We are setting up an emergency fund that will benefit donors to effective charities. The concept is that, if an effective-altruist donor runs into financial trouble, they can apply to the fund and potentially recoup up to 50% of their EA-related donations from the fund.
The emergency fund will serve a dual purpose:
- To help donors in financial trouble
- To promote donations to effective charities by minimizing the risk that comes with giving
EA donors will be able to apply for assistance without having donated to the fund. There might very well be no overlap between EAs who support the fund and EAs who apply to the fund.
If you count yourself as an EA donor, we would be grateful if you could take 4 to 5 minutes to respond to the following questionnaire. Your answers will help us plan and could make this emergency fund more effective.
This is a super interesting idea!
For potential donors who are risk-averse or financially insecure and unsure about their first few donations, I think this will significantly boost willingness to donate. I'd also expect redemption rates to be pretty low. All this strikes me as feasible to test on a limited scale. Some implementation concerns:
(Asking anyone who might know) How much might this complicate funding allocation/accounting/planning? I'm not 100% privy to the inner workings at Givewell or OpenPhil, maybe this will increase funding uncertainty and planning. I'd assume that any significant implementation would grow to comprise most donations, since it's better to have the option than not. edit: I'm assuming the emergency fund would communicate/integrate closely with funds themselves, since it would seem smoother and more secure that way instead of operating 100% independent
What happens in financial crises with abnormally high withdrawal rates? Short-term crashes are practically inevitable, and I'm imagining the headache that comes with a "bank run".
I'm pretty sure some nonprofit somewhere has thought of this, and come up with useful answers or other creative implementations. Perhaps a solution is to simply provide a warranty? (i.e. no questions asked return policy with 2/3 years) This way, funds can maintain an element of financial certainty, and they can give the money back at their discretion anyway.
I'm curious to discuss this more and lend my limited fundraising/entrepreneurship/UX perspectives. I think the premise itself is promising, and plays on the EA community's strengths of mutual helpfulness and goodwill.