Annual 'splitting' of funding gaps can be partial funging when gaps carry over across years

In a 2015 blog post, the Open Philanthropy Project contrasted several strategies for coordinating Good Ventures' donations with those of smaller donors. One was 'splitting,' in which a large donor commits to funding only a fixed percentage of a funding gap (between two thresholds of efficacy) in a given year. The advantage of this is said to be that a $1 marginal donation by a small donor will increase funding to the recipient charity by $1, in contrast to 'funging' where the large donor reduces its donation in response to the small donor, so that funding to the recipient charity increases by substantially less than $1. However, this distinction does not hold when funding gaps can substantially carry over from year to year. In the limit of perfect carryover, funging of small donors could approach 100%. With substantial stochastic carryover funging could be likewise substantial, while 'one-time' opportunities may suffer minimal funging. I suggest that some accounting for carryover across periods must accompany 'splitting' to avoid donor illusion.

Creating a donor-advised fund lottery

Summary: In a previous post I discussed the construction of charity lotteries, which let donors who think that the effectiveness of their donations has increasing returns to scale convert small donations into a small chance of donations large enough to exploit scale economies. However, transaction and coordination costs pose a barrier to individual users: there are scale economies to setting up charity lotteries. Effective altruists looking for projects could set up a charity lottery with low transaction costs using a donor-advised fund to provide easy access to small donors.

If big donors have much better opportunities than small donors, then small donors can go to Las Vegas, or Wall Street

Summary: For various reasons, donors giving large amounts may be able to achieve more per dollar with their donations, enjoying economies of scale. When this is true, small donors may be able to do more good by exchanging a donation for a lottery with a 1/n chance of delivering a donation n times as large. In practice, transaction costs and taxation mean the donation will be smaller, a cost which must be compared against scale economies. However, the use of randomization, casino gambling, derivatives, and other institutions can limit lottery costs to a modest factor, lowest when investments are used. So small donors who believe strong scale economies exist can take advantage of them.