How we use back-of-the-envelope calculations in our grantmaking

Abstract

This document describes the use of back-of-the-envelope calculations (BOTECs) by Open Philanthropy to estimate the social return on investment (SROI) of potential grants. BOTECs are rough quantitative models used to compare a grant’s expected benefits to its estimated costs. While the structure varies depending on the grant type, common examples include estimating disability-adjusted life years (DALYs) averted for health grants, reductions in suffering for farm animal welfare, and funding raised for cost-effective charities through movement-building grants. Open Philanthropy uses a bar of ~2,000x SROI for Global Health and Wellbeing grants, meaning that for every dollar spent, the grant aims to create the equivalent value of giving ~$2,000 to someone earning $50,000/year in the U.S. The document provides four simplified examples of BOTECs across different focus areas, including trialing statins for tuberculosis treatment, reducing the cost of lead paint screening, supporting fundraising for effective charities, and improving broiler chicken welfare. These examples demonstrate how BOTECs are used, the assumptions made, and limitations of the models. BOTECs are not the sole basis for grant decisions but are considered alongside other factors such as leadership, track record, strategic considerations, and potential for unforeseen benefits. – AI-generated abstract.