Why Activists Should Consider Making Lots of Money

Why Activists Should Consider Making Lots of Money

by Brian Tomasik

First written: 2006; Last update: 12 June 2014

Summary

It's common for altruists to equate "nonprofit work" with "doing good" and "for-profit work" with "evil." But in fact, if you're well suited to working at a corporation or startup company, this option might be better than working at a nonprofit, because the extra money you could donate at the for-profit job would buy new nonprofit employees, while at the nonprofit, you might partially be replacing someone else. That said, I would not advise the "earning to give" approach for everyone, and I think there are cases where people should clearly work on a problem directly rather than making money to donate toward it. There may also be cases in which you don't counterfactually replace another person, in which case the direct impact of the job is potentially significant.


Table of contents

Introduction

Activism is about "changing the world" and "making the world a better place" -- through research, lobbying, and civic engagement. So it seems quite natural to suggest that someone who wants to effect change should work for an advocacy organization, or a citizen-action campaign, or a charitable foundation. To do something different -- for instance, taking a job at a big law firm or corporation -- is sometimes seen as "selling out" and abandoning one's moral ideals. This common perception is reflected in the title of one Wall Street Journal article: "Social Principle vs. High Salary: Reconciling Ideals with Financial Goals Can Be a Struggle for Some in Their 20s" (by Adelle Waldmen, 2005).

Replaceability?

However, there is a factor that is often ignored in this line of thinking: Namely, that when an organization hires one person for a competitive position, it thereby chooses not to hire another.

Example. Suppose Alice and ten other people are applying for the position of campaign coordinator for an advocacy group. Alice is hired and feels good about all of the work that she's doing. She forgets, however, that because she was hired, someone else wasn't. In her place, that person would have done all sorts of great work too.

A model with fixed budgets and wages

One simple model of replaceability is the following. Consider all of the nonprofits that do good work. Those nonprofits have essentially fixed budgets that allow them to hire an essentially fixed number of employees. Since nearly all of these positions will be filled by someone, much of the work that Alice does with one of those organizations would have been done by someone else in her place. Hence, the difference that Alice makes on the world is only the amount by which she's more productive than whoever would have been hired instead.

This will usually not be quite true. For instance, consider an unrealistic model in which all nonprofits within a certain sector agree on a ranking of all job applicants from best to worst. If the nonprofits have fixed budgets and pay fixed salary amounts for each job slot, they will be able to fill a constant number of slots, and they will choose the highest-ranked applicants to fill those slots. If you then enter the pool of applicants and get hired, and if you aren't the lowest-ranked of the applicants hired, then you don't "knock out" the person who would have been hired in your place, because that person will still be hired somewhere else. Instead, you prevent the lowest-ranked applicant from being hired. In this case, the difference you make is the amount by which you're more productive than that lowest-ranked person who got kicked out would have been. (This ignores what happens to that lowest-ranked candidate; I'm implicitly assuming that he goes off to work for an organization that makes no net impact to the world.)

When we relax the assumptions made in the preceding paragraph, we find that the benefit you make by working for an organization is probably less than the difference between you and the worst employee. For one thing, it won't always be the case that the worst person who would have been hired will be "kicked out"; maybe someone slightly more capable would leave instead. Second, if you're more talented than other candidates, you may receive more remuneration, which lowers the total hiring power of your organization.

A model with variable wages

The assumptions of a fixed charity budget and constant employee wages are unrealistic. In Econ 101, it's taught that when you enter a labor market, you shift the labor supply curve rightward. Then this both decreases wages and increases quantity of labor supplied. If supply is highly elastic, then the increase in quantity supplied that results is rather small. For some charity jobs, such as "grunt" positions that nearly anyone could fill, it's plausible that supply is quite elastic, since people would quickly move elsewhere if wages declined even slightly. Supply is presumably also pretty elastic for corporate jobs, which tend to have very competitively priced wages. In other cases supply might be less elastic, in which case your entering the market suppresses wages enough that the charities or corporations can hire an appreciable fraction of one new worker on balance.

For further discussion of replaceability models, see

It's important to consider whether replaceability applies to a significant degree with the job you're considering. If not, then the direct impact of the work may be highly significant. For certain industries -- including work for military companies, software/hardware companies that help speed up AI, or other companies that speed up risky technologies -- the direct impacts may significantly detract from the good accomplished by your donations.

Earning to give

In some cases, productivity differences between you and your potential replacement could be quite large. In other cases, even small differences in effectiveness could translate into large impacts. If, for instance, Alice were a slightly better fundraiser than the next person who would have been hired, she might be able to bring in millions of extra dollars over her lifetime.

But another option to consider, besides working for a charity, is to work at a corporation or other employer that will provide vastly greater income. Replaceability suggests that even if the employer is slightly negative in its social impact, not all of this impact will be realized in a counterfactual sense, although enough will be that you'd presumably still want to avoid the worst industries.

The key benefit of earning to give is that, while your labor would have been somewhat replaced by another person, your donations at a high-paying job probably would not have been replaced, or at least not very much, given that most people don't donate large percentages of their income. With these extra donations, you can create not just a partial new charity job like you would by working for a charity but actually several new charity jobs, by expanding charities' budgets.

Earning keeps options open

Another strong case for earning instead of focusing on altruism directly is that wealth is robust against changes in your moral or epistemological outlook. It provides flexibility and keeps your options open. Of course, if there's a risk of your becoming affluent, you may not want your options too wide open. One way to navigate this dilemma is by using a donor-advised fund, which offers tax deductions in the short run and requires you to eventually donate your income to a charity of some sort.

In addition, starting out in a corporate career can keep options open relative to starting out in a nonprofit one. Nonprofits would love to hire former McKinsey consultants, but McKinsey may be wary of hiring a former animal activist.

Finally, having money can open up doors that wouldn't have been possible without it, including working on your own startup without being squeezed for cash, founding a new nonprofit before you have funding to support it, or even just doing work totally on your own without needing an organization to support you and donors who will hold you accountable to particular expectations.

Cases where earning to give may not be optimal

In practice, I don't think a career of making money to donate is always the obvious choice, for several reasons.

Differences in productivity

Assessing your own abilities without Lake-Woebegone bias is important, but it may very well be that you are exceptional in a particular field. Differences in personal effectiveness can be huge: Some leaders of nonprofit organizations, say, probably are many times more influential than their counterparts. Certain academics are perhaps 3, 5, or 20 times more productive than their colleagues in terms of predictably high-quality work. If, upon reflection, you find that you excel in a certain area that can be used to prevent lots of suffering, then by all means pursue it, whether it makes money or not. (If you are exceptionally skilled at torturing squirrels or cleaning bathrooms with a toothbrush, please do not pursue these vocations.)

Transactions costs

As is true of so many theoretical Pareto improvements, the reality of transactions costs can get in the way. Hiring someone else to do a job for you requires finding that person, establishing trust, maintaining communication to share information, setting up proper incentives to avoid principal-agent problems, etc. Plus, making money means paying taxes twice if your arrangements are sufficiently informal that you can't deduct the payments as donations to a public charity. And if you do set up a 501(c)(3) for tax reasons, that involves yet more paperwork.

Eliezer Yudkowsky elaborated on this point:

I once observed that Ricardo's Law of Comparative Advantage is the theorem that unemployment should not exist. The gotcha being that if someone is sufficiently unreliable, there is a cost to you to train them, a cost to stand over their shoulders and monitor them, a cost to check their results for accuracy -- the existence of unemployment in our world is a combination of transaction costs like taxes, regulatory barriers like minimum wage, and above all, lack of trust. There are a dozen things I would pay someone else to do for me -- if I wasn't paying taxes on the transaction, and if I could trust a stranger as much as I trust myself (both in terms of their honesty and of acceptable quality of output). Heck, I'd as soon have some formerly unemployed person walk in and spoon food into my mouth while I kept on typing at the computer -- if there were no transaction costs, and I trusted them.

What's the true opportunity cost of your hires?

It can be tempting to say things like the following: "The people at the charity I'm donating to earn $30K per year. But I can donate $90K per year. So my donations are supporting 3 new people to do charity work." This may or may not be true depending on who the people are. For example, say one of the people working for the charity was Nick Cooney. Given his assiduity, acumen, and altruism, if he weren't working for animal organizations, he could and would be earning significant money (>$100K per year?) to donate to animal organizations. Say that if he weren't working for animal organizations, he would donate $75K to them, but when he does work for them, he takes $25K in salary. The full cost of hiring Nick Cooney is thus $100K, not $25K.

In other cases, the same may not be true. People doing veg outreach or administrative tasks or working for a very popular cause like global health might be hired from a pool of applicants who would have otherwise gone on to do non-altruistic jobs and wouldn't have donated much. Their opportunity costs may be closer to their direct compensation costs.

Information as the limiting resource

The argument for making money to donate treats wealth as the limiting resource in efforts to reduce suffering. However, you may decide that the hardest part about making a difference is figuring out where exactly to donate at all. While differences in earnings between those in the nonprofit and private sectors can differ by a multiple of 3, 5, or 15 times, differences in cost-effectiveness of donations can vary by 20, 50, or 100 times. If, by working for a charity, you're able to improve your on-the-ground knowledge about what kinds of activities and groups really are effective, that can be extraordinarily valuable. If, by doing research, you're able to spend time learning about details of an issue in a way that leads you to discover a vastly more cost-effective cause than you ever would have discovered as a lawyer working on mergers and acquisitions, then you've made a great career choice. For very speculative and under-studied causes, you might be able to spend your whole lifetime researching and still not hit sharply diminishing returns on the value of further information.

Of course, it's worth pointing out that you don't have to work on the ground yourself to get advice on what works and what doesn't: You can also make friends with people in that position and consult them. And you don't have to earn a PhD in, say, political science in order to get sound advice about the implications of international policies on prospects for compromise in the future; you can also establish a relationship with people who do know about such topics. While it's important not to assume that every task can be optimally traded in Ricardian manner, it's also important not to assume that you're the only one who can adequately gather information, assess options, and carry out altruistic projects. Even if information is the limiting resource, it may be best still to make money and hire experts to make decisions for you given knowledge of your personal objective function.

Startup and fringe causes

The case for making money to donate is very strong for established causes where the limiting resource is funding to hire more eager employees -- e.g., at Vegan Outreach or the Humane Society of the United States. The situation is different when it comes to a fringe or startup charity that doesn't yet exist or where it's hard to hire people other than yourself to get the ball rolling, except possibly at high opportunity cost. In these cases, you may have no option but to do the work directly if the value is high enough relative to what you could accomplish by donating to more mainstream causes.

Risk of becoming affluent

I have been supposing that the hypothetical donor in this scenario would live as frugally as possible -- purchasing fancy clothes, expensive meals, and other luxuries only to the extent that doing so is justified on the grounds of long-term career advancement to earn a higher income or to engage in social networking with powerful people. (An investment banker is unlikely to pull in hundreds of thousands per year if she wears a ratty T-shirt to meetings with clients.) Spendthriftiness can sometimes be hard to maintain amidst social pressure towards luxury. If you find that to be the case -- or think, after adjusting for overconfidence bias, that it may become the case in the future -- you could consider donating to a foundation or charitable-advised fund to enforce your commitment to charitable giving, while simultaneously reaping income-tax deductions in the year the money is earned. Of course, this strategy may not be a good idea if you intend to use the money in ways that can't be supported by a foundation or public charity -- e.g., to support your own start-up company before you reach the stage of attracting venture-capital funding.

Chicken-and-egg questions

Direct altruism work may have higher payoff than it appears, especially if it helps to change society's Zeitgeist in the long term. Lots of wealthy philanthropists (and non-donor private citizens) are influenced by the ideas in society at large. By doing outreach, writing, and speaking on important issues now, you might make it so that in a few decades it's not just one philanthropist (i.e., yourself, if you had done earning to give) donating to highly important causes but perhaps many of them. The route of social influence is riskier than direct earning, because you might have little impact, or you might (with lower probability) have huge impact. But it's not obvious how it compares with direct earning in expected value.

However, there's also the option of earning and in the process funding others to shape society's ideas. You might be able to accomplish more total influencing in the same amount of time this way, so it's possible earning could be better even from the perspective of long-run memetic change.

Or maybe rather than earning yourself, you should bring others into the movement, some of whom will earn. Or you could write about building movements to encourage people to earn. Or you could earn to fund people to write about building such movements. And so on. We run into issues of whether the chicken or egg comes first here.

This becomes confusing to think about, but it helps to remember that each of these strategies takes time and has bounds on how far it can go before other limiting factors kick in. Direct outreach can be limited by funding. Earning is bounded by how many people you can fund. Movement-building is limited by funding and having some content to share with people (otherwise, what exactly are you building?). Direct altruism work is constrained by funding and knowledge of which causes are best to support.

There's nothing magic about any of these options. All are a priori plausible possibilities, and the choice depends on what factors are limiting right now, what you're best at, and what you'd most enjoy.

Don't earn to give if your talent lies elsewhere

The perspective of earning to give largely treats altruism projects as given + scalable vs. money as the limiting resource. A different view could argue for unique abilities of individuals as the limiting resource, with talent attracting money when it's warranted. I think each of these extremes isn't quite true, but there's some wisdom to both. I do think that really impressive projects will tend to attract funding, and there are some extraordinary amounts of wealth in the world to be courted. If you have a special knack for an altruistic undertaking -- research, outreach, fundraising, etc. -- I suspect you'll be able in the long run to acquire the finances you need. At least, this has been my experience.

There may be exceptions in cases where few other major donors share your values, and if so, you might need to fund the project yourself. However, I'm doubtful whether this is often the case; somewhere in the world there must be wealthy people who are on your wavelength, and if not, maybe your particular project doesn't have high odds of success anyway. (Thanks to Jonah Sinick for this point.) In most cases, I think extraordinary people should focus on the area of altruism in which they're extraordinary and leave the funding situation to work itself out later.

In the case of earning to give, your can, by donating more than your counterfactual replacement, expand the total size of the philanthropy pie. If you rely on being exceptional at something else, you're mainly displacing existing philanthropy money (unless you do such novel work that a philanthropist decides to donate more in total). This is somewhat a concern but maybe not a big one, depending on the counterfactual value of where the philanthropist would have given instead.

Because one altruist who earns to give can support many altruists doing direct work, in general, we should see most altruists doing something other than earning, unless we assume that the supply of non-earning altruists is already far higher than the number that can be employed. Insofar as I don't see a vast surplus of the most effective altruists unable to do direct charitable work on account of insufficient funding, it makes sense for many altruists to end up doing direct object-level projects at this point.

Holden Karnofsky echoed this sentiment:

I have a general intuition that over the long run, [effective altruists] EAs are going to be disproportionately well funded and will be more bottlenecked by human than financial capital (this doesn't mean the best thing to do is work directly on EA activities, but it would argue against earning to give all else equal, at least if you don't expect to be one of the top earners [...].

General guideline

Links

Acknowledgements

My understanding of this topic has been refined by the many people with whom I've discussed career choice, both inside the effective-altruism movement and beyond.

Appendix: My personal history with this topic

When I was in high school (2001-2005), I was a member of a club called Youth Ending Hunger. One of our activities was to raise money, through selling lollipops, bagels, and pizza. Pizza sales were the most lucrative, typically bringing in ~$150 per sale. To hold one, we had to (1) request approval for a table in the hallway after school, (2) tell everyone in the club the date and times of the sale, (3) order pizza, (4) request permission to leave class 15 minutes early to set up, and (5) serve pizza at the table for about an hour. We needed 3-5 people to help out. All told, this probably implied at least ~5-7 hours of people time, not including the accounting paperwork later. Meanwhile, I had a friend whose father probably earned ~$150 per hour at his job. I often thought to myself, "Why don't we ask him for a donation of one hour of his time and skip the whole pizza sale?"

In Dec. 2004, I began thinking about replaceability in career choice, when I heard of a friend who had quit working for a corporation because the friend considered it "evil." Upon reading Peter Singer's "Famine, Affluence, and Morality" in summer 2005, I also realized the high potential value of money. This was reinforced when I came across the following observation from Jack Norris around the same time:

Many activists view money and wealth as evil. As a source of power, money can be used to promote either evil or good. Just think how much better the animals would be if vegans had significant amounts of money. If each vegan had enough money to buy and distribute multiple copies of educational materials, the animals would greatly benefit. Someone who works a job that isn't directly promoting animal rights, but who can use their money to fund the resources needed by our movement, will be doing much to help the animals.
In fall 2005 I began to research high-earning careers for myself, and in late 2005 / early 2006, I wrote the first draft of this essay.

Throughout college I explored many possible high-earning careers. I realized that a corporate career path would be seen as odd by my do-gooding activist friends, so I often explained my reasoning to them. In fall 2007, I wrote an editorial for my college newspaper titled "Making Money and Making Change Not Mutually Exclusive."

Eventually I chose to pursue a career in software. One reason was that it offered the potential for pursuing a startup with very high expected earnings later on. Another motivation was that it had high starting salaries (often higher than entry-level finance/consulting remuneration, though with a slower growth trajectory) and didn't require extra education (in contrast to law/medical school). I realized that I might not earn indefinitely -- that I might want to earn for a few years and then "retire" to do independent writing -- which is why higher starting compensation was important.

I ended up working at Microsoft's Bing search engine for four years. I enjoyed the work a lot, but gradually it became apparent that I should return to altruism research full-time, because I had too many topics I needed to study in order to figure out how to do good with donations. Another reason was I was told repeatedly that my writing and thinking were of sufficiently high-quality that I should consider doing it directly as my area of comparative advantage.

As far as the idea of earning to give, Jeff Kaufman cites me as one of the first people to write about it on the web, and while it's true that I came up with the argument on my own, it seems that many people have developed the same idea independently. I later discovered at least three other friends who had already pursued the same path for similar reasons. As Eliezer Yudkowsky notes, the basic principle is not original:

There is this very, very old puzzle/observation in economics about the lawyer who spends an hour volunteering at the soup kitchen, instead of working an extra hour and donating the money to hire someone to work for five hours at the soup kitchen.

Earning to give is basically a combination of the concept of comparative advantage with the observation that jobs in an economy will tend to be at least somewhat replaceable.

In 2011, the organization 80,000 Hours began popularizing the idea of earning to give to a wider audience. Actually, at that point, they called it "professional philanthropy." However, in Aug. 2012, Jeff Kaufman expressed his worry that the name was confusing and asked for alternatives. I suggested "earning to give," and the rest of the community liked it, so the name stuck. Niel Bowerman independently came up with a similar phrase: "earn to donate." The name has since become well known through a Washington Post piece and many other citations, and now has its own Wikipedia article.

Appendix: Reforming from the inside?

Sometimes altruists propose going into seemingly non-altruistic careers with the intent of reforming an institution from the inside. I haven't studied in detail whether this can be effective, but I have a weak intuition that it's probably not optimal, unless you also plan to go into the same career for other reasons (e.g., making money). My guess is that working on the issue directly from the outside is often better. Why?

  1. Reaching an influential position in a big company or government agency is hard. Many people want those jobs for other reasons. Of course, influencing from the outside is hard too, but my point is that going the inside route isn't obviously an easier path to success. If you are skilled enough to rise in the ranks internally, chances are you can also be very successful externally.
  2. Constraints on internal reform. Even if you do reach an influential position, it's still not clear you can reform too dramatically. A company CEO is fundamentally constrained by what's profitable. A politician is fundamentally constrained by donors and popular opinion (unless it's her last term in office). When you lobby from the outside, you can do whatever you want. There's a famous quote by a politician (which I can't find at the moment) in which he tells activists something to the effect of "Thank you for making me enact this policy." In other words, he wanted to do it, but he couldn't until the political winds changed such that doing so became politically feasible.
  3. Too much front-loaded investment. It takes years or decades to become influential in an industry or agency, and in that time, your ideas about what cause to focus on may very well have shifted. You also need to spend lots of time on activities not relevant to your goal.
  4. Less public conversation. Along the same lines, a significant part of the value of advocacy work comes from sparking conversation and refining our ideas about what we think the right policies are. That debate is easiest to hold in the public domain. If you speak too openly about your intentions from inside the organization, you may not be promoted in that organization. (Of course, there are some exceptions, like organizations that actively seek new ideas about how they can grow.) By building the movement from outside, you can more directly focus on the aspects of the situation that you care about and can generate momentum that may eventually influence those already in the organization to change, either voluntarily or by public pressure.
  5. Less precedent? Most of the examples of reform that come to my mind have involved campaigning from the outside. Of course, this availability heuristic may be flawed, perhaps because the outside campaigns are more salient, more interesting to historians, or just more common in general. Certainly plenty of bureaucrats, politicians, and business executives have aimed to make many internal reforms. That happens all the time when new leadership comes to power. But typically this is done by people who intended to build their careers in that field for other reasons. Maybe politicians are the best exception: Some people deliberately run for office to challenge the status quo from the inside. This seems like a decent approach if you're suited to politics and want to work on issues that are politically feasible. (Insect suffering, for instance, is not a politically feasible issue in the near future.)

There may indeed be cases where working on the inside is the best approach, such as if you have a lot of detailed technical contributions you want to make, or if there are other factors that change the calculations considerably.

A long time ago I read a biography of Ralph Nader. It mentioned an episode in which Nader met a young man who was planning to reform a corporation from the inside by working for it. Nader encouraged him to lobby from the outside instead, which the man did.


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