EA - SoGive rates Open-Phil-funded charity NTI “too rich” by Sanjay

Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: SoGive rates Open-Phil-funded charity NTI “too rich”, published by Sanjay on June 18, 2023 on The Effective Altruism Forum.Exec summaryUnder SoGive’s methodology, charities holding more than 1.5 years’ expenditure are typically rated “too rich”, in the absence of a strong reason to judge otherwise. (more)Our level of confidence in the appropriateness of this policy depends on fundamental ethical considerations, and could be “clearly (c.95%) very well justified” or “c.50% to c.90% confident in this policy, depending on the charity” (more)We understand that the Nuclear Threat Initiative (NTI) holds > 4 years of spend (c$85m), as at the most recently published Form 990, well in excess of our warning threshold. (more)We are now around 90% confident that NTI’s reserves are well in excess of our warning threshold, indeed >3x annual spend, although there are some caveats. (more)Our conversation with NTI about this provides little reason to believe that we should deviate from our default rating of “too rich”. (more)It is possible that NTI could show us forecasts of their future income and spend that might make us less likely to be concerned about the value of donations to NTI, although this seems unlikely since they have already indicated that they do not wish to share this. (more)We do not typically recommend that donors donate to NTI. However we do think it’s valuable for donors to communicate that they are interested in supporting their work, but are avoiding donating to NTI because of their high reserves. (more)Although this post is primarily to help donors decide whether to donate to NTI, readers may find it interesting for understanding SoGive's approach to charities which are too rich, and how this interacts with different ethical systems.We thank NTI for agreeing to discuss this with us knowing that there was a good chance that we might publish something on the back of the discussion. We showed them a draft of this post before publishing; they indicated that they disagree with the premise of the piece, but declined to indicate what specifically they disagreed with.0. Intent of this postAlthough this post highlights the fact that NTI has received funding from Open Philanthropy (Open Phil), the aim is not to put Open Philanthropy on the spot or demand any response from them.Rather, we have argued that it is often a good idea for donors to “coattail” (i.e. copy) donations made by Open Phil. For donors doing this, including donors supported by SoGive, we think it’s useful to know which Open Phil grantees we might give lower or higher priority to.1. Background on SoGive’s methodology for assessing reservesThe SoGive ratings scale has a category called “too rich”. It is used for charities which we deem to have a large enough amount of money that it no longer makes sense for donors to provide them with funds. We set this threshold at 18 months of spend (i.e. if the amount of unrestricted reserves is one and a half times as big as its annual spend then we typically deem the charity “too rich”). To be clear, this allows the charity carte blanche to hold as much money as it likes as long as it indicates that it has a non-binding plan for that money.So, having generously ignored the designated reserves, we then notionally apply the (normally severe) stress of all the income disappearing overnight. Our threshold considers the scenario where the charity has so much reserves that it could go for one and a half years without even having to take management actions such as downsizing its activities.In this scenario, we think it is likely better for donors to send their donations elsewhere, and allow the charity to use up its reserves.Originally we considered a different, possibly more lenient policy. We considered that charities should be considered too rich if they...