80,000 Hours finance report

Summary

(N.B. figures are rounded.)

Current financial situation

As of April 2014, 80,000 Hours had £148,000 in reserves. This would represent 16 months of reserves at current rates of spending or 12.5 months of reserves if we follow our target budget, which would have us spend £130,000 over 2014. This £130,000 would be primarily spent on staff salaries (£68,000), intern support expenses and accommodation (£24,000) and office rent (£10,000).

Historical spending

In 2013, 80,000 Hours spent £124,000, or around £10,000 per month. From January through March 2014 80,000 Hours spent £28,000, or around £9,000 per month, slightly under the £31,000 budgeted. Since its founding in 2012 until April 2014 80,000 Hours has spent £176,000.

Historical income

In 2013 80,000 Hours received £175,000 in donations, of which £150,000 were specifically restricted to 80,000 Hours by donors and the remainder was given without restriction to our parent organisation, the Centre for Effective Altruism. From January through March 2014 80,000 Hours has received a further £92,000, of which £73,000 was restricted to 80,000 Hours by donors. Since its founding in 2012 until April 2014 80,000 Hours has received a total of £301,000.

Fundraising targets

We are currently looking to raise an additional £40,000. This would cover our remaining shortfall for 2014, and give us the option to hire an additional staff member to focus on research and coaching. Making this goal would mean we could end fundraising for the rest of 2014, and fully focus on developing our programs.

If you’re interested in donating, please see our summary business plan and the rest of the annual review for more information. you can find out how to donate here. If you have any questions, contact Robert Wiblin at development@80000hours.org.


Historical spending

Throughout this report figures are rounded where appropriate.

Audited budget, July 2012 – June 2013

Q3 2012Q4 2012Q1 2013Q2 2013Total
Employees£4,718£7,117£11,712£10,420£33,968
Intern expenses and accommodation£1,639£4,088£10,601£10,280£26,609
Office£0£2,039£1,624£1,049£4,712
Chapters, communications and events£220£269£216£1,181£1,886
Technical£375£264£62£356£1,057
Charges on donations£0£716£1,455£147£2,318
Legal and financial£119£720£420£591£1,851
Miscellaneous minor expenses£251£634£146£166£1,196
Total of all costs£7,323£15,848£26,236£24,190£73,597

As-yet unaudited budget, July 2013 onwards

Q3 2013Q4 2013Total
Employees£11,923£15,297£27,220
Intern expenses and accommodation£19,793£8,796£28,589
Office£5,460£3,596£9,055
Chapters, communications and events£4,262£907£5,169
Charges on donations£1,526£200£1,726
Other£998£824£1,822
Total of all costs£43,961£29,620£73,581

Average number of staff and interns over time

Q3 2012Q4 2012Q1 2013Q2 2013Q3 2013Q4 2013
80,000 Hours staff112112
Share of central staff0.50.50.50.50.661
80,000 Hours interns2.66333.553
Share of central interns0.330.50.50.661.51

What drove spending increases in the second half of 2013?

Spending rose as we took on a second staff member and a number of interns who were available in the second half of 2013, particularly over summer. This required us to rent new houses in order to provide them with accommodation. We also moved into a more professional and larger office in the University of Oxford. This raised our office rent and resulted in some other one-off costs. Collectively this increased costs, especially in Q3 2013.

In 2014, costs have declined due to reductions in the number of interns working. In addition, two new projects were started by CEA, reducing our share of costs for the central team from roughly 50% to 45%.

Historical Fundraising

In 2013, 80,000 Hours received £175,000 in donations. In 2014 through the end of March, 80,000 Hours received a further £93,000.

Since its founding, 80,000 Hours has raised £232,000 directly and received a further £67,000 in unrestricted donations through CEA.

Income

2H 20121H 20132H 2013Q1 2014Total
80,000 Hour restricted income£13,808£75,810£71,696£72,862£234,176
Share of unrestricted income£18,800£3,500£24,100£20,100£66,500
Total of all income£32,608£79,310£95,796£92,962£300,676

Key supporters

SupporterBackgroundSupport to date
Jaan TallinnCo-founder of Skype, Kazaa, MetaMed£12,500 per year, on-going.
Fred MulderFounder of The Funding Network, art dealer£30,000 per year for three years starting February 2013. One more payment next year.
Matt WageAnalyst at a major quantitative trading firm, coaching alumni£70,000 in the last 18 months.
Luke DingFormer hedge fund manager at Brevan Howard£30,000 in the last year.
AnonymousFounder and Chairman of a major mutual fund.£10,000 per year for three years from September 2012. One more payment this year.
Tony PurnellFounder of Pi Research, Professor of Engineering at Cambridge£10,000 last year.
Jeff Kaufman and Julia WiseGoogle software engineer and social worker£10,000 per year for two years.
Patrick Brinich-LangloisSoftware engineer£10,000 per year for two years.
van Houten FundUniversity of Oxford project fund, bequeathed by Georges van Houten£10,000 grant over two years.
Alexander Gordon-BrownAnalyst at a major quantitative trading firm£10,000 in the last year.

Financial security

Besides cash reserves on hand, our financial security depends on (i) the accuracy of our income projections, and (ii) the depth and diversity of our donor base.

In August last year CEA forecast receiving between £300,000 and £400,000 in

the 2013 fundraising year. In fact CEA received £340,000, roughly in the middle

of these estimates. Since then, we have further improved our process for predicting income, so overall, absent a significant shift in strategy, we expect our income projections to be realistic.

Over the past year, we added three donors who have given more than £10,000, substantially increasing the diversity of our donor base. Overall, we think we have a strong base of donors, though there is room to become less reliant on the effective altruism community and our largest donor, Matt Wage.

Projected spending

With current staffing

If we maintain our current staffing, with two staff on 80,000 Hours, and a 40% share of three staff in central, this will cost £115,000 across 2014.

FY 2014
3.5 employees pay/tax£68,310
2.5 interns support/housing expenses£24,245
Office expenses£9,688
Contract workers£2,159
Events£3,145
Advertising and website£1,770
Training£591
Other costs£11,455
Total£121,362

Target budget

However, our intention is to take on one third-time staff member focusing on tech from May and an additional full-time staff member focusing on research from July. Following this budget in 2014 would cost an extra £15,000, bringing the total to £130k.

If we were to continue through 2015 at this target level of staffing, we would spend a bit over £155,000.

Our target in 2015 is to add one further staff member and probably upgrade our part-time web developer to full-time by July 2015. Each new staff member costs approximately £21,000 in their first year, so these two changes would raise expenditure by nearly £20,000. Our full budget in 2015 in this target case would be around £175,000. To continue at this same level through 2016 would cost approximately £195,000.

Current financial situation

At the start of April 2014, 80,000 Hours had £148,000 in reserves. This would represent 16 months of reserves at current rates of spending or 12.5 months of reserves if we follow our target budget, which would have us spent £130,000 over 2014.

Fundraising targets

Previous fundraising target

At the start of March 2014, we set two targets:

  • Our primary target was to raise £55,000 from new donors by the end of April to cover the remainder of our development phase. This broke down into £30,000 to bring us to 12 months of reserves and £25,000 to cover an additional staff member for a year.

  • Our secondary target was to raise an additional £25,000 to cover a second new staff member.

Since then, we have raised £40,000 from two new donors.

Updated fundraising target

During this review, we updated all of our figures and targets.

Our new primary target is to raise £10,000 by the end of June. This would cover the remainder of our 2014 budget and give us six months of reserves. This would enable us to hire an additional team member, focused on research, and enable the team to fully focus on improving the online content for the rest of the year.

The target breaks down as follows:

  • We predict spending of £100,000 over the rest of 2014 from May.

  • In order to have six of months’ reserves at the end of 2014, we require an additional £78,000.

  • We have commitments of £19,000 from existing donors over the rest of 2014.

  • We expect to have £149,000 in reserves at the end of April.

  • So, we require 100 + 78 – 19 – 149 = £10k in additional funds.

Note that this target is £5,000 below our previous target because our projected costs are slightly lower than previously.

Our secondary target is to raise an additional £30,000. This would allow us to hire a second new staff member. They would initially contribute to developing the online content, but next year would specialise in outreach. This would let us complete our ideal execution phase team: myself, our share of central CEA, and specialists in coaching, research, web development and outreach.

This is £5,000 greater than our previous target, because we recalculated the associated overhead costs, and want to have the option to pay a slightly higher starting salary than the normal £18,000.

If we are unable to hire a second new staff member within 2014, then these funds will be used to cover our 2015 budget, giving us the option to cease fundraising until March 2015.

I’m interested in donating, what should I do?

If you’re interested in donating, please see our summary business plan and the rest of the annual review for more information. you can find out how to donate here. If you have any questions, contact Robert Wiblin at development@80000hours.org.


Appendix – Financial policies

Staff salaries

Our current policy is that all staff start on £18,000 per year, and this increases by £1,000 every six months. We implemented this policy in autumn 2012, raising the salaries from £15,000 per year.

Our highest paid staff members are Rob and Ben, who will receive around £21,000 over 2014.

We are open to paying higher salaries for more experienced staff, but this hasn’t been required in hiring so far.

Our interns are able to stay in houses we rent and receive £10 per day in expenses, if needed. In addition, we sometimes meet travel and visa expenses for interns who do not live in the UK.

Reserves policy

We strongly prioritise having at least 6 months of cash reserves, and aim to maintain at least 12 months. We regard 6 months as probably not providing enough margin for error, and will avoid any expansion while reserves are below 6 months.

We chose this level because:

  • It is difficult to change our income or expenses in less than 6-12 months. On the income side, it takes between 3-18 months between starting to fundraise and receiving the income. On the expenses side, we typically make annual commitments to staff, rent and other expenses, so can’t easily reduce expenses within 12 months. Overall, six months of reserves gives us a reasonable margin for error if a round of fundraising goes worse than expected, and twelve months is better still. The benefits start to diminish after 18 months’ reserves.

  • Twelve months’ reserves also means that we only need to fundraise every six months in order to maintain six months of reserves. Batching fundraising is a significant benefit, because fundraising absorbs the focus of our core staff. 18 months of reserves is even better, because it allows us to fundraise once a year.

  • In addition, it is conventional in the charity sector to have 3-12 months of cash reserves, and seems to be regarded as good practice to have 6-18. For instance, GiveWell prefers charities to have at least 6 months of reserves (though regards more than 24 months as worrying or unnecessary). Charity Navigator gives higher scores to charities who have at least 6 months of reserves, with the highest scores going to charities that have at least 12 months of reserves.