The Open Philanthropy Project Is Now an Independent Organization

Over a year ago, we started exploring options for spinning the Open Philanthropy Project out from GiveWell as an independent organization. Though the process took a bit longer than we had hoped, the new legal arrangement took effect on June 1.

This post covers the evolution of the Open Philanthropy Project into an independent entity, and the reasons for the spin-out from our perspective. It also discusses why we’re operating the Open Philanthropy Project as an LLC, and what our relationship to GiveWell will be going forward. (For some more technical details on the transaction, see the GiveWell post here.)

This transition has been in motion for some time, and we expect that the bulk of our operations will appear unchanged to outsiders.

The evolution of the Open Philanthropy Project into an independent entity

In 2011, GiveWell launched GiveWell Labs as an arm of research open to any giving opportunity, no matter what form and what sector. GiveWell Labs partnered with Cari Tuna and Dustin Moskovitz of the philanthropic foundation Good Ventures, with whom we felt deeply aligned on values and mission. In 2014, the partnership rebranded as the Open Philanthropy Project but remained part of GiveWell.

From the beginning, the Open Philanthropy Project aimed at a different audience from GiveWell: a few major philanthropists rather than many individual donors. It took a different approach from GiveWell, dropping the emphasis on evidence-backed, cost-effective, scalable organizations in favor of important, neglected, tractable causes, often with an emphasis on upside (and comfort with debatable judgment calls). GiveWell, which Elie Hassenfeld and I launched in 2007, continues to recommend evidence-backed charities to donors of all sizes.

We continue to think that GiveWell’s work is outstanding and anticipate that Dustin and Cari will continue to be among the largest supporters of GiveWell operations and recommended charities.

But over the years, as we built up increasingly separate teams and missions, it became clear that if we encountered each other today we would not make the decision to merge, and that each group had more to gain than lose as separate organizations in the future. So we decided more than a year ago that we would explore options for spinning the Open Philanthropy Project out into its own legal entity.

After a long process of deciding how to structure the Open Philanthropy Project and negotiating the details of the separation and how to work together going forward, the GiveWell Board of Directors voted unanimously (without its conflicted directors) at its April 25 meeting to approve the transaction, and it took effect on June 1.

Why spin out the Open Philanthropy Project?

• GiveWell and the Open Philanthropy Project are fundamentally different projects. Both seek outstanding giving opportunities, but they use very different criteria and processes. By 2016, most staff (particularly those involved in giving recommendations) worked exclusively or near-exclusively on one project or the other.
• We think it’s good for both organizations that they have different brands, and that they will now have fully separate finances.
  • GiveWell is associated with heavily evidence-backed giving. Being associated with GiveWell has in some cases caused confusion about the Open Philanthropy Project’s criteria and requirements of grantees, leading some people to misunderstand what sorts of giving opportunities we were seeking.
  • The Open Philanthropy Project engages in significantly more debatable work than GiveWell does. We value GiveWell’s reputation as highly thorough and relatively non-controversial, and would not want that reputation to be undermined by our activities.
  • Note that, as discussed below, GiveWell and the Open Philanthropy Project expect to continue sharing office space until the current lease ends, and some staff continue to work on both projects. But we think it is valuable for the two to have distinct brands and finances, so that it is straightforward for someone to support and/or promote one without supporting/promoting the other.
• We believe that the Open Philanthropy Project can have more impact and better fulfill its mission as an LLC, as discussed in the next section.

The Open Philanthropy Project will be structured as an LLC

Although we’ve overwhelmingly recommended grants to 501(c)(3) organizations in the past, we are in principle agnostic about a giving opportunity’s tax status, and, prior to the separation, we occasionally recommended impact investments (e.g. an investment in Impossible Foods to accelerate the development of plant-based meats) or contributions to 501(c)(4)s (e.g. supporting non-political housing advocacy by Greater Greater Washington) in cases where we thought they would be competitive in terms of cost-effectiveness with grants to 501(c)(3)s despite their less generous tax treatment. Organizing the Open Philanthropy Project as a private foundation would have made contributions to our operating costs tax-deductible but also would have limited our ability to spend staff time investigating or recommending some non-501(c)(3) opportunities. We ultimately decided that the flexibility associated with being an LLC outweighed the foregone tax benefit because we believe it will enable us to maximize our impact.

Despite not having the legal structure of a non-profit, we expect to continue to largely operate like one:

• We will have a Board of Managers (currently Cari, Dustin, Elie, Alexander Berger and me), akin to a board of directors, which will be responsible for oversight and direction of the organization.
• We don’t expect to make a profit–or even material revenue–but as part of our separation from GiveWell, we pledged that any profits the LLC does earn within the next three years will be donated to GiveWell’s top charities.
• We expect the vast majority of our recommendations will be 501(c)(3)-eligible and will be directed to a 501(c)(3) vehicle (e.g. Good Ventures or a donor-advised fund, as has been the case to date).
• We plan to maintain our commitment to openness, including blogging about major decisions and the reasoning behind them; creating detailed reports on the causes we’re investigating; sharing notes from our information-gathering conversations; and publishing writeups and updates on many of our grants and investments, including our reasoning and reservations and challenges we encounter.

The main ways we anticipate behaving differently from if we were a 501(c)(3) are:

• The LLC will no longer file the tax forms that non-profits file (though the non-profits directly making the grants will continue to file the relevant tax forms).
• We may recommend impact investments or non-501(c)(3) contributions in cases where we believe that the programmatic benefits justify them and they could be cost-effective (including in some cases where we would not be able to recommend the contributions if we were a 501(c)(3)). This could potentially extend to recommending political contributions in some cases (for instance, we could imagine recommending support for district attorney candidates who are favorable towards criminal justice reform).
• Funding for our operating costs will not be tax-deductible charitable contributions, though the vast bulk of our funding recommendations will still be directed to 501(c)(3) organizations and accordingly will be tax-deductible. (Generally, we will recommend grants to donor-advised funds or foundations, as has been the case to date. The Open Philanthropy Project LLC will employ staff, not make grants directly.)

The Open Philanthropy Project and GiveWell

We are now a separate organization from GiveWell, but substantial connections will remain:

• The two organizations will continue to share an office, at least through the life of our current lease, and some staff members will split their time between the two organizations. Employees who split time will track their time and the costs will be allocated, along with associated overhead, to the relevant organization, with some protections built in to make sure that GiveWell is receiving more from the Open Philanthropy Project than it is giving.

• It will take some time to update our website to reflect the new arrangement. We will be going through pages and posts systematically, but if you notice a reference to GiveWell that seems out of date, please let us know.
• I have stepped down as Co-Executive Director of GiveWell, but both Cari and I will be staying on the GiveWell Board of Directors. We both remain passionate about GiveWell’s work and will continue to support GiveWell’s top charities.