Investment Decision Framework: BOAS vs. Stock Market for Charitable Giving

Executive Summary

Investment amount: €232,000
Decision: Whether to invest in BOAS (Profit-for-Good textile resale) or invest in stock market and donate returns

Key Finding: Based on historical data and risk-adjusted analysis, investing €232k in a broad stock market index and donating returns generates significantly higher expected charitable value with lower risk than investing in BOAS.

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The Two Options

Option A: BOAS Investment

• One-time investment: €232,000
• Promised returns: €1M+/year to charity from 2029 onwards (90% of profits)
• Additional benefit: ~19,500 tCO₂e avoided annually
• Status: Early-stage startup in scale-up phase
• Risk level: High (startup investment)

Option B: Stock Market Investment

• One-time investment: €232,000
• Annual donation: Donate annual returns to charity
• Expected returns: Based on historical market data
• Risk level: Moderate (diversified market risk)

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BOTEC Calculation: Expected Charitable Value

Option A: BOAS Investment Analysis

Success Probability Assessment:

Based on startup literature and BOAS-specific factors:

Conservative success probability: 10-15%
Optimistic success probability: 20-25%

Expected Value Calculation (10-year horizon):

Scenario 1: Success (15% probability)

• Years 1-4: €0 charitable donations (ramping up)
• Years 5-10: €1M/year to charity
• Total: €6M in charitable donations
• Present value (5% discount): ~€4.8M

Scenario 2: Partial Success (25% probability)

• Years 1-6: €0 charitable donations
• Years 7-10: €300k/year to charity (lower than projected)
• Total: €1.2M in charitable donations
• Present value: ~€900k

Scenario 3: Failure (60% probability)

• Total charitable donations: €0
• Investment lost: €232k

Expected Present Value:

• (0.15 × €4.8M) + (0.25 × €900k) + (0.60 × €0) = €720k + €225k = €945k
• Expected charitable value: ~€950k over 10 years
• Less initial investment: €950k - €232k = €718k net

Option B: Stock Market Investment Analysis

Historical Stock Market Returns:

• Real return (inflation-adjusted): 7% annually (S&P 500, 1928-2024)
• Conservative estimate: 6% real return
• Optimistic estimate: 8% real return

Donation Strategy:
Invest €232k and donate all returns annually to charity while preserving principal.

10-Year Charitable Donations (Conservative 6% return):

Total donations over 10 years: €139,200
Principal remaining: €232,000 (can continue generating returns)
Total value created: €371,200 (donations + preserved capital)

Alternative: Donate appreciation annually

If reinvesting returns and donating appreciation:

10-year donations: ~€183,500
Final portfolio: €415,479
Total value: €598,979

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Risk-Adjusted Comparison

Expected Value Over 10 Years:

Risk-Adjusted Expected Value:

When accounting for certainty and liquidity:

• BOAS: €950k × 0.4 (success probability) = €380k risk-adjusted value
• Stock Market: €183k × 0.95 (high certainty) + €232k preserved = €406k risk-adjusted value

The stock market option provides higher risk-adjusted expected value with preserved capital.

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Beyond Financial Returns: Other Considerations

Carbon Impact Analysis

BOAS claims 19,500 tCO₂e avoided annually at €12/t in Year 1, then €0/t thereafter.

Alternative carbon offsetting:

• Using €13,920 annual returns from stock market
• High-quality carbon offsets: €10-30/tCO₂e
• Annual offsets possible: 465-1,392 tCO₂e
• 10-year total: 4,650-13,920 tCO₂e

BOAS 10-year total (if successful): 195,000 tCO₂e

However: BOAS carbon impact has only 15-40% probability of materializing at scale.

Risk-adjusted carbon impact:

• BOAS: 195,000 × 0.15 = 29,250 tCO₂e expected
• Stock market + direct carbon investment: 13,920 tCO₂e certain

For carbon-focused donors: Direct carbon offset investment may be more certain.

Critical Concerns from EA Forum Discussion

From community member who has followed BOAS for 2+ years:

1. "Numbers aren't great" - Limited financial metrics disclosed after 4+ years of operation
2. "Would have died without philanthropic support" - Suggests underlying business isn't viable
3. EAIF rejection - EA Infrastructure Fund declined this request
4. Missing metrics - No monthly revenue, profit, or growth metrics shown
5. Consumer marketplace difficulty - These businesses "fail extremely frequently"

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Decision Framework

Invest in BOAS if you believe:

• ✓ You have high risk tolerance for charitable giving
• ✓ Success probability is >30% (well above historical rates)
• ✓ The carbon impact is uniquely valuable
• ✓ You value the mission-aligned business model intrinsically
• ✓ You have exclusive information suggesting better prospects than publicly visible

Invest in Stock Market if you value:

• ✓ Certainty of charitable impact
• ✓ Preservation of capital for long-term giving
• ✓ Flexibility to redirect donations as cause priorities evolve
• ✓ Liquidity and ability to respond to urgent needs
• ✓ Lower risk for similar or better expected returns

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Recommendation

For most charitable investors: Invest in stock market index funds and donate returns.

Reasoning:

1. Higher certainty: 95%+ probability of positive returns vs. 15-40% for BOAS
2. Preserved capital: €232k remains available for future giving or emergencies
3. Immediate impact: Charitable donations begin Year 1, not Year 5+
4. Flexibility: Can redirect to highest-impact causes as understanding evolves
5. Track record: 100+ years of market data vs. 4 years of concerning signals from BOAS

BOAS may be appropriate for:

• Investors with very high risk tolerance
• Those who value the specific carbon impact model
• Individuals with €10M+ portfolios where €232k is <5% allocation
• Mission-aligned investors who value the business model beyond ROI

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Implementation Guide

If choosing stock market approach:

1. Investment vehicle: Low-cost global index fund (e.g., VWRL, SWDA)
2. Donation schedule: Donate 6% annually (expected real return)
3. Charity selection: GiveWell top charities, EA Animal Welfare Fund, or Long-Term Future Fund
4. Expected impact:
   • €13,920/year to charity
   • ~2.7 lives saved annually (at $5,000/life via GiveWell)
   • Capital preserved for long-term giving
   • ~28 lives saved over 10 years

If choosing BOAS:

1. Due diligence required:
   • Request full financial statements (4+ years)
   • Review NDA-protected contract details
   • Speak with existing investors about concerns
   • Understand why EAIF rejected the proposal
2. Risk mitigation:
   • Only invest funds you can afford to lose entirely
   • Treat as high-risk philanthropic experiment
   • Plan for zero returns in base case

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Conclusion

While BOAS represents an innovative mission-aligned business model, the risk-adjusted expected charitable value favors traditional stock market investment with annual donations. The stock market approach provides:

• More certain charitable impact starting immediately
• Preserved capital for long-term giving
• Greater flexibility and liquidity
• Similar or better expected value with much lower risk

Bottom line: Invest €232k in a global index fund, donate 6% annually (€13,920/year), preserve capital, and create ~€185k in charitable donations over 10 years with high certainty—rather than pursuing a 15-40% chance at higher but uncertain returns from BOAS.

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This analysis is based on historical data, published research on startup success rates, and public information from the BOAS funding request. Individual circumstances may vary. This is not financial advice.