80,000 Hours finance report April 2015

In this report, we outline our income, expenses, projected budget and financial situation as of the end of March 2015.

All figures are in British pounds.

Historical Spending

Audited budget, Jan 2014 – Dec 2014

Q1 2014Q2 2014Q3 2014Q4 20142014 Totals
80,000 Hours Employees10,32810,13610,87811,41442,757
80,000 Hours’ share of central employees6,6588,5994,5974,55524,409
Intern expenses and accommodation6,0233,7722,1192,13614,051
Office4,1273,2801,8692,34511,621
Chapters, communications and events2781,1521,371172,818
Technical, research and online activities6544161,0931,9964,160
Charges on donations111785102215
Legal and financial71,0342331761,449
Training, conferences and travel514-1,7805,1818094,723
Miscellaneous minor expenses (incurred by CEA)6006631924111,866
Miscellaneous minor expenses (incurred by 80,000 hours)1,0441564,3325,72611,257
Total of all expenditure30,24527,44431,95129,687119,326
Annual currency gain/loss-2,957
total of all costs116,369

Summary annual budget

201220132014 Totals
Employees11,83549,35276,884
Intern expenses and accommodation5,72749,47014,045
Office2,03911,72911,621
Student groups, communications and events4896,5662,818
Technical6394184,160
Charges on donations7163,328215
Legal and financial83910111,571
Training, travel and conferences (new category in 2014)4,723
Miscellaneous expenses88521343,358
Total of all costs23,171124,008119,326

What drove the spending decrease?

  • Intern costs dropped significantly as we ended our internship program. The central team continues to hire interns, so intern-related costs are not zero.
  • Employee costs rose due to (i) the addition of a freelance web developer to the team in September and (ii) salary increases according to our previous salary policy. However, they didn’t rise as much as we planned because we didn’t hire an additional staff member over 2014.
  • Charges on donations fell due to improved processes for donations from the US and the addition of more ways to donate.

Historical income

80,000 Hours received £236,000 in donations in 2014, of which £204,000 was 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 its founding in 2012 until April 2015, 80,000 Hours has received a total of £402,000 in donations.

2012201320142015 (end Apr)
Donations income restricted to 80,000 Hours13,808147,506170,45010,314
Share of unrestricted donations income18,80027,60032,134NA^
Total of all income32,608175,106202,58410,314

^Note that 80,000 Hours no longer automatically receives a portion of unrestricted income, as we did in the past. This is due to a change of policy in CEA: now unrestricted income is added to a reserve fund, which covers the costs of the Executive Director of CEA, and then is spent at the discretion of the trustees of CEA. The intention is for the money to be used to seed new projects or to respond to especially pressing funding needs from the organisations within CEA.

Income attributable to users

About 30% (£130,000) of historical income from donations was given by former users.

In addition, recently we’ve started to charge fees for coaching, raising about £2,100 in the first part of 2015.

Key donors

SUPPORTERBACKGROUNDSUPPORT TO DATE
Jaan TallinnCo-founder of Skype, Kazaa, MetaMed£12,500 per year, on-going.
Fred MulderFounder of The Funding Network, art dealer£90,000 over the last three years
AnonymousAnalyst at a major quantitative trading firm, coaching alumni£70,000 in 2012
Luke DingFormer hedge fund manager at Brevan Howard£30,000 in the last year.
AnonymousFounder and Chairman of a major mutual fund.£30,000 over the last three years
Tony PurnellFounder of Pi Research, Professor of Engineering at Cambridge£10,000 last year.
Jeff Kaufman and Julia WiseGoogle software engineer and social worker£20,000 over the last three years
Patrick Brinich-LangloisSoftware engineer£20,000 over the last three years
The 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£28,000 last year
AnonymousPartner at a quantitative trading firm£39,000 over the last two years

Projected spending

FY 2015
Pay / tax for 3 employees throughout 2015, projected to grow to 5 employees in late 2015117,644
Pay / tax for 2.5 CEA staff (40% share)17,447
Support/housing expenses for 0.5 interns4,800
Contract workers7,320
Office expenses6,720
Communications and Events8,435
Advertising and website1,680
Training and equipment8,480
Relocation to California27,200
Other costs (eg legal, financial and other expenses incurred by CEA central)8,856
Total208,582

What are the largest drivers of spending increases in 2015?

  • Hiring – our freelance web developer joined full-time in early 2015, the central team hired another staff member, and we anticipate hiring another two staff over the remainder of 2015.
  • Higher staff salaries and expenses, in line with our new salary policy (explained below).
  • Costs for relocation to California.

Change to staff salary policy

We changed the staff salary policy to the following:

The base salary for full-time staff is £21,000. The starting salary is increased by £3,000 per year of relevant experience (up to a maximum of the Executive Director’s salary). Staff also receive a raise of £3,000 per year conditional on good performance. Staff have an equipment allowance of £2,000 every two years. This policy stands until the end of 2017.

Previously, the starting salary was £18,000 for everyone, rising £2,000 per year, so the result was a substantial pay increase for existing staff, as well as significantly higher starting salaries for new staff. The highest salary currently paid is £28,500, compared to £21,000 previously.

We made this increase because recruiting talented staff is proving a bigger bottleneck than raising funding. In negotiations with potential hires, we found that low salary was a significant problem for them. Rather than increase the salaries of marginal hires in an ad hoc way, we decided it would be better to raise their overall level, making the system fairer and less open to negotiation. We also expect the rise to improve the productivity of our existing staff, though two of the three staff members decided to voluntarily forgo 40% of the increase. Overall, the levels are still low based on comparables e.g. the average US non-profit CEO with a budget under £300,000 is paid about £38,000; the starting salary at GiveWell is about £31,000.

Current financial situation

As of March 2015, 80,000 Hours had £164,000 in reserves. This would represent 12 months of reserves at current rates of spending or 7.5 months of reserves if we follow our target budget, which would have us spend £209,000 over 2015.

Room for more funding

We aim to maintain at least 12 months’ reserves according to our reserves policy. Given that we have 7.5 months’ reserves based on our projected spending, that means we currently have room for more funding of at least 4.5 months’ expenses, approximately £80,000.

Appendix

Financial security

We think our financial security increased substantially last year.

  • We gained two new major donors, who have substantial additional capacity to donate. This more than offset the likely loss of one large donor.
  • In general, fundraising was faster and easier than expected.
  • The total amount donated by our community of former users grew significantly, and we anticipate we could receive substantial additional funding from them in case of need.

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.

Read why we adopted this policy in our last annual review.