Is Fundraising for Nonprofits a "Zero-Sum Game"?

If you work or want to work in fundraising, it is crucial to reflect on the impact your work might have.

Not all fundraising is equal. In fact, some fundraising might even do more harm than good.

Our fundraising skills profile provides an introduction to fundraising for nonprofits in animal advocacy. In this article, we take a deeper dive into some of our most important research that will help you make the most of your fundraising work — and actually create a high positive impact.

Is fundraising for nonprofits a “zero-sum game”?

It has been suggested that fundraising for nonprofits is what economists would call a “zero-sum game”; a gain in funding for one nonprofit requires an equal loss in funding for other nonprofits. This loss could be spread across vast numbers of other nonprofits, so even a large gain for a particular nonprofit would probably be imperceptible to other nonprofits.

Indeed, the total amount of charitable giving in the US seems to have hovered around 2% GDP for years (source here, plus here and here relative to GDP) suggesting that most additional fundraising for charity doesn’t really “raise” money — it just moves it from one nonprofit to another.

Bad news? It gets worse, unfortunately. (But don’t give up hope yet… there’s good news below.)

Fundraising for nonprofits can cause harm

If fundraising for nonprofits is a zero-sum game, we should expect that, as 80,000 Hours explain, “most fundraisers at the margin are shifting money to charities that are less effective than the average charity.” Here’s why:

If you graph how cost-effective charities are… the median is significantly less than the mean. In other words, the effectiveness of the majority of charities is less than the effectiveness of the average charity. That sounds a bit odd, but it’s just because the average effectiveness is pulled up a long way by the small number of really good charities at the top. (Similarly, the average wage at a company is normally higher than what the majority of the staff are paid).

This means that most fundraisers at the margin are shifting money to charities that are less effective than the average charity. So, they are reducing the overall effectiveness of the charity sector. They are actually reducing how much good gets done!

This may seem demoralising. However, there are a couple of reasons to be cheerful.

Fundraising for charity isn’t quite a zero-sum game

Firstly, charitable giving isn’t entirely fixed. Widespread use of effective fundraising techniques (or any long-term, indirect processes mostly outside your control) could plausibly change the total amount of funding raised for nonprofits.

I said that the total amount of charitable giving in the US seems to have hovered around 2% of GDP for years, but it has in fact increased a small amount, from around 2.11% to around 2.25% between 2016 and 2020. This isn’t very reassuring though, because that’s quite a small increase.

Some nonprofit fundraising is very impactful anyway

Secondly, and much more importantly, as highlighted by 80,000 Hours’ article: if you “work for charities that are more cost-effective than the mean,” you are “shifting money from less effective charities to more effective ones, potentially doing a huge amount of good.”

The total donated to the combined category of environmental and animal causes by US donors increased by 46% from 2016 to 2020 ($11.05bn → $16.14bn, an increase that beat cumulative inflation of 7.84% by a substantial margin).[1] Farmed Animal Funders note that, having surveyed groups a few different times, funding in the farmed animal movement is “growing at what could be described as a quick pace.”

So, sure, fundraising for charity in general might not do much to grow the overall amounts of money donated, but you might be able to increase the total funding for a particular cause area by attracting donations that would otherwise have gone to other cause areas.

This could be incredibly impactful.

Some charities are plausibly orders of magnitude (i.e. 10, 100, 1000, or more times) more impactful than others. Large differences might occur between different cause areas.

For example, this comparison between The Humane League (an unusually cost-effective animal charity) and the Against Malaria Foundation (an unusually cost-effective human health charity) concludes that, “in expectation, THL is >100x better than AMF,” although they note a lot of uncertainties. Global health is in itself arguably a cause area with opportunities to do a huge amount of good relatively easily. So consider that fundraising for effective animal advocacy charities might look even more impactful if you thought that most of the funding would be redirected from other cause areas.

This principle of large potential differences in the cost-effectiveness of different charities might also hold when comparing the cost-effectiveness of different animal advocacy charities.

As a simple demonstration of this claim, consider that there are roughly 1,000 times as many vertebrate farmed animals alive as vertebrate lab animals: very roughly about 150 billion, compared to (at least) 100 million.[2] Now imagine that, for the same cost, one group of charities might reduce the number of farmed animals by 0.1% and another might reduce the number of lab animals by 0.1%. Given the huge differences in the relative number of animals, the former group would likely reduce orders of magnitude more suffering.

More concretely, the mid-points and best guess estimates of expected value for different intervention types given by Animal Charity Evaluators (at least, in their archived intervention reports) and Charity Entrepreneurship also suggest that several orders of magnitude of differences in cost-effectiveness are possible between different farmed animal interventions.

This is part 1 of an article on our website that has 5 sections:

1. Is fundraising for nonprofits a “zero-sum game”?
2. Effective fundraising: Are all dollars equal?
3. How much money do you need to raise to make fundraising for animals worthwhile?
4. Who can we fundraise from?
5. Research into effective fundraising for animal advocacy

Read all about Fundraising for Effective Animal Advocacy on our website.