Last Updated: January 2024; Published: 2011
GiveWell often receives more unrestricted donations (i.e., funding that is not restricted for granting) than we need for our operations that year. We decide each year whether we will (a) hold onto these funds to cover our operations in the future or (b) designate these funds for grantmaking.
In making this decision, we balance two competing needs:
- We don’t want GiveWell to grow a large endowment. When we have more unrestricted funds than we can productively use ourselves for a reasonable period of time, we should grant the excess of these funds to our grantees.
- We want to retain enough unrestricted funding so that we are able to run our organization without spending a significant amount of time fundraising to ensure our continued ability to operate.
Our "excess assets" policy is a formalized approach to making this decision. While the details are somewhat more complex (see below), our policy roughly states that we’ll hold enough unrestricted funding to support GiveWell for about the next two years (based on relatively conservative calculations), and that once we surpass a certain level of unrestricted assets, we designate the excess assets for granting. This ensures that we direct these excess assets to our grantees rather than to GiveWell’s operations.
Policy Details
Unrestricted assets are the assets held by GiveWell that are available to be spent on operating expenses (this excludes assets held in our donor-advised fund as well as all assets restricted by donors in such a way that we cannot use them for internal operations).
"Months' worth of unrestricted assets" refers to how many months we could operate, according to current (generally conservative) budgeted expenses and projected revenue.
We seek to be in a financial position, based on our budgeted expenses and projected revenue, so that at any point in the next 12 months, we have 12 month’s worth of unrestricted assets remaining. A couple of simplified examples illustrate this idea:
- If we had budgeted expenses of $30,000 per month (constant), and projected no new revenue in the next 12 months, we would need $720,000 of unrestricted assets in order to fulfill the above criterion (in this case, in month 12 we would have $360,000 in unrestricted assets, which would last us an additional 12 months).
- If we had budgeted expenses of $30,000 per month (constant) and expected to receive $500,000 of revenue at once six months from now, we would need $510,000 of unrestricted assets in order to fulfill the above criterion (in this case, in month 5 we would have $360,000 in unrestricted assets, which would last us 12 months).
"Excess assets" are defined as unrestricted assets in excess of what is needed to fulfill the above criterion.
The Board meets at minimum once a year to approve a budget. During this meeting, we assess the level of our "excess assets" and, if we have any, vote to irrevocably earmark them for regranting (the timing and nature of the grants will be at our discretion, but the grants cannot be made to GiveWell or an affiliated organization). Unrestricted assets arising from an extraordinary transaction, such as a sale of assets, may be considered up to one year following the closing of such transaction, rather than at the next Board meeting at which we approve a budget.