In the past few years, we have introduced a new element to our work by redefining UP's default option. Previously, we would fund each opportunity that we found compelling, with little emphasis on the year-end total. We were reluctant to set a predefined grantmaking budget because we felt that the expectation to fund at a certain level might create pressure to fund some less-than-compelling opportunities.
Therefore, UP has set a minimum level of funding of $3 million. If we find great opportunities that exceed that target, we will pursue them. If we do not achieve this level of aggregate funding, the entire shortfall will be transferred toGiveDirectly for the benefit of households experiencing extreme poverty.
We credit philosopher Peter Singer for the inspiration of this concept. His writings prompted us to ask the provocative question, "If UP's assets were stored in the financial accounts of the world’s poorest individuals, what alternative uses would be sufficiently compelling to justify recalling the capital?” By adopting GiveDirectly as our default option, we aim to impose a high quality hurdle with respect to the allocation of each incremental dollar.
While we recognize that $3 million is merely a drop in the bucket of philanthropic capital, one of UP’s tenets has always been that small amounts of funding married to robust ideas can have outsized impact when the sector follows. Perhaps the adoption of cash transfers as a default funding option is one such idea that could be broadly adopted by the philanthropic sector.
A second benefit of this approach is that it gives us a standard benchmark against which to measure potential awards. With the understanding that all of our annual grantmaking budget could go directly to the poor, our investment decisions must clear that hurdle and provide some justification for allocating resources elsewhere.
We appreciate the important role that philanthropic capital can play in de-risking new ideas and models; UP’s mission to support initiatives that can use finite philanthropic capital to achieve impact at scale has not changed. Rather, we see this exercise in imagining an alternative default as a way to ensure that UP prioritizes systems-change opportunities with outsized impact.