Profiting-to-Give: harnessing EA talent with a new funding model

post by andavargas · 2019-03-04T09:22:23.154Z · score: 22 (18 votes) · EA · GW · 12 comments

There is a morale issue in EA. It is dissatisfying for many passionate members in the EA community to either A) try and [probably [EA · GW]] fail to secure a career among EA organizations or B) do largely meaningless work each EA individual separately in order to "earn-to-give." Given the huge amount of talent in EA and how it often tends to pool together geographically, there is a third option that comes to mind: individual EAs could doing meaningless work together in companies that they control and give of their excess to EA charities. Or as I'm labelling: profiting-to-give.

Before I continue, I should point out that I consider myself EA-adjacent. Many of my readers, however, may consider themselves similarly. I am not nearly close enough to the center of the EA movement to be able to implement some of the more audacious proposals below, which is why I'm serving them up as a blog post rather than doing any behind-the-scenes string-pulling.


Some background

For-profit companies are legally required to pursue their own interests. What that means fundamentally changed about 5 years ago, when B-lab, a non-profit in Pennsylvania, USA, started successfully pushing through laws in many states in the USA that allow companies to explicitly declare some good objective as one of their "interests." A company that structures according to this new rubric is called a "Benefit Corporation," and you could say that it has terms in its utility function for entities besides <delete>itself</delete> its shareholders. Laws with similar provisions have recently been enacted throughout the Anglosphere and Hispanosphere.

There is some confusion in this space about the difference between a "B-corporation" and a "Benefit Corporation," as they are often conflated. A "Benefit Corporation" is a legal term and it refers to a company that satisfies the relevant legal definition. A "B-corporation" is a benefit corporation that is certified by B-lab. A certification from B-lab has stricter requirements and also costs $$$.

Hold up.

A self-anointed non-profit pushed through legislation creating a framework conferring legitimacy upon its goals that it could take advantage of to pursue them more fully (with some clever 🅱️arketing). And those goals have now been adopted by over 2000 companies all over the world and it gets paid for it.


II. My proposals

1) The EA movement can create a company certification. They can attach criteria such as financial transparency and giving 10% of its yearly profits to EA causes or something. Such a certification rides on the work of B-lab, such that any involved company would have to be Benefit Corporation but not necessarily a B-corporation.

2) Create a start-up incubator for companies that want to start off as EA-certified, to enculture a wide swath of talent that can operate at all levels in business.

3) The large quantities of eager talent that cannot find jobs in EA orgs could flock to these benefit corporations instead. Any attempt by one of these to pivot away from EA's certification would probably result in most talent leaving, a fatal [disincentivizing] blow. Also note that EA talent may be willing to work for less money for the possibility of working for an EA-certified company, which may also result in EA-certified companies undercutting their industry and having a competitive advantage.

4) People in the EA movement would be a prime target for products created by these organizations, closing the feedback loop and territorializing an entire self-regulating market out of the movement. There is no ethical consumption under capitalism, perhaps, but perhaps there is under an EA-certification.


Note: I am not arguing for Impact Investing. EA-certified companies do not have to a have a noble goal, they just have to funnel resources to the EA movement and whatever else as per the EA-certification's standards.

12 comments

Comments sorted by top scores.

comment by Peter_Hurford · 2019-03-04T21:37:07.619Z · score: 5 (3 votes) · EA · GW

I'd point out that your A and B are not mutually exclusive - I do a for-profit ETG job but also donate a significant amount of time to my own EA organization.

comment by aarongertler · 2019-03-04T20:23:25.401Z · score: 5 (4 votes) · EA · GW

You've got a leftover HTML tag in your post:

<delete>itself</delete>

As for the idea: I'm glad you wrote this up! The story of B-corporations is interesting (and not the sort of thing I'd have thought was likely before it actually happened), and there may be something we can learn from it. (It's easier to change corporate law than we thought? There are a lot of founders with strong ethical beliefs?)

But on the other hand, "EA-corporations" seems to be a much more demanding standard (10% of profit!), for little reward.

Yes, there's a bit more access to talent, but the number of people applying for EA-type jobs isn't that high. The largest number I've ever heard was ~800 for an Open Phil research round, and they achieved this in part by reaching out individually to hundreds of people, including many they knew about because they'd been GiveWell applicants -- and this was for a non-technical position at an organization with a long history. (I'd also guess that many of those 800 weren't involved with the EA community, and just happened to find the job posting somewhere.)

As for point (4): The EA community has about 20,000 people, optimistically (that's the number of people who've liked the EA Global page, and a bit less than the number who have ever opened even one edition of the EA newsletter). Those people are scattered across the globe, and many of them aren't interested enough in EA to make purchasing decisions based on a company's alignment. There are ways to make money by providing a useful service to a population this size (e.g. if you run something like a coaching business where you only need a few dozen clients), but for now, I don't see how that would scale to anything like a real company.

Still, if we ever scale up to have hundreds of thousands of people, this is one direction that could be productive to think about -- kudos for posting a proposal to see how people react.

comment by andavargas · 2019-03-04T22:01:49.928Z · score: 3 (2 votes) · EA · GW

The html tag was a stylistic choice borne out of not being able to immediately find the strike-through formatting haha.

I admit my proposals may not be that viable currently. I’m thinking more in terms of how do you close a feedback loop that can drive significant expansion of EA once a tipping point is reached.

However, there are several companies that have already been started by EAs or EA-adjacents. Wave is mentioned below, and another I believe is Mealsquares, so perhaps a tipping point is not that far away. It’s also not like ONLY EAs would be marketed to.

comment by Peter_Hurford · 2019-03-04T21:37:15.466Z · score: 4 (5 votes) · EA · GW

A classic argument against social benefit companies is that they tend to do neither for-profitting or social benefitting that well - it would be more efficient to optimize for one or the other. What do you think of that?

comment by andavargas · 2019-03-04T21:56:21.054Z · score: 2 (2 votes) · EA · GW

I think I clarify in my note at the bottom of the post that I’m not thinking about these as “social benefit” companies. They could be perfectly useless companies, they merely must by their certification donate some stipulated funds out of their revenues to the EA movement / causes.

In your response to your other comment, I applaud your contributions, but there could be other options for those who can’t contribute similarly.

comment by Liam_Donovan · 2019-03-04T23:22:49.554Z · score: 3 (2 votes) · EA · GW

I like the idea of profiting-to-give as a way to strengthen the community and engage people outside of the limited number of direct work EA jobs; however, I don't see how an "EA certification" effectively accomplishes this goal.

I do think there would be a place for small EA-run businesses in fields with:

  • a lot of EAs
  • low barriers to entry
  • sharply diminishing returns to scale

Such a business might plausibly be able to donate at least much money as its employees were previously donating individually by virtue of their competitive success in the marketplace (i.e. without relying on EA branding or an EA customer base). By allowing EAs to work together for a common cause, it would also reduce value drift and improve morale.

More speculatively, it might improve recruitment of new EAs and reduce hiring costs for EA organizations by making it easier to find and evaluate committed candidates. If the business collectively decided how to donate its profits, it could also efficiently fufill a function similar to donor lotteries, freeing up more money for medium-size grants. Lastly, by focusing solely on maximizing profit, "profiting-to-give" would avoid the pitfalls of social benefit companies Peter_Hurford mentions while providing fulfilling work to EtG EAs.

comment by vaidehi_agarwalla · 2019-03-08T21:47:03.672Z · score: 1 (1 votes) · EA · GW

I agree strongly with the last point in this comment,- and the post in general. I have a few responses to the first points. I imagine the EA-certification would have many benefits:

  • certification of successful companies could set an example for other companies to follow, and set a high bar for CSR - not just to dontate x% but to give it to an effective charity.
  • keeping track of EA-Corps as the movement grows so that they can attract EAs outside the personal networks of the creators
  • spreading EA values beyond the non-profit industry and tight social networks of current EAs
  • potentially create a new model for socially-minded businesses to follow (and allow socially-minded investors a new business model which could have better results than the social benefit companies model)
comment by atlasunshrugged · 2019-03-04T19:46:14.295Z · score: 3 (3 votes) · EA · GW

I really like the second proposal in particular, the work charity entrepreneurship does is phenomenal and I think there is room for companies (not just nonprofits) to be launched that have a focus on generating returns that can be funneled into EA causes or just that have sustainable business models that can be run as for profit entities that do good while making money, employing other EAs, etc.

comment by G Gordon Worley III (gworley3) · 2019-03-04T18:41:30.763Z · score: 3 (3 votes) · EA · GW

Hmm, I wonder why there were some downvotes. This seems like a rather creative idea to me to find a way towards creating for-profit endeavors that may help soak up excess talent and generate additional revenue for EA projects (not to mention some of these EA-corps might directly do work that has benefit to people; Wave comes to mind as a possible example of such an existing organization).

comment by Peterslattery · 2019-03-04T22:12:41.376Z · score: 2 (2 votes) · EA · GW

I strongly agree with a lot of this idea. Thanks for sharing!

comment by poliboni · 2019-03-05T08:57:22.170Z · score: 1 (1 votes) · EA · GW
  1. People in the EA movement would be a prime target for products created by these organizations, closing the feedback loop and territorializing an entire self-regulating market out of the movement. There is no ethical consumption under capitalism, perhaps, but perhaps there is under an EA-certification.

It seems to me that the combination of generating profits to support other EA orgs and having EAs as the target consumers would not be optimal. Because EAs already donate, by profiting off of them, profiting-to-give could, rather than moving more money into the EA movement, just be moving donations from what EAs would choose to what these profiting-to-give orgs would choose. It seems to me, then, that targeting regular consumers would be the best way to maximize the money coming into EA from this strategy.

Edit: it seems to me now that what I described above would only apply if EAs were actually trying to maximize donations through minimizing expenses instead of donating a fixed percentage every year (which I don't think it's usually true).

comment by andavargas · 2019-03-06T16:41:14.714Z · score: 1 (1 votes) · EA · GW

You make a very good point, and the economic analysis of this is comparable to finding the optimal tax rate. It’s certainly not an easy problem and fraught with politicization.