Forward Discount Factors for Climate Philanthropy (2025–2030)

Source:https://chatgpt.com/share/682c94f4-a088-8002-93c5-fd0287d500b0

Thanks, that's helpful. I’ll review literature and data on five key dynamics affecting the relative effectiveness of climate philanthropy over the 2025–2030 period:

  • Decreasing opportunities to affect carbon lock-in.
  • Policy stickiness and the diminishing marginal influence of late-stage climate policy.
  • Increasing global resourcing of climate efforts.
  • Uncertainty in global social response (influence on additionality).
  • Learning about philanthropic effectiveness. I’ll provide evidence-backed point estimates or ranges for 5-year discount rates for each factor, using empirical literature and historical trends where possible. I’ll let you know as soon as the research is ready.

Forward Discount Factors for Climate Philanthropy (2025–2030)

Climate philanthropists often consider a “time discount” on effectiveness – i.e. how the impact of a dollar spent now compares to a dollar spent in the future. Several dynamic factors will likely change the marginal effectiveness of climate philanthropy between 2025 and 2030. Below, we examine five key dynamics and estimate 5-year forward discount factors (as a percentage reduction in effectiveness by 2030 relative to 2025) for each, based on empirical data and literature. All estimates are given as the approximate decrease in philanthropic impact if action is delayed to 2030, with justification and sources provided.

1. Decreasing Opportunities to Affect Carbon Lock-In

Early action can prevent high-carbon infrastructure from being built, whereas delaying action risks “locking in” decades of emissions. As time passes to 2030, opportunities to avert new carbon-intensive infrastructure diminish significantly. The IPCC warns that “delayed mitigation…would lock-in high-emissions infrastructure”, reducing feasibility and increasing costswww.ipcc.ch. For example, the remaining carbon budget for 1.5°C is extremely tight – projected CO₂ emissions from existing fossil fuel infrastructure alone would already exceed the 1.5°C budgetwww.ipcc.ch. This means any new coal plants, oil fields, or gas pipelines built in the late 2020s commit substantial additional emissions, shrinking the room for future philanthropic impact.

  • Shrinking coal development pipeline: The global shift away from coal illustrates the declining window to prevent lock-in. In the last decade, the number of countries planning new coal power has fallen by nearly half (from 75 in 2014 to 40 in 2024)www.carbonbrief.org, and 98% of proposed new coal capacity is now confined to just 15 countries (China and India alone accounting for 86%)www.carbonbrief.org. This concentration suggests that by 2030, either these projects proceed (locking in emissions) or are cancelled – leaving fewer “easy wins” for philanthropy. Indeed, recent data show global coal capacity growth in 2024 was the slowest in decades (net +18.8 GW) as retirements almost caught up with new additionswww.reuters.com. The window to influence the fate of the remaining planned coal plants is essentially this decade.
  • Lost avoidance vs. costly retrofits: Stopping a fossil project pre-construction avoids its full lifetime emissions; waiting until 2030 means any built infrastructure will either emit for years or require expensive premature retirement. Early 2020s philanthropic campaigns helped cancel many coal plants; if such efforts come too late, by 2030 philanthropy might only pursue retirements or carbon capture on already-built assets, capturing less value. Studies find that once high-carbon assets are built, they tend to operate for decades barring strong interventionwww.founderspledge.comwww.founderspledge.com. Thus, the marginal impact of each $1 spent to prevent lock-in declines as more infrastructure gets decided in the interim. Estimated 2025–2030 impact discount (carbon lock-in): ~20–30% lower effectiveness by 2030. In other words, a philanthropic dollar aimed at preventing carbon lock-in in 2030 might avert ~20–30% fewer tons of CO₂ (or avoid fewer locked-in assets) than the same dollar spent in 2025. This estimate is supported by the rapid erosion of the carbon budget and expansion of committed emissions this decadewww.ipcc.ch. It reflects the lost opportunities to influence infrastructure decisions: as we approach 2030, most high-emitting infrastructure for the coming decades will either already be built or cancelled, leaving less “low-hanging fruit” to influence. Early action has outsized effect, whereas by 2030 philanthropy may be forced into costlier end-of-pipe solutions. (For instance, delaying climate action until after 2030 would almost certainly blow past the 1.5°C goal, locking in higher warmingclimateanalytics.org – a stark illustration of diminished impact when action comes too late.)

2. Policy Stickiness and Early Policy Multipliers

Climate policies enacted early tend to be durable and self-reinforcing, which means influencing policy now can have compounding benefits that late policy changes cannot fully replicate. Many analyses show that delaying climate policy boosts costs and forgoes the benefits of policy feedback loops. Early policies can drive innovation, infrastructure, and public expectations that entrench progress (“stickiness”), whereas latecomer policies must be more abrupt and face established high-carbon interests.

  • Durability and feedbacks: Early climate policies often create constituencies and market momentum that make them “stick.” For example, initial renewable energy mandates and incentives led to massive cost declines in solar and wind technology – a virtuous cycle where early policy “enable[d] cost reductions leading to further investments”www.founderspledge.com. Those early feed-in tariffs in the 2000s helped solar PV costs drop ~80% by 2020, making later adoption far easier. Similarly, efficiency or clean air regulations tend to become politically durable once industries adapt. Conversely, waiting longer means missing years of cumulative improvements. A meta-analysis by the U.S. Council of Economic Advisers found that a 10-year delay in climate policy increases the required carbon price and overall mitigation costs by about 37–56%www.weforum.orgwww.weforum.org. This implies each 5-year delay raises costs roughly ~18–25%. The higher costs reflect how much harder it is to catch up when policy action is postponed – industries have less time to learn and scale clean technologies, and more high-carbon infrastructure gets embedded (see lock-in above).
  • Propagation of early policies: Early adopters often influence others through policy diffusion. For instance, the European Union’s early 2000s climate policies not only cut EU emissions but also demonstrated feasibility to other countries. By 2030, many jurisdictions will likely have implemented the kinds of policies philanthropy is advocating today (e.g. coal plant moratoria, EV mandates). If philanthropy only acts in 2030 to push such policies in laggard regions, they’ll be fighting against a decade of foregone emissions cuts and tech development. Indeed, implementing a policy in 2025 versus 2030 means five extra years of emissions avoided and learning accrued. Those benefits cannot be fully recovered later – policy delays mean permanently higher cumulative emissions and lost “snowball” effects. The IPCC Synthesis Report emphasizes that near-term policy action this decade largely determines whether 1.5–2°C limits remain achievablewww.ipcc.chclimateanalytics.org. Policies put in place by 2030 set the trajectory; after that, even drastic measures struggle to undo the interim emissions or rapidly transform entrenched systems. Estimated 2025–2030 impact discount (policy stickiness): ~15–25% lower effectiveness by 2030. We estimate that a philanthropic dollar spent on policy advocacy in 2030 would be ~20% less effective (in terms of long-term emissions mitigated) than if spent in 2025. This range is consistent with modeling that finds a ~37% cost penalty for a decade of delaywww.weforum.org (roughly linearized to ~18% for five years), and with historical observations that early policies yield outsized tech and market shifts. In essence, early policy wins “lock in” clean trajectories (a positive lock-in), whereas late policy changes face a diminished runway to deliver cumulative benefits. By 2030, some policy avenues (and their compounding benefits) may no longer be available, or will require much higher effort for smaller gains – hence a substantial forward discount on effectiveness.

3. Increasing Global Resourcing and Changing Philanthropic Leverage

Global investment in climate action is rising rapidly, which has complex effects on the leverage of philanthropic funding. On one hand, public and private climate finance growth means philanthropic dollars are dwarfed by larger flows, potentially reducing the additionality of philanthropy in well-funded areas. On the other hand, more resources in the system can increase opportunities for philanthropy to act as a catalyst or to target niche gaps. We assess whether philanthropic leverage is likely to increase or decrease toward 2030, based on funding trends:

  • Booming climate finance: Worldwide funding for climate mitigation and adaptation has surged. Global investment in the clean energy transition **hit a record 1.1trillionin2022∗∗,up311.1 trillion in 2022**, up 31% from 2021[weforum.org](https://www.weforum.org/stories/2023/02/low-carbon-investment-record-2022/#:~:text=%2A%20Global%20investment%20in%20low,carbon%20dioxide%20emissions%20by%202050), and jumped further to ~n1.77 trillion in 2023about.bnef.com. BloombergNEF reports that _2024 saw over 2trillioninenergytransitioninvestments–morethandoubletheannualinvestmentjustafewyearsprior.Thisincludesmassivepublicexpenditures(e.g.theEUGreenDeal,U.S.InflationReductionActwith 2 trillion_ in energy transition investments – more than double the annual investment just a few years prior. This includes massive public expenditures (e.g. the EU Green Deal, U.S. Inflation Reduction Act with ~n370B for climate) and private capital in renewables, EVs, etc. By 2030, annual climate investment could be 3× higher than today if nations aim to hit net-zero goalswww.weforum.org. Philanthropy’s share of total climate funding is therefore shrinking in percentage terms. For perspective, foundation and individual climate philanthropy reached an estimated $9–15 billion in 2023www.climateworks.org – a record high, yet on the order of only ~0.5% of global climate-related investment. Major initiatives by governments and markets are now tackling areas that were once the domain of philanthropy (e.g. funding clean tech R&D, renewables deployment, climate policy planning).
  • Philanthropic surge and repositioning: Climate philanthropy itself has grown fast – foundation climate funding nearly tripled from 1.7Bin2019to1.7B in 2019 to n4.8B in 2023www.climateworks.org (and total climate giving including individuals is a few times higher). New mega-donors (e.g. Bezos Earth Fund’s $10B pledge) and collaborative funds have entered. This influx means that by 2025–2030, some climate niches may become well-funded, reducing marginal returns for additional philanthropic dollars. For example, one analysis noted that after a change in U.S. leadership in 2021, the climate advocacy space in the U.S. became “increasingly saturated” with funding, such that “additional money [for] short-term wins would not have large additional impact”www.founderspledge.com. In response, philanthropists have started shifting focus to under-resourced regions and strategies. Founders Pledge observed a “strong uptick” in domestic climate philanthropy and government spending, which led them to pivot their grants toward avoiding carbon lock-in in emerging economies where funding gaps remainedwww.founderspledge.comwww.founderspledge.com. This exemplifies how rising overall resources can diminish philanthropic leverage in one area (once neglected, now crowded), forcing philanthropists to seek the next gap.
  • Leveraging larger flows: In optimistic scenarios, more public/private climate spending could increase philanthropic leverage by providing opportunities to influence and direct these vast resources. For instance, a small grant that shapes a national climate policy could steer billions in government funds – a high leverage ratio. Philanthropy can act as a “venture capital” for climate ideas, later scaled by states and markets. As one report notes, philanthropy’s impact comes from inducing policy or private action, given the “vast scale difference” between philanthropic vs. public fundingwww.founderspledge.com. By 2030, that scale difference is even larger, so well-targeted philanthropic interventions might leverage bigger outcomes than ever. However, this only holds if philanthropists identify truly neglected, high-impact leverage points. If they simply fund projects that governments or investors would have funded anyway by 2030, their effective additional impact is small (the money might just displace other funding)www.founderspledge.com. On balance, philanthropic leverage per dollar is likely to moderately decline by 2030 in many areas, because the climate fight is increasingly mainstream and well-resourced. Philanthropy in 2025 had a larger relative role in, say, getting new solutions off the ground; by 2030, many solutions (solar, batteries, etc.) will be commercially viable and heavily funded without philanthropic help. That said, philanthropists will shift to areas of continued high leverage (e.g. next-generation tech, climate justice, policy in emerging markets), maintaining strong impact in those niches.Estimated 2025–2030 impact discount (global resourcing): ~10% lower effectiveness by 2030. We project a modest discount (~ five to fifteen percent range) in average philanthropic climate additionality due to increased global resourcing. In practical terms, a dollar spent in 2030 may achieve ~90% of what it could in 2025, if applied to the same objective, because governments, markets, and larger donors are increasingly handling many climate actions. (Some mature solutions will “happen anyway” by 2030 thanks to public demand and market forces, meaning philanthropy’s unique contribution there is less.) This discount is relatively small – reflecting that while some opportunities are no longer neglected, new ones (and the need for catalytic funding) still arise. Notably, effective philanthropists can mitigate this trend by continually refocusing on the most neglected, high-leverage interventions, thereby staying ahead of the funding curve.

4. Changing Social Response and Additionality of Philanthropy

Societal attitudes, political will, and market readiness for climate solutions are evolving quickly, which in turn affects the additionality of philanthropic interventions (i.e. the extent to which philanthropic actions add outcomes that wouldn’t have happened otherwise). By 2030, public support for climate action and market uptake of green technology are expected to be even higher than today, potentially reducing the marginal impact of each philanthropic dollar in certain domains. We examine whether growing social momentum enhances or erodes philanthropic marginal impact:

  • Rising public concern and political commitment: Public opinion worldwide has shifted toward stronger climate action. A 2024 global survey covering 87% of the world’s population found four in five people want more climate action from their country, and 89% want more from their governmentclimatepromise.undp.org. Climate change is increasingly seen as an immediate concern (over half of people think about it weekly) and demands for policy solutions (renewables, protection from extreme weather, climate justice, etc.) enjoy broad majority supportclimatepromise.undp.orgclimatepromise.undp.org. This growing mandate means that by 2025–2030, many policies and projects that philanthropy might have pushed for are being adopted due to public pressure anyway. In democracies especially, politicians are more likely to implement climate measures unprompted as voter concern intensifies. Even in sectors like finance and corporate behavior, social expectations for climate responsibility are rising (e.g. investors divesting from coal, consumers favoring green products). The net effect is that philanthropy is no longer acting alone in a vacuum – its efforts may increasingly ride a wave of public momentum, or conversely, find that the simplest awareness-raising tasks are already accomplished.
  • Market uptake and technology diffusion: Over the past few years, we’ve seen rapid market adoption of climate solutions. For example, sales of electric vehicles and related infrastructure investments surged by 54% in 2022 to reach $466 billion globallywww.weforum.org, and renewables consistently break installation records. As clean technologies become cost-competitive and profitable, the private sector and consumers drive uptake without needing philanthropic subsidy. By 2030, many clean solutions (solar, wind, EVs, heat pumps, etc.) will likely be mainstream. This reduces the additional impact of philanthropic funding for scaling these solutions – funding an extra pilot or advocacy campaign may have marginal effect if the technology is already being widely adopted due to economics. In contrast, a decade ago philanthropy played a pivotal role in legitimizing and early-scaling such solutions. Now, the role shifts to either pushing the last hard 10-20% (e.g. heavy transport, heavy industry, or lagging regions) or addressing areas that markets ignore (e.g. climate resilience for marginalized communities).
  • Political and social saturation of certain strategies: There is also the risk of diminishing returns to awareness campaigns or movements by 2030. The late 2010s saw a surge of climate activism (youth climate strikes, etc.) that put climate on the agenda. By 2030, climate discourse will be even more entrenched in politics. Philanthropic efforts that aim to “increase concern” or general awareness might see lower returns – many citizens are already convinced, and the bottlenecks may lie in incumbent interests or complex trade-offs. In some contexts, public opinion may have shifted enough that governments commit to action (so philanthropic advocacy reinforces rather than initiates change). However, there’s a flip side: if public concern grows, philanthropy can leverage that to push bolder initiatives (the Overton window shifts). The key is that philanthropy’s role evolves – from basic agenda-setting to perhaps more technical or justice-focused interventions – as society’s response matures. Overall, we expect philanthropic additionality per dollar to somewhat decline by 2030 in areas where public policy or markets have caught up. Put simply, if a certain outcome was 0% likely without philanthropy in 2025 but becomes, say, 50% likely due to public demand by 2030, then philanthropy’s relative added value is smaller. Philanthropists will increasingly need to target the truly unmet needs (for instance, helping vulnerable communities adapt, funding litigation or accountability mechanisms, or incubating next-gen tech) to maintain high additionality. This dynamic was highlighted by climate philanthropy strategists: donors must ensure their funding isn’t just displacing what would happen anyway – if a policy target “would be reached anyway,” additionality is zero and the money is essentially wastedwww.founderspledge.com.Estimated 2025–2030 impact discount (social response & additionality): ~10–20% lower effectiveness by 2030. We estimate a moderate discount in philanthropic marginal impact due to the strengthened social and political response. A dollar in 2030 might achieve ~ Fifteen percent less unique impact on average, because some of the heavy lifting will be done by others (governments, citizens, businesses) as climate action becomes more routine. The range is fairly broad (10–20%) reflecting uncertainty in future politics – e.g. a potential backlash or complacency could keep space for high-additionality philanthropy, whereas an ever-intensifying public mandate could sharply limit what only philanthropy can do. Notably, this discount can be offset if philanthropy continuously pivots to emerging challenges (where public action still lags). In scenarios where social change accelerates, philanthropy’s role may shift toward complementing and innovating (with slightly reduced per-dollar impact); in scenarios where political action still drags, philanthropy remains highly additional (low discount). We lean toward a modest discount given current trends of rising climate ambition.

5. Learning and Improving Effectiveness in Climate Philanthropy

Finally, an important dynamic is learning-by-doing within the climate philanthropy sector itself. Over time, foundations, funds, and nonprofits accumulate knowledge about what strategies yield the greatest impact. They refine their priorities, coordinate better, and avoid past mistakes. If climate philanthropists continue to improve their methods, the effectiveness of a dollar spent in 2030 could actually be higher (per dollar) than one spent in 2025, all else equal. In other words, this factor could counteract some of the discounts above. We examine evidence of such learning and its potential magnitude:

  • Strategic focus and data-driven grantmaking: Major climate philanthropy players have increasingly embraced strategic frameworks to maximize impact. For example, philanthropic reports now identify “funding gaps” and priority areas using rigorous analysiswww.climateworks.org. ClimateWorks Foundation’s annual funding trends report highlights which sectors are underfunded relative to need, enabling smarter allocation of new philanthropic dollarswww.climateworks.org. Similarly, organizations like Founders Pledge and Open Philanthropy (influenced by effective altruism principles) use outcome-oriented grantmaking, focusing on leverage and tractability. Founders Pledge argues for funding policy advocacy and systemic change due to the “vast scale difference” and ability to unlock public resourceswww.founderspledge.com – a conclusion drawn from comparative analysis of interventions. This kind of targeted approach in 2030 means fewer philanthropic dollars will be wasted on low-impact efforts.
  • Collaboration and coordination: Philanthropies are learning to collaborate rather than work in silos, which prevents duplication and magnifies impact. Initiatives like the Climate Leadership Initiative, ClimateWorks networks, and multi-donor funds (e.g. around methane reduction or climate justice) allow sharing of best practices. Over the past five years, there’s been a trend of coalition-building – for instance, multiple foundations aligning strategies to pass key policies or support clean innovation. This learning in coordination means by 2030 the philanthropic community might respond more efficiently to opportunities (avoiding the scenario where ten groups separately try the same thing while other areas stay unfunded). Better coordination and lesson-sharing directly increase effectiveness per dollar.
  • Adaptive learning from success and failure: After some prominent setbacks in earlier years (e.g. cap-and-trade failing in the US in 2010, or over-investment in narrowly focused tech that didn’t pan out), climate funders have adapted. They’ve broadened the portfolio of approaches (mitigation, adaptation, tech, policy, movement-building) and placed a greater emphasis on equity and local engagement, learning that solutions must be socially and politically viablewww.climateworks.orgpublicworkspartners.com. There is also more emphasis on monitoring outcomes – e.g. some climate philanthropies now commission evaluations of their grant results to iterate on strategy. Over a five-year horizon, these improvements can accumulate to noticeably better effectiveness. Concrete examples of learning-driven impact include the following: after observing the outsized success of a few policy-focused grants (for example, philanthropic support for U.S. policy think tanks contributed to large climate provisions in the 2021–2022 legislation)www.founderspledge.comwww.founderspledge.com, more donors shifted toward policy advocacy funding. Likewise, seeing the importance of international action, some foundations globalized their efforts (placing staff in emerging economies)www.founderspledge.com. These adjustments, informed by experience, mean that philanthropy in 2030 should be more optimized than in 2025.Estimated 2025–2030 impact “discount” (learning factor): ~–5% to –15% (i.e. a potential increase in effectiveness by 2030). We interpret this as a negative discount rate: philanthropic dollars in 2030 could be perhaps 10% more impactful on average than today purely due to better strategy and knowledge. This modest gain might partially offset the other discount factors. For instance, if other factors made waiting seem less effective, improved philanthropic methods might reclaim some lost ground. Our rough estimate (5–15% improvement) is speculative but grounded in the observed rapid maturation of the field. In the last five years, foundation climate giving tripledwww.climateworks.org and was accompanied by greater focus on under-served issues (e.g. methane, climate justice) and evidence-backed interventions. We expect this trend to continue, though there are limits – learning alone cannot overcome physical realities like carbon lock-in. Nonetheless, a philanthropist in 2030 should be able to deploy funds more shrewdly, getting slightly more climate impact per dollar than their 2025 counterpart, thanks to better targeting and coordination.

In summary, our analysis suggests that climate philanthropy tends to be more time-sensitive (more effective sooner) for factors like carbon lock-in and policy path dependence, which together impose perhaps a 20–30% effectiveness penalty for a 5-year delay. Additionally, rising mainstream climate action and public support may modestly erode the unique impact of philanthropy (on the order of 10–20% less by 2030). Counterbalancing this is the philanthropic sector’s own improvement in effectiveness, potentially boosting future impact by ~10%. Taken together, these dynamics imply a net forward discount: a dollar spent in 2030 is likely less impactful than one spent in 2025, by roughly 15–25% after accounting for all factors (with uncertainty). This reinforces the case for earlier philanthropic action on climate. However, it also underscores that strategic, well-informed giving can mitigate some of the time discount – especially if philanthropists continue to adapt by focusing on high-leverage gaps and learning from what works. Each factor above carries its own uncertainties and regional nuances, but the quantitative estimates provide a sense of scale for 5-year changes in expected climate philanthropy effectiveness.Sources: