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The Principles & Economics Behind 'Utility for Change'
Our Inspiration
Opportunity Cost
A core economic concept that underpins our strategy is opportunity cost. In economics, opportunity cost refers to the value of the next best alternative that must be forgone when making a choice. When considering where to donate or allocate resources, we always consider the opportunity cost of any action. For example, donating to a cause that has a limited impact means forgoing the chance to support a more effective intervention. This is why we focus on high-impact charities that have proven results in alleviating suffering, ensuring that every pound you donate delivers the most value possible.
Comparative Advantage
We also draw on the principle of comparative advantage. While this concept typically applies to international trade, we apply it to charitable giving and resource distribution. The idea is simple: different organisations or interventions are better suited to address different issues. By partnering with charities that have a comparative advantage in specific areas, we ensure that resources are used as efficiently as possible. Each charity has a unique strength, and by focusing on what they do best, we maximise the overall impact.
Economies of Scale
We also leverage the idea of economies of scale. Larger organisations or initiatives often benefit from reduced costs per unit when their scale increases, making their operations more efficient. For example, a large charity that distributes vaccines globally can do so at a lower cost per vaccine than a smaller operation. At Utility for Change, we aim to support charities that have the ability to operate at scale so your donations go further. As we mentioned, our long-term goal is to develop this capacity ourselves, reducing inefficiencies in aid delivery and maximising every contribution.
Positive Externalities
We also consider positive externalities—the third-party benefits that charitable activities can create beyond their immediate goals, and that are un-internalised in the market system. For instance, providing clean water not only improves health outcomes but also boosts local economies by reducing time spent collecting water and freeing up time for work or education. When evaluating which causes to support, we consider not only the direct impact of an intervention but also its broader social and economic benefits.
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