The Nonlinear Library EA - EA orgs' legal structure inhibits risk taking and information sharing on the margin by Elizabeth
Nov 5, 2023
07:28
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: EA orgs' legal structure inhibits risk taking and information sharing on the margin, published by Elizabeth on November 5, 2023 on The Effective Altruism Forum.
What is fiscal sponsorship?
It's fairly common for EA orgs to provide fiscal sponsorship to other EA orgs. Wait, no, that sentence is not quite right. The more accurate sentence is that there are very few EA organizations, in the legal sense; most of what you think of as orgs are projects that are legally hosted by a single org, and which governments therefore consider to be one legal entity.
The king umbrella is Effective Ventures Foundation, which hosts CEA, 80k, Longview, EA Funds, Giving What We Can, Asterisk magazine, Centre for Governance of AI, Forethought Foundation, Non-Trivial, and BlueDot Impact. Posts on the castle
also describe it
as an EVF project, although it's not listed on the website. Rethink Priorities has a
program
specifically to provide sponsorship to groups that need it. LessWrong/Lightcone is hosted by CFAR, and have sponsored at least one project themselves (source: me. It was my project).
Fiscal sponsorship has a number of advantages. It gets you the privileges of being a registered non-profit (501c3 in the US) without the time-consuming and expensive paperwork. That's a big deal if the project is small, time-limited (like mine was) or is an experiment you might abandon if you don't see results in four months. Even for large projects/~orgs, sharing a formal legal structure makes it easier to share resources like HR departments and accountants. In the short term, forming a legally independent organization seems like a lot of money and effort for the privilege of doing more paperwork.
The downsides of fiscal sponsorship
…are numerous, and grow as the projects involved do.
The public is rightly suspicious about projects that share a legal entity claiming to be independent, so bad PR for one risks splash damage for all. The government is very confident in its belief that you are the same legal entity, so legal risks are shared almost equally (iamnotalawyer). So sharing a legal structure automatically shares risk. That may be fixable, but the fix comes at its own cost.
The easiest thing to do is just take fewer risks. Don't buy retreat centers that could be described as lavish. And absolutely, 100%, don't voluntarily share any information about your interactions with FTX, especially if the benefits to doing so are intangible. So some amount of value is lost because the risk was worth it for an individual or small org, but not to the collective.
[it is killing me that I couldn't follow the
rule of three
with that list, but it turns out there aren't that many legible, publicly visible examples of decisions to not share information]
And then there are the coordination costs. Even if everyone in the legal org is okay with a particular risk, you now have an obligation to check with them.The answer is often "it's complicated", which leads to negotiations eating a lot of attention over things no one cares that much about. Even if there is some action everyone is comfortable with, you may not find it because it's too much work to negotiate between that many people (if you know anyone who lived in a group house during covid: remember how fun it was to negotiate safety rules between 6 people with different value functions and risk tolerances?).
Chilling effects
A long, complicated (but nonetheless simplified)example
The original version of this story was one paragraph long. It went something like: A leader at an EVF-sponsored project wanted to share some thoughts on a controversial issue, informally but in public.The comments were not riskless, but this person would happily have taken the risk if it affected only themselves or their organization. Someone at EVF said no. Boo, grrr.
I sent that versi...
What is fiscal sponsorship?
It's fairly common for EA orgs to provide fiscal sponsorship to other EA orgs. Wait, no, that sentence is not quite right. The more accurate sentence is that there are very few EA organizations, in the legal sense; most of what you think of as orgs are projects that are legally hosted by a single org, and which governments therefore consider to be one legal entity.
The king umbrella is Effective Ventures Foundation, which hosts CEA, 80k, Longview, EA Funds, Giving What We Can, Asterisk magazine, Centre for Governance of AI, Forethought Foundation, Non-Trivial, and BlueDot Impact. Posts on the castle
also describe it
as an EVF project, although it's not listed on the website. Rethink Priorities has a
program
specifically to provide sponsorship to groups that need it. LessWrong/Lightcone is hosted by CFAR, and have sponsored at least one project themselves (source: me. It was my project).
Fiscal sponsorship has a number of advantages. It gets you the privileges of being a registered non-profit (501c3 in the US) without the time-consuming and expensive paperwork. That's a big deal if the project is small, time-limited (like mine was) or is an experiment you might abandon if you don't see results in four months. Even for large projects/~orgs, sharing a formal legal structure makes it easier to share resources like HR departments and accountants. In the short term, forming a legally independent organization seems like a lot of money and effort for the privilege of doing more paperwork.
The downsides of fiscal sponsorship
…are numerous, and grow as the projects involved do.
The public is rightly suspicious about projects that share a legal entity claiming to be independent, so bad PR for one risks splash damage for all. The government is very confident in its belief that you are the same legal entity, so legal risks are shared almost equally (iamnotalawyer). So sharing a legal structure automatically shares risk. That may be fixable, but the fix comes at its own cost.
The easiest thing to do is just take fewer risks. Don't buy retreat centers that could be described as lavish. And absolutely, 100%, don't voluntarily share any information about your interactions with FTX, especially if the benefits to doing so are intangible. So some amount of value is lost because the risk was worth it for an individual or small org, but not to the collective.
[it is killing me that I couldn't follow the
rule of three
with that list, but it turns out there aren't that many legible, publicly visible examples of decisions to not share information]
And then there are the coordination costs. Even if everyone in the legal org is okay with a particular risk, you now have an obligation to check with them.The answer is often "it's complicated", which leads to negotiations eating a lot of attention over things no one cares that much about. Even if there is some action everyone is comfortable with, you may not find it because it's too much work to negotiate between that many people (if you know anyone who lived in a group house during covid: remember how fun it was to negotiate safety rules between 6 people with different value functions and risk tolerances?).
Chilling effects
A long, complicated (but nonetheless simplified)example
The original version of this story was one paragraph long. It went something like: A leader at an EVF-sponsored project wanted to share some thoughts on a controversial issue, informally but in public.The comments were not riskless, but this person would happily have taken the risk if it affected only themselves or their organization. Someone at EVF said no. Boo, grrr.
I sent that versi...