I'm mostly aligned with the Seema's view, though I think it's systematic of a wider problem in which funders pay more than their grantees almost universally. I've experienced at both IDinsight (where I was Chief Economist) and Rethink Priorities (where I'm on the board) a steady drumbeat of top talent going to funders, including GiveWell and Coefficient. I don't believe this happens because of any careful thinking on where talent is best allocated in the sector, but instead because (a) foundations just can pay more because they don't have a binding budget constraint and (b) even if they do have enough money (which they typically don't) nonprofits need to be careful about salaries because top salaries are public on 990 forms and donors will be scared away by large salaries.

When I've spoken with friends at funding orgs and brought up the issue of salary disparity, I've usually heard some version of attempting to align salaries with other foundations or the private sector. But that doesn't address this imbalance between foundations and NGOs/grantees in their space. 

After spending some side on both the donee side as well as the donor side (with Giving Green), my opinion is that giving away money is easier and more fun day-to-day than working for an org where you have to fundraise and/or serve demanding clients. Therefore I don't fundamentally think that donor orgs need to pay more to attract similar level of talent as NGOs. But trying to fix the coordination problem required to shift norms in the sector is likely impossible. 

Hi Seema, thanks for this thoughtful post! I work as a grantmaker at Coefficient Giving (formerly Open Phil) and I’ve had similar thoughts in the past. Last year, CG began offering a modest severance package for staff who leave voluntarily to mitigate the golden handcuffs effect. Anecdotally, a number of colleagues have left for lower-paying jobs at other impactful nonprofits over the past year. It’s hard to say whether staff would pursue other opportunities more often if CG paid less, but it’s been reassuring to see that some staff feel comfortable leaving and the decision is celebrated by the org.

CG’s HR team also regularly conducts benchmarking exercises to sense-check that staff compensation is in line with other foundations and roles with similar levels of responsibility. Overall, CG (and I strongly suspect GW) spends considerably less on opex than peer foundations. Staff fly economy, bureaucracy is low, and people have the tools they need to work efficiently so the ratio of money moved per FTE is high.

A number of CG and GW staff members choose to donate some of their pay, and CG/GW may have this in mind when setting compensation. Personally, I’ve passed up pay or donated a little over half my income this year. Some staff use part of their pay for childcare, which helps them achieve their professional ambitions while maintaining work-life balance.

I share the concern that the ecosystem effects of drawing talent through high salaries may be under-appreciated. But when I zoom out, I directionally think that increasing compensation in the social impact space is valuable. For example, there has been a push to increase salaries in the animal advocacy field in recent years and my understanding is that this has increased professionalism and decreased workplace harassment - employers have a larger talent pool to draw from, and have an easier time replacing problematic employees. 

Of course, there are always tradeoffs, and I sometimes feel uncomfortable that orgs working to end poverty offer lavish compensation (even by US standards). But all things considered, I think there are fair reasons why an org like GiveWell would choose the compensation structure it does.

On an unrelated note, I help organize Princeton’s Effective Altruism student group. We and the School for Moral Ambition club would love to host you at an event to discuss your work when you’re back from sabbatical - it’s wonderful to have a fellow randomista on campus!

My - purely anecdotal - sense is that GiveWell pays more than many of its social sector peers. 

To put some numbers on this, here is the data from GiveWell's 990 in 2023 -- these do appear to be the highest-paid eleven employees (which is not always the case on the 990)

Thanks for the post. I think the golden handcuffs concern is worth flagging, but it's likely outweighed by the bigger problem: talented people who never enter the social sector because they can't afford the pay cut.

There's also a structural issue here. Nonprofits can underpay because they're extracting a "mission commitment subsidy" from employees. And this gets reinforced by funders/donors who often treat salaries as wasteful overhead rather than core inputs to doing good work. That creates perverse incentives where orgs compete to look "efficient" by under-investing in people.

Somewhat obvious note: These organizations can pay more because they're exceptionally well-funded. The real issue isn't that some orgs pay well, it's the unevenness. If compensation were uniformly reasonable across the sector, people could move based on impact and fit rather than financial need. 

That all said, publishing compensation philosophies would be broadly beneficial (and more fully in line with transparency). 

(FWIW, these points are also broadly true in the public sector.)

If donors thought the other thing was more valuable than GiveWell, they should donate there instead, and that other group could then pay higher salaries and attract the talent.

I think this is generally true, but not sure that GiveWell is the best example of competition in social sector peers, since they seem mainly focused on hiring Western-based number crunchers who might otherwise be at a university or analysing financial data in the commercial sector, rather than poaching a small pool of educated staff from local NGOs or the best-networked, highest-performing grant fundraisers in the West.

GiveWell has internal documentation about our compensation philosophy. I'm not going to quote it directly, but the gist is: "We don't want to overpay because that would be financially irresponsible and we don't want to underpay because that would inhibit our ability to execute our mission." Like Coefficient Giving (see Sam Anschell's comment), we benchmark our compensation to organizations that we think (1) do similar work and (2) try to hire similar talent. Our policy as written doesn't consider the spillover effects of our approach to compensation (e.g. its effects on the optimality of talent allocation between impact-focused organizations).

It's also worth noting that the unique setup of our retirement benefits (we increase salaries in lieu of offering e.g. a % match on 401k contributions) makes total compensation a better cross-org comparator than salary. But, I'm just making a pedantic point here, not trying to sneakily imply that GiveWell's total compensation isn't higher than many impact-focused organizations - it is!

Thanks for the post, Seema! Staying at a higher-paying less directly impactful job may make sense to donate more. Impact can be doubled by donating 10 pp more of gross income to interventions 10 times as cost-effective as one's own direct work.