Causes or organizations use resources, primarily labor and money, and those resources are limited. The fact that these resources are limited means that the organization also has limited capabilities.
Consider two organizations, both of which have ten staff and would like to increase capacity:
- Organization A: Has annual funding of $5m, so can fund more staff, and has been actively hiring for a year, but has been unable to find anyone suitable.
- Organization B: Has annual funding under $1m, so can only just cover current costs. Several suitably talented individuals have made speculative applications to the organization, but the organization could not afford to hire them.
Organization A is more talent constrained than funding constrained, and vice versa for Organization B. We can generalize these concepts:
- An organization is more talent constrained if the main factor limiting their work is access to skilled labour.
- An organization is more funding constrained if the main factor limiting their work is a lack of money.
These concepts are not precisely defined: rather, there tends to be a spectrum between the extremes that Organization A and Organization B occupy.
One of the key decisions people face when they want to support a cause is whether to work directly on that cause, or whether to earn to give in order to fund that cause. A key consideration relevant to this decision is whether the cause is talent constrained or funding constrained, since that will influence what kind of resource is most needed.
80,000 Hours currently believes that, within the effective altruism community, talent constraints are more pressing than funding constraints (Todd 2015). This happens primarily because the effective altruism community has access to large amounts of funding from members of this community pursuing earning to give as well as external philanthropists.
Naik, Vipul. On the concept of “talent-constrained” organizations.
Suggests that organizations might simply not be paying enough for talent, causing talent constraints, although there are countervailing considerations.
Todd, Benjamin. 2015. Why you should focus more on talent gaps, not funding gaps.
80,000 Hours’ overview of why talent constraints might be more important than funding constraints.