It’s the end of the financial year, and a lot of us are donating this week. Some of that is the tax deduction, which makes now the sensible time to give. That’s fair. But it’s worth noticing the the deduction nudges our giving toward whatever happens to be tax-deductible, rather than whatever does the most good.
A charity twice as effective does twice as much good with your dollar, whether or not you can claim it. The deduction doesn’t change what your gift achieves in the world. So if you give half as much to a charity that’s twice as effective — even one you can’t claim a cent on — you’ve done as much good as the full deductible gift. Even at the highest Australian marginal tax rate, a deduction hands back less than half of what you gave.
And the gaps between charities are far bigger than the gap a deduction makes. The best global health charities can do tens or even hundreds of times more good per dollar than an average one. A deduction is small compared to a difference like that. If we’re going to optimise anything about our giving, it should be effectiveness.
You don’t have to work this out for yourself, either. Independent evaluators like GiveWell do the work to find the charities that save or improve the most lives per dollar, and there are equivalents for other causes like Animal Charity Evaluators.
This has shaped much of my life. I’ve come to treat my career as one of the main tools I have for doing good for two reasons.
Sometimes the work itself is the impact. That’s a big part of what drew me into energy — it’s a field where getting the policy and the infrastructure right matters enormously for a lot of people and for the climate over a very long time.
The other way is simpler: the income funds my giving. Money directed well saves and improves lives.
A while ago I decided to live below a set amount each year and give everything above it to the most effective causes I can find. I worked out what I needed for a good life and fixed it.
It’s never felt like a sacrifice, and it’s even removed some of the guilt I had about not doing more.
Last year, this giving went to Good Ancestors. They’re an Australian charity working to improve the long-term future — AI safety and governance, pandemic preparedness, and policy for the kinds of catastrophic risks that no one is paid to worry about until it’s too late.
Part of what I find compelling is their thesis about leverage. The big powers are already saturated with well-funded advocacy on these issues. Australia is a middle power — big enough to matter to international decisions, and small enough that careful, well-aimed work can still move things. A dollar of advocacy here can buy more influence than the same dollar spent in a highly lobbied country. And they’ve done important work on Australia’s disaster readiness, pushing for serious assessment of AI risk inside government, even technical AI-safety research with the UK’s AI Security Institute. For a small organisation, the footprint is large.
Despite this impact, Good Ancestors is not tax-deductible because, to claim a gift in Australia, a charity needs deductible gift recipient status, which is only granted to organisations that fit a fixed list of categories written into the tax law: health, education, poverty relief, the environment. Work on AI safety, pandemics, or long-term catastrophic risk doesn’t fit any of those boxes, so however valuable it is, you can’t deduct a donation to it. Deductibility doesn’t correlate to how much good it does, which should be fixed. The list wasn’t written with this century’s risks in mind. I believe tax law should play a role in steering people to the most effective giving, and the Productivity Commission has flagged the system for reform.
I gave to Good Ancestors anyway, because I think it’s one of the highest-impact things I can do with that money.
This isn’t a comfortable thing to write. Money and giving are a private thing. I sat on this for a while. But this is one of the most important things in my life. It’s the framework I’ve used to make almost every big decision I’ve made, and staying quiet about it started to feel dishonest. If sharing this nudges even one person to think differently about where their giving goes, that seems worth a bit of awkwardness on my part. That’s my small offering for the end of this financial year. Not necessarily give more, just notice that the deduction may be guiding you away from what matters.