The fungibility question: How does GiveWell’s funding affect other funders?

How do GiveWell’s funding decisions influence the actions of governments, funders, and other organizations? Answering this question is an important part of figuring out which global health programs are most cost-effective and thus which we should support. We’ve already written about two key factors in our cost-effectiveness estimates: the cost per person reached and the overall burden of the problem. But those are only part of the equation.
We also consider what others are likely to do in response to our choices. For example, does our funding displace money the local government had planned to allocate to the program? Or would our funding make other funders more excited to join us in making sure the program is implemented?
Wedding registries provide a loose analogy about how one person’s decision might influence another’s: If great-aunt Sally already bought the toaster on the list, you’re probably not going to buy the lucky couple another one. The money she spent on the toaster has displaced the funding you had planned to allocate to the toaster: this is what we call “fungibility.”
In contrast, if the spouses-to-be have signed up for flatware service for 12 and other guests have purchased only 6 settings, you might prioritize filling out the remainder of the set, to be sure that the couple doesn’t run out of spoons at their upcoming dinner parties. In that case, the guests who purchased the first 6 settings are “crowding in” funding from you: this is what we call “leverage.”
Let’s think about how this might apply to health programs. Suppose we’re considering a $10 million grant for a program to increase childhood vaccination in (fictional) Beleriand. GiveWell’s initial cost-effectiveness estimate showed that the program was almost 20x as cost-effective as unconditional cash transfers. (We use cash transfers as a benchmark for comparing different programs.) This estimate makes the program initially seem like a good candidate for funding, as it surpasses our current cost-effectiveness threshold of 10x.
But what if there was a possibility that the government would have funded the program if GiveWell hadn’t? Because money is fungible, our $10 million grant would displace funds that may have been allocated by the government, freeing up the government to spend its $10 million in some other way. The arrival of the funding has

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