About a year ago, GiveWell announced they were going to be offering donation matching. I missed this at the time, but now that I see it I'm disappointed. They intend to offer a "true" match, where donors who take advantage of donation matching can trust that the matching funder would not have given otherwise. They write:

We plan to verify that the donors who provide matching funds for GiveWell campaigns would not have otherwise donated. We are taking the following steps to do so:
  • Approaching donors who have shown interest in increasing GiveWell's reach.

  • Asking if they would be interested in making an additional gift this year to underwrite our matching campaigns.

  • Assessing their giving history and our expectation of their likely giving in 2020 so that we can see if matching funds appear additive.

  • Confirming with potential matching donors that we are only interested in donations they would not have otherwise made.

  • Communicating to potential matching donors that we will only accept their gift in the amount we are able to match from other supporters. This might mean asking the donor to wait to give until the matching campaign is complete so that we only receive the correct amount, or returning unused funds to the matching donor.

While this is a lot better than the more common practice of matches that are entirely illusory, it is below the standard I expect from GiveWell. Critically assessing impact is GiveWell's core strength, but on this question they are essentially taking the donor's word that it's a "true" match. GiveWell does have options if they wanted to more carefully validate these claims, such as refusing a fraction of donations and verifying that the money was not spent on anything similarly positive.

(I shared a draft version of this post with GiveWell, and they described the vetting that they currently do. While it was better than I had guessed from their website, I still don't think it's sufficient to support their strong claim of counterfactuality. I would encourage GiveWell to write publicly about the steps they take here.)

As with many donor illusions, however, I think it would probably be worse if GiveWell really did have a pool of money that would be wasted if people did not take them up on their match offer. As GiveWell explained ten years ago, that "creates incentives for [funders] to take gifts they would have made anyway, and structure them in a way that gets you to give more to the program of their choice."

I think GiveWell does a great job overall, and I really appreciate having their recommendations available when I'm deciding where to donate. I'm glad GiveWell is trying to expand its reach and move more money, and I understand how offering matching can drive donations. But I don't think donors understand how much weaker GiveWell's match vetting is than their charity vetting, and either way we should not be incentivizing setting up situations where funders leverage others into increased giving by threatening to spend their funds poorly.

(Disclosure: my wife is a GiveWell board member, but she had no input into this post.)

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I never understood matching donations, and still don't. They seem to be a net loss over unconditionally donating to causes where it will do the most good. I even tried constructing fanciful scenarios with highly non-linear utility functions of donation, and it still didn't work out unless the total donation amounts happened to exactly correspond to sharp curves in the utility function, and the people making the conditional donations knew that would happen.

Even if this is some weird psychology thing that some people have that I don't know about, it seems strange for it to be a thing that an organization would actually promote.

Can anyone help me understand this?

Suppose you run a big company like Microsoft. You want to donate some money to charity but you don't especially care where it goes. Your primary goal isn't to do the most good. It's to do some good while maximizing prestige and minimizing criticism of your decisions.

A pragmatic strategy is to offer to match the donations of your employees. This has several benefits.

  • It's a morale boost for your employees. If an employee loves <charity > then the employee gets extra money for <charity >. Lots of employees casually mention to their friends about how you supported their pet charity. You were going to spend the money on something anyway so it costs nothing to you. Compensating your employees at no (marginal) cost to you is a benefit to the business as a whole. It especially incentivizes altruistic people to work for you, which improves the quality of your workforce.
  • You end up spending money on a variety of little things. This is good for the community you operate out of. Some positive externalities feed back into your company. Instead of having to earmark every individual <community project > (which creates tons of bureaucratic friction) you indirectly fund it with matching donations.
  • You have insulation from all individual decisions. If somebody throws money at a charity that does something unethical you don't take heat for it the way you would if you specifically authorized a giant lump of money for that specific charity. Instead of dealing with the political fallout, you get to focus on your real job of maintaining the Windows Operating System monopoly. Which brings is to perhaps the most important reason…
  • Matching donations costs zero managerial overhead. Money is cheap to a large organization like Microsoft. High-level decision-making ability is scarce.

Thank you! I hadn't considered amoral actors offloading their decision making to others for whatever benefits might accrue to them from conspicuous altruism, but this makes perfect sense.

This is a good explanation of why employer donation matching makes sense, but that's pretty different from the case we're discussing here?

The easiest case for a charity offering donation matching, if you don't think too hard:

  • Funders take money they were already going to donate to this charity, and call it matching funds. No utility loss for the funders.

  • Regular donors who don't have strong charity preferences see advertising saying that this charity is offering a matching drive, view that as an opportunity for their money to go farther, and donate.

This works out well for the charity, who gets more money, and the funder, who maybe sees their money go farther. It's not good for the regular donor, who was convinced to donate based on a false understanding of the impact.

The approach GiveWell is using tries to fix this, by making sure that the money the funders provide would not otherwise be going to anything nearly as valuable. If they are correct in that assessment, and if funders don't change their approach in response to expecting GiveWell to want matching funds, then this seems like it can work out well for everyone. Unfortunately, I don't think they are doing sufficient vetting to claim that the match is fully counterfactual, and I do expect funders to take into account opportunities like this in deciding how they would donate their funds "normally".