Thoughts on patient philanthropy

Abstract

Patient philanthropy is the idea of investing resources rather than spending them to grow them for solving future problems. Low risk-free interest rates in the current market environment call into question the common assumption behind patient philanthropy, that most people are impatient while altruists are not. To achieve higher investment returns, one needs to invest in risky assets, such as the stock market. However, with risky assets, it is important to consider the certainty equivalent, which is the guaranteed return that’s equally desirable as the risky return, rather than expected return, especially for risk-averse investors. Patient philanthropy may be particularly appealing from a suffering-focused perspective because we can generally do more to prevent a risk in the years before it materializes, whereas work done very long in advance is less effective, and because we are arguably far away from serious risks that require technological maturity. However, there are also arguments for spending sooner, such as diminishing marginal returns in impact opportunities over time and the uncertainty of how effective investments will be in preventing future suffering. – AI-generated abstract.