Donate Unrestricted
paulgraham.com
Donate Unrestricted
1–10 of 301 posts
Re: Donate Unrestricted
#2One of the reasons I give big cash envelopes as gifts to be deployed as recipients see fit. I do offer symbolic gifts, or small cute things, but when the monetary value of the gift is large, I give cash.
Re: Donate Unrestricted
#3Very true. I've been running non-profits to help the security of journalists and human rights defenders for years (https://www.secfirst.org). One of the big issues is that donors often only want to fund projects which means core costs (accounting, IT or whatever) often are not covered or are only partly covered.
To an extent project specific funding also means that some organisations have to make sacrifices or do projects that aren't central to their mission. Mission creep can happen with some NGOs. Without core costs covered it's also a lot harder to develop new concepts as there isn't really much room essentially for R&D.
Core costs in general also become a bit of a barrier to entry for new non-profit ideas and organisations. Core costs usually are only granted by big donors and usually will only be granted to big organisations. It's very very hard as a small org to get core costs paid for so it's hard to scale a lot of things. Collaboration in the NGO field is very varied, a lot of big orgs talk about it but when it comes down to it, often are very lacking. This leads to lots of inefficiency, overlap and duplication.
Also the project based funding tends much more towards new ideas rather than maintenance. Maintenance and sustaining projects just doesn't get the same level of funding. For example we built our open source Umbrella App for learning about security with project specific funding. Nearly all of which gets spent specifically on that project. It's very hard for us to find donors willing to fund the ongoing maintenance of the apps. The rest of our core costs has to come from our training and consultancy work with organisations. That's tricky as we love doing it but it means we can't focus as much on our core tool building.
Because of the core cost issues, the non-profit space is often very inefficient. It doesn't really have the same culture of startup, mergers, takeovers etc. To extent what you often get is zombie NGOs which become big and inefficient but soak up the donor money and keep smaller/better organisations out of the market. The way big donors work, many are very slow and risk adverse. So that means for example a lot of the big funders will never find any organisation that hasn't been around for at least three to five years. Imagine a VC not finding any company that hasn't been around for more than three to five years!
Re: Donate Unrestricted
#4I've done a fair amount of volunteering for nonprofits, one in particular[1], and I will say that nonprofits are full of the most overworked, underpaid, and passionate people you will meet anywhere. They need every penny they can get, and very often people mistake nonprofits spending money on essential activities like marketing or event planning as "overhead", when such expenditures generate multiples of revenue for every dollar spent. Wouldn't you rather the $1 you donate generate leverage in new donations?
One thing that PG doesn't mention here is fungibility: if you restrict your donations, nonprofits will still route unrestricted funds to where they need to be spent. It's still sub-optimal, obviously, but people who donate restricted don't always understand that they don't have as much control as they think they do over where funds will be spent, and that's a good thing.
[1] Liberty in North Korea is the best way you can contribute to the wellbeing and success of the North Korean people directly...one $ donated to resettle refugees can return 100% ROI after just 2 years: https://www.libertyinnorthkorea.org/
Re: Donate Unrestricted
#5One of the reasons I give big cash envelopes as gifts to be deployed as recipients see fit. I do offer symbolic gifts, or small cute things, but when the monetary value of the gift is large, I give cash.
When I worked in gift cards one of their benefits was a way to give to people with destructive habits without enabling them. Though hardcore addicts would just sell the cards for cash anyway.
Re: Donate Unrestricted
#6He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction, then it usually isn't a problem to spend the other donation on that, and the restricted one on the road maintenance that would have been done anyway. So a restricted donation is really only effectively restrictive if it significantly outweighs the rest.
Re: Donate Unrestricted
#7> Which means a restricted donation is inherently suboptimal
Maybe so, but maybe it's a compromise as well. If not, no funding at all would have been given which maybe would be a net-loss long-term. Receiving money to do research might not always include research you want to do, but you'll gain more experience overall and do better once you get to the research you want to do.
I'm thinking from the perspective that if I got to choose where my taxes went to. If I could decide which areas 50% the money goes towards, I think I would have been more happy paying taxes and maybe would add more, in order to fund efforts I believe in personally.
Re: Donate Unrestricted
#8He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction, then it usually isn't a problem to spend the other donation on that, and the restricted one on the road maintenance that would have been done anyway. So a restricted donation is really only effectively restrictive if it significantly outweighs the rest.
This also illustrates how unrestricted donations are much more useful to the nonprofit. Funds that can be spent as needed are very flexible, and so can fill gaps left by restricted funds.
Re: Donate Unrestricted
#9He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction, then it usually isn't a problem to spend the other donation on that, and the restricted one on the road maintenance that would have been done anyway. So a restricted donation is really only effectively restrictive if it significantly outweighs the rest.
It's a great reason against donating restricted, but wouldn't help his overall argument that you should trust the non-profit.
Re: Donate Unrestricted
#10He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction, then it usually isn't a problem to spend the other donation on that, and the restricted one on the road maintenance that would have been done anyway. So a restricted donation is really only effectively restrictive if it significantly outweighs the rest.
> only ... if they significantly outweigh the rest.
Or if it causes over-investment into a specific cause (e.g. $100k must go to roads, when the non-profit only wanted to allocate $50k to that), which fungibility of money can't address.
The more specific the restriction is, the less fungibility is able to provide an out.