Skinner Fund discount rate

From CharityScorecard

Discount rate (DCR) 

Discount rate is a term used by economists to talk about the rate used for comparing the value of a resource today to the value of a resource at some point in the future. Discount rates are usually expressed as percent values, such as 5% or 12%. Discount rates can be based on subjective factors (such as personal preferences about the value of having something now vs. waiting until later), or on objective factors (such as the rate of inflation, or the rate of return available on investments). See also: Skinner Fund discount rate.

Moral and economic questions

Is it better to prevent 100 cases of HIV/AIDS this year, or instead wait a year and do nothing, and then prevent 120 cases next year? To answer questions like that consistently, you need to decide what discount rate you're using to make decisions.

Discount rates are controversial. There are a lot of different factors to take into consideration in estimating the discount rate to use for a project. It's hard to get consensus about what rate to use, and a small difference in the discount rate can translate to a big difference in policy choices. In practice, different people use widely different discount rates in thinking about world problems.

9%

For the Skinner Fund scorecards, it makes sense to pick a single discount rate and use that discount rate consistently across all the scorecards, so that we compare the different non-profit efforts using the same assumptions.

I've chosen to consistently use a 9% discount rate for the Skinner Fund scorecards. You could easily argue that 9% is too high, or too low, for any number of reasons. But, 9% is a good estimate of the opportuntity cost of giving money away this year versus next year.