One of the things stopping people from donating a substantial part of their income to charity is the risk of a future financial downfall, which can be anything from unemployment to illness. Even in a rich country with a solid social safety net, the idea of having no financial buffer at all seems daunting. However, if effective altruists precommitted to helping other effective altruists in need, they could all donate more money, since the risk would be spread and only some would go on to become sick or unemployed.
This sounds a lot like insurance, and effective altruists could indeed insure themselves against a myriad of risks. Unfortunately, this introduces the overhead of an insurance company. (When asking for a ballpark estimate at the insurer I interned at, I was told that at most one-third of all premium money is put back into payment of legitimate claims.) Besides, coverage will never be 100%, an insurer will reject claims whenever possible, and insurance requires monthly payment, which requires stable income.
The alternative to insurance I propose is an intermediary charity that acts as an emergency fund. If a donor spends $100 through this charity, this intermediary charity directly forwards $80 of incoming donations to charities of the donor's choice. The remaining $20 is put in an emergency fund. In situations where the donor would otherwise make use of their financial buffer, they can recoup up to $95 from the emergency fund.
Recoupments would not need to be subjected to the same thorough vetting as insurance claims, since donors cannot recoup more money than they originally spent, so there is little opportunity for fraud.
The numbers above work under the assumption that, on average, donors need 20% of their donations back. It might make sense to create different funds for donors with different risk profiles: if a subset of donors think there's a 50% chance they'd need donated money back, they could donate to a fund which puts half of their donation in the emergency fund.
Because the idea of an emergency fund for donors is so simple, I'd say there's a good chance this has already been done or it's not feasible. This is quite far out of my ballpark, so don't hesitate to school me on this stuff. Some details that definitely have to be worked out:
- Should donors be required to provide reasoning for recouping their donation? My gut says no, unless something akin to a bank run occurs. They should probably have to tick a box that says "An emergency occurred! Because of this, I really need the money."
- Should the right to recoup be inheritable? This would make donating more attractive for those worried about their offspring, but it makes the operation more complex.
- If recoupments occur sparingly, as I'd expect, where should the remaining funds go? Donate them proportionally to all donations?
- How big is the risk that the fund will be used in illicit ways, such as temporarily moving money off the books, despite the fact that donors cannot claim more than they spent?
- Should the emergency funds be invested?
- What ought to happen if the fund is drained?