Donor lotteries: demonstration and FAQ

Abstract

Suppose that Alice is trying to figure out how to do the most good with her donation of $1,000 this giving season, and can spend various kinds of resources to improve her decision. Unfortunately, many investments that could improve the decision quality would impose costs that are large relative to her donation: spending hundreds of hours (whether her own, those of charity staff, or of hired evaluators) investigating opportunities will cost more than her donation amount. She will also be limited in the projects she can fund: whereas a large funder can attract proposals for new projects, and fund a new position or startup organization, she seems to be limited to contributing to existing public opportunities.One solution to this problem would be for Alice to work with Bob, a large donor, to construct a ‘donor lottery.’ Alice donates her $1,000 to Bob’s donor-advised fund, or DAF. Then Alice and Bob consult a random number generator to determine how to recommend donation allocations to the DAF. For example, they might plan that with 1/100 probability Alice would get to recommend the allocation of $100,000 from the DAF, while with 99/100 probability Bob allocates the DAF without input from Alice.