.

Other options, such as Charitable Remainder Unitrust or Charitable Remainder Annuity Trust can be seen at the link too - https://web.archive.org/web/20160410065403/http://mercatus.org/charitable-gift-annuities

It had its ups and downs but S&P 500 historically returns 7-8%.

Yes, the Australian stock market averages about 8% real return. My only guess is the 4% figure is without capital gains.

My guess is he's saying 4% because valuations are high from a historic perspective currently, so not expecting a "historically average" yield any more. In addition, I read something about the public stock market becoming more and more adversely selected due to over-regulation, much less IPOs than in days past, and Private Equity being where the yield's at. Not sure if true, but if true this would also support the lower than historically average yield hypothesis. That said, there are still securities with 25% yearly yield available on the market, even (junk) bonds, such as Argentina's.

Be careful about mentioning Argentina. A rather enthusiastic Brazilian, or faux-Brazilian, might respond.

"I can make the case for 5% if pressed"

And 5% is the correct answer!

Part of that is inflation.

Maybe some here don't know what that means.

Lobbying has returns in 1000-10000% range. Legalize shrooms or LSD and that could be a good business for you.

All right... but if not now, then when? I mean, if it makes more sense to collect interest and use funds later /now/, at what point will this no longer hold true?

And: economic development means less suffering in the future, so we likely can do more good now than later. More importantly: lifting people out of poverty now ("teach a man to fish") will also help their descendants, but obviously not the converse.

The key is her reference to climate change. She's hoping for a future where there is clearer evidence of warming and harm therefrom, such that public opinion has developed a significant constituency for large-scale intervention.

If enough people want to use their money later, then we get negative interest rates.

Since Peter Thiel and Cowen are one, and Thiel has a linear view of time, the future is always different from and better than the present, so one should defer giving until the future arrives. But when the future arrives and it's time for giving, it's the present; there's a new and better future that beckons. Wouldn't it make more sense to give in the present in order to make a better future? But then the question arises: what can be done in the present to make a better future? Cordelia Scaife May, an heir to the Mellon fortune, decided that to make a better future, America should keep immigrants out in the present:

"She believed that the United States was “being invaded on all fronts” by foreigners, who “breed like hamsters” and exhaust natural resources. She thought that the border with Mexico should be sealed and that abortions on demand would contain the swelling masses in developing countries. An heiress to the Mellon banking and industrial fortune with a half-billion dollars at her disposal, Mrs. May helped create what would become the modern anti-immigration movement. She bankrolled the founding and operation of the nation’s three largest restrictionist groups — the Federation for American Immigration Reform, NumbersUSA and the Center for Immigration Studies — as well as dozens of smaller ones, including some that have promulgated white nationalist views. Today, 14 years after Mrs. May’s death, her money remains the lifeblood of the movement, through her Colcom Foundation. It has poured $180 million into a network of groups that spent decades agitating for policies now pursued by President Trump: militarizing the border, capping legal immigration, prioritizing skills over family ties for entry and reducing access to public benefits for migrants, as in the new rule issued just this week by the administration." https://www.nytimes.com/2019/08/14/us/anti-immigration-cordelia-scaife-may.html

Vivalt and Cowen's view that we should give in the future rather than the present obliterates Ms. May's reasoning, for immigrants today are the productive citizens of the future; indeed, maybe the most productive, building successful businesses, finding cures for disease, promoting the individualistic philosophy that Cowen believes makes for a prosperous nation and better future.

"immigrants today are the productive citizens of the future": that will depend on which immigrants you admit.

We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness…

But then, perhaps you were born in a monarchy, and are a subject, not a citizen. It might be hard to relate.

“Men's natures are alike, it is their habits that carry them far apart.”


Certainly, but habits do change. In an individual. In a society. @DrIbram is correct.

"You know, 'racist' is not a fixed term. It's not an identity, it's not a tattoo — it is describing what a person is doing in the moment, and people change from moment to moment."


"Can the Ethiopian change his skin, or the leopard his spots?"


'that will depend on which immigrants you admit'

So, considering that Trump's mother was an immigrant, and that he married two immigrants, did the U.S. come out ahead or behind? After all, Trump has been involved in more than couple of bankruptcies, and was involved in Trump U, which has been described by a New York Attorney General as fraudulent. Maybe the U.S. should look more critically at what nations it allows maids to be from.

On the other hand, he is the president, so there is that on the plus side to immigration, one assumes.

Always nice to provide quotes, particularly when one realizes that Eric Trump too is the son of an immigrant.

'The best part about all this, according to Eric Trump, is the charity's efficiency: Because he can get his family's golf course for free and have most of the other costs donated, virtually all the money contributed will go toward helping kids with cancer. "We get to use our assets 100% free of charge," Trump tells Forbes.

That's not the case. In reviewing filings from the Eric Trump Foundation and other charities, it's clear that the course wasn't free--that the Trump Organization received payments for its use, part of more than $1.2 million that has no documented recipients past the Trump Organization. Golf charity experts say the listed expenses defy any reasonable cost justification for a one-day golf tournament.

Additionally, the Donald J. Trump Foundation, which has come under previous scrutiny for self-dealing and advancing the interests of its namesake rather than those of charity, apparently used the Eric Trump Foundation to funnel $100,000 in donations into revenue for the Trump Organization.

And while donors to the Eric Trump Foundation were told their money was going to help sick kids, more than $500,000 was re-donated to other charities, many of which were connected to Trump family members or interests, including at least four groups that subsequently paid to hold golf tournaments at Trump courses.'

Amusingly, with the proper legal guidance, I'm quite confident that this would be more than acceptable, as long as one was careful - particularly in having it come to light in the first place.

People in the future will be richer than people today. Practically everyone alive today should end up in the bottom 1% of all people past, present, and future.
By giving later you will be helping people who are increasingly less poor.
Also, the fortunes of the people who will end up rich in the future will grow much faster than the return on your money. So by giving later your donation will get less status then if you donate now, as people in the future will vastly outbid you for prestige.

status ... prestige ...

So it's all virtue-signalling, is it?

One can be virtuous and also signal that one is virtuous. Virtue is still happening.

While this may be true on average, there will probably still be some pockets of extreme poverty in the future, that are significant enough to soak up any feasible level of private charitable donations.

The implicit assumption is that giving is never in itself an investment in the future. This seems insupportable to me (and almost Malthusian), to assert that all giving simply turns into consumption.

“By giving later you will be helping people who are increasingly less poor.”

Indeed. Perhaps the correct discount rate to use is not that of the donor, but that of the recipient. If you’re starving now, future charity is of little consolation.

But since when was philanthropy about the recipient?...

Good grief.

It seems unlikely to me that this exact moment in time, of all times in the future, is the best time for me to cross the street and buy a cup of coffee. Therefore I should just sit in a cave and do nothing.

That is a novel solution, so it must be the best!

So when *is* a good time to give? Have there been any times in the past 100 years when it was a good time, or when it looked like a good time to give?

What if the cost disease means that charitable intervention in the future is extremely expensive?

Holden Karnofsky at Givewell made a reasonable counter-argument to this approach in a blog post (https://blog.givewell.org/2011/12/20/give-now-or-give-later/) a couple years ago:

"In general, I would guess that the conceptual “interest rate on empowering people” is higher than the interest rate you earn when you save. This is because the same basic mechanism underlies both (having more resources today can allow a person to generate more resources for the future), but savers get paid directly for providing resources, while donors don’t (thus, there is likely more “unmet need” for donations than for savings). Given today’s interest rates, it seems particularly likely that the “interest rate on empowering people” is higher than the interest rate you earn when you save."

As others have mentioned, another problem with Vivalt's argument is that it doesn't provide an exit criteria. If you apply the same logic to the contents of your DAF each year, then each year you will come to the conclusion that it would be better to wait and earn returns on the investments rather than distribute the money. The money would stay locked in the DAF indefinitely, with no charitable impact.

A more principled approach would be to evaluate likely risk-adjusted "returns" of investments and of the best possible charitable contributions. Vivalt doesn't seem to have made a real effort at estimating the "return" of a charitable investment today, and instead falls back to theoretical math.

Don’t forget the principal agent problem. You might not be around in the future and the people who actually get the money will have their own agenda, which may be quite different than yours.

Agreed. 2 big reasons that people who have made a ton of $ give now are: 1) the people who give the money away in the future won’t be as smart (or have the same agenda, as Larry says), and 2) they want to see the fruits of their labors and giving realized in their lifetime.

I don't buy the "give later" argument unless she can tell us when it will be OK to give. That's one reason.

Another is that it is foolish, IMO, to compare returns on investment in profit-making activities to the benefits of philanthropy. They are different things, maybe both beneficial, but to pretend that they can be compared using some sort of common metric is silly.

Finally, why not give now and let the beneficiary invest if he, she, or it so chooses? It's possible the beneficiary has a better view of the time considerations involved than Vivalt does. Meta M&M.

"I prefer a fund that disburses in the future"

So donate to a college that will put your donation into their endowment, and your gift will keeping giving indefinitely.

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