As requested in this post, I am writing a full post on our most cost-effective fundraising project: Solar pumps for income generation in Malawi.
What is the impact of a marginal donation?
Every $100 of marginal donation will add one brushless DC pump and 100m of irrigation hose to a container shipment of solar equipment that we will purchase in February to be delivered to low-income rural women's groups and farmers in rural Malawi starting in June 2024.
People can donate at:
https://www.omprakash.org/global/solar4africa/donate/
Our general website is:
Our educational work with UC Berkeley EA students can be seen at:
https://www.solar4africa.org/technical-details/fall-2023-student-projects
Between now and the end of the year, the marginal donation provides a subsidy that makes a solar pumping system affordable to very low income farmers. The pump and irrigation hose is subsidized, while the farmers are required to purchase the solar panels at market prices for running the pump.
Using this subsidy model, we distributed about 800 solar pumping systems to women's groups and small farmers in rural Malawi from June to September 2023. We interviewed a few beneficiaries and we forecast impacts of pump system ownership of roughly $20 to $30 of new, net income generated per $1 of donated subsidy based on preliminary impact estimates that are described in this report:
For 2024, we will distribute longer irrigation hoses, larger solar panels and longer lasting pumps in order to increase the irrigated area and the net income that can be generated by each pumping system. We will also encourage greater amounts of income generation by encouraging beneficiaries to grow two crop rotations during the dry season each year instead of just one.
In this way we hope to increase donation impact leverage from the current ~20:1 to a level that is hopefully greater than 50:1.
Given our experience distributing solar pumps last summer, we can try to roughly estimate a diminishing returns curve given our current distribution constraints.
Roughly the maximum in EA donations that we think that we could efficiently absorb for 2024 currently is about $400k (i.e. the cost if a full 40-foot container load of pumps and hoses). At that level, I estimate that the marginal impact leverage would likely drop about 10:1 because there would be challenges and costs associated with expanding the distribution network beyond 4000 systems given our current capacity.
On the other hand, if our donations are less that $100k, then demand for pumps in our current distribution network will exceed supply and we will be focusing much of our effort/bandwidth on further increasing our impact through improvements in our cost efficiency (e.g. by decreasing the subsidy). In that case, we will have bandwidth to increase distribution and customer support efficiencies and perhaps also decrease pump system subsidy levels and reliance on donor funds. Then our hope is that our marginal impact leverage will increase to something closer to 50:1. Thus over the next year, we have diminishing marginal returns as a function of marginal donation volume.
Note, Open Philanthropy's threshold for impact marginal cost-effectiveness (MCE) is "increasing income for 4 people by ~1% for a year for $1" which corresponds four "people-percent-years" (PPY) of impact per $1.
Doing a rough interpolation of the above-described endpoints for our $1/capita/day customers, our diminishing returns curve for 2024 might look like the following:
Donations. Impact Leverage MCE [PPY/$1 donated]
~$50k. --> 50:1 13
~$150k. --> 40:1 11
~$300k. --> 25:1 7
~$400k. --> 10:1 3
Note that any donor can monitor the total donations in real time for the project at the donation link above, and donate only if the donations is at a level that corresponds to their impact leverage or MCE target. Our hope is that we will meet the Open Philanthropy threshold of 4 PPY/$1 for any total donation level below $350k, and at low donation levels, we hope to beat the Open Philanthropy MCE threshold by ~4X.
We know it would be ideal if our estimates could be verified through Randomized Control Trials (RCTs). But unfortunately, we are currently too small and too early in our development to do RCT studies. So how might an enthusiastic, dedicated, but skeptical EA verify our numbers for themselves?
Well, we encourage any dedicated and serious members of the EA community who are excited by this intervention to contact us and come to Malawi next summer if they are interested in evaluating impact for themselves. We need such EAs to cover their own expenses and volunteer/stay for four weeks or more in order to have time to do a significant amount of data collection. The visit would have to happen some time between June and August for us to be able to support and host the volunteer. Such a volunteer would help us measure impacts and help us figure out the details of how to most effectively increase impact cost effectiveness to the higher levels (i.e. 50:1) that we aspire to.
In this way a dedicated and serious EA donor can have the opportunity to try to measure the impact cost-effectiveness themselves and the donor does not have to rely solely on the information that we provide to verify the impact of the EA donation.
How do I hope we can do our follow-up reporting to the EA community?
In March, I will try to report back on our estimate of the total pump and hose purchases that were provided by the EA community vs. the non-EA community. Thus at that time we will see marginal EA impact in terms of number of pumps and hoses provided/ordered.
And then in Sept/October after distributing the pumping systems and semi-randomly visiting and interviewing beneficiaries, I will try to report back on our best forecast of average and marginal impacts. I hope to also provide my best estimate of the marginal donation gap. This gap will be an estimate of the potential unmet need of beneficiaries who were not served because a limited supply of pumps and hoses delivered. This will provide an estimate of the "opportunity lost" due to the project not meeting its full potential next summer. We will try to make an estimate of the potential benefit to the marginal unserved beneficiary, so that we can compare that to the diminishing returns forecast provided above.
Ideally, because we have a clear diminishing returns curve forecast, my hope is that this allows for the 'EA donation market' to set its 'price' for its 'willingness to donate' relative to the impact leverage ratio that we think we can achieve. Then if we can do an ex-post estimate of whether the marginal lost opportunity was close to that price in practice, then we get to see how efficiently the EA donation market is working for a small project like this.
Thank you for your attention and consideration. I hope the community finds this donation/market/price-discovery impact experiment helpful and interesting.