Much business ethics and corporate social responsibility literature suggests, implicitly or explicitly, that firms ought to engage in activities that can be characterized as philanthropy, namely, expending resources beyond what is required by law and market norms to promote others’ welfare at the expense of firm profits. However, this literature has struggled to provide a normative framework for evaluating corporate philanthropy, although scholars have noted that such expenditures can potentially remedy market failures and provide public goods more efficiently. I articulate two specific rationales that can justify corporate philanthropy based on considerations of welfare economics: 1) firms making strategic but high-risk investments in activities that are likely to generate positive externalities even if they prove unprofitable and 2) firms possessing a strong comparative advantage in their ability to address a social problem at lower social cost. Moreover, these rationales can be evaluated by a concept I develop called the philanthropy multiplier, indicating the ratio of net positive externalities to net costs. I suggest that firms consider publicizing their philanthropy multipliers, and I discuss theoretical and practical implications.

Some charities are much more cost-effective than other charities, which means that they can save many more lives with the same amount of money. Yet most donations do not go to the most effective charities. Why is that? We hypothesized that part of the reason is that people underestimate how much more effective the most effective charities are compared with the average charity. Thus, they do not know how much more good they could do if they donated to the most effective charities. We studied this hypothesis using samples of the general population, students, experts, and effective altruists in five studies. We found that lay people estimated that among charities helping the global poor, the most effective charities are 1.5 times more effective than the average charity (Studies 1 and 2). Effective altruists, in contrast, estimated the difference to be factor 50 (Study 3) and experts estimated the factor to be 100 (Study 4). We found that participants donated more to the most effective charity, and less to an average charity, when informed about the large difference in cost-effectiveness (Study 5). In conclusion, misconceptions about the difference in effectiveness between charities is thus likely one reason, among many, why people donate ineffectively.

When people donate, they rarely give to the charities that do the most good perdollar. Why is this? One possibility is that they do not know how to giveeffectively. Another possibility is that they are not motivated to do so. Acrosssix tasks (Studies 1a, 1b), we found support for both explanations. Among laydonors, we observed multiple misconceptions—regarding disaster relief,overhead costs, donation splitting, and the relative effectiveness of local andforeign charities—that reduced the effectiveness of their giving.Similarly, we found that they were unfamiliar with the most effective charities(Studies 2a, 2b). Debunking these misconceptions and informing people abouteffectiveness boosted effective donations; however, a portion of lay donorscontinued to give ineffectively to satisfy their personal preferences. Bycontrast, a sample of self-identified effective altruists gave effectivelyacross all tasks. They exhibited none of the misconceptions that we observedamong lay donors and overwhelmingly favored the most effective option in theirchoice set (Study 3). Taken together, our studies imply that donors need to beboth informed and motivated to give effectively on a consistent basis.

Effective altruism (EA) requires that when we donate to charity, we maximize the beneficial impact of our donations. While we are in broad sympathy with EA, we raise a practical problem for EA, which is that there is a crucial empirical presupposition implicit in its charity assessment methods which is false in many contexts. This is the presupposition that the magnitude of the benefits (or harms) generated by some charity vary continuously in the scale of the intervention performed. We characterize a wide class of cases where this assumption fails, and then draw out the normative implications of this fact.

Transnational altruism comes in many forms, prominently among them private giving through charitable NGOs. This paper focuses on the altruistic actions of those giving to charitable organizations and especially on the subsequent altruistic choices of those second-order, donor-organizations. Leaving choices about how donated money should be used exclusively in the hands of donors is morally problematic in various ways. This is why transnational relationships that involve private giving from rich to poor should be democratized. We propose thus a new moral principle for guiding altruistic behavior: democratic altruism. We develop our argument by focusing on the moral powers and formative agency that donors exercise through their charitable behavior, in particular through their choice to support particular types of aid or organizations. We argue that if and when donors give, they should do so in a way that allows the poor to exercise formative agency as well, in decisions over how donated resources should be used on the ground.

One of the main objections against effective altruism (EA) is the so-called institutional critique, according to which the EA movement neglects interventions that affect large-scale institutions. Alexander Dietz has recently put forward an interesting version of this critique, based on a theoretical problem affecting act-utilitarianism, which he deems as potentially conclusive against effective altruism. In this article I argue that his critique is not as promising as it seems. I then go on to propose another version of the institutional critique. In contrast to Dietz's version, it targets not the core principles of effective altruism but rather some important methodological assumptions made in EA research, namely diminishing marginal returns and low-hanging fruits. One key conclusion is that it may be time for critics of effective altruism to shift their attention from the theoretical core principles of effective altruism towards the methodological tools actually employed in practice by the EA movement.