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Today’s Robin Hood: Effective Altruism
Foundations for Activism Part 3: How foundations can hide theft
The trial of Sam Bankman-Fried revealed an interesting case study of the effect of intensive marketing and gimmicks of a new, complex group of donor-advised foundations in persuading young, rich entrepreneurs to be entrepreneurial in their philanthropy.
Bankman-Fried’s crypto-trading firm, FTX, and his Alameda Research hedge fund went bankrupt in 2022 in a strange situation where they could not account for over eight billion dollars that went missing. This article will argue that a considerable amount of that was donated to charities via the dark money foundation mechanism known as donor-advised funds. It will center around the operations of a relatively new type of funds grouped under a “movement” called Effective Altruism.
Founded by two Oxford philosophy professors, Toby Ord and Will MacAskill, and basically utilitarian in its ethics, the Centre for Effective Altruism proposes that the greatest good for the greatest number could be achieved by the greatest donations. Sam Bankman-Fried was a committed follower of the Effective Altruism movement that professed that the power of professionals could save the world.
Sam met Will MacAskill in 2013 and was persuaded to donate what he could from his first job onwards (something MacAskill called “earning to give”). Time Magazine reported that the two became friends and MacAskill had ignored multiple warnings about Bankman-Fried’s poor business practices going back to 2018-19. The FTX Future Fund (which MacAskill was an advisor to), Time reports, “gave more than $160 million to effective altruist causes, including more than $33 million to organizations connected to MacAskill.” Bankman-Fried was also on the board of the Centre for Effective Altruism.
The Firebreak reported how Bankman-Fried, in 2022, had FTX director Ryan Salame donate millions of Alameda Research’s funds in his own name to NGO groups like US Right to Know, as well as donations via the Effective Altruism donor-advised funds to the same group. As the whole point of donor-advised funds was to protect the identity of the donor via a third-party foundation, it is unclear how much of the missing FTX-Alameda eight billion dollars was funneled to NGOs. What is clear is that none of them are returning the stolen funds. That money has been washed clean in a deceptive abuse of this form of foundation secrecy.
So it appears that Sam Bankman-Fried broke laws (repeatedly) and defrauded his hedge fund investors in order to donate more to more foundations via the Effective Altruism groups (minus the commission fees that any donor-advised fund survives on). The Effective Altruism companies are a modern-day Robin Hood: robbing the rich to … well … “save the world”.
Networks of Foundations to Tailor your Needs
Is there an Effective Altruism Foundation? There seems to be a bouquet of ten organizations with a myriad of complex relationships that would confuse even the sharpest regulatory authority. They market each group with different brand identities under the Effective Ventures umbrella like: Giving What We Can, 80,000 Hours, the Centre for the Governance of AI, Blue Dot Impact… Some groups sell books or train the next generation of philanthropreneurs. Effective Altruism presents itself as a one-stop shop for tech billionaires to spend their money.
Salvation for tech and crypto billionaires can be found in saving the world from “existential threats” like climate collapse, nuclear war and artificial intelligence. These long-term ambitions were no longer the most effective use of donated funds (compared to vaccines and nutrition developments) but Effective Altruism foundations were, rather, becoming the perfect exculpation for the sins committed in wealth gained (while harnessing the powers of entrepreneurial efficiency). For the last decade, groups of funds connected to the Effective Altruism movement have been marketing themselves as the new way to save the world from such existential threats.
A New Ethics
Co-founder of the Effective Altruism movement, Will MacAskill, calls for a 21st century ethics to meet the demands of the 21st century. But what is this ethics? It is essentially a 19th century utilitarianism repackaged for the tech and crypto-billionaires to build their legacies. They play on the model of creating measurable goals and objectives for high achievers to get a good return on their investment.
It makes sense of course. If you are going to spend your money, spend it well. Bjørn Lomborg, via his Copenhagen Consensus Center, looked at how we could save countless more lives more effectively if we focus our finite resources on more immediate issues like sanitation, medicines and nutritional developments rather than wasting trillions trying to cool the sun. But Lomborg’s mistake was that he was speaking to the public and has been relentlessly buried with abuse from NGOs.
Billionaires, meanwhile, have relatively infinite resources and providing better nutrition or vaccines in some developing country just does not justify their time or meet their expectations of grandeur. So Effective Altruism groups aim higher to make bigger impacts for their donors (called “longtermism”). They are discretely spending billions of other people’s money on some bizarre groups fighting “existential threats” to humanity and promoting it as viable and essential. And the NGOs are backing up the trucks to collect the relatively unattached funding.
Of course this “new ethics” is based on the old opportunistic values of greed and manipulation. Effective Altruism brands itself as the humble servant of humanity providing a five-star service for the extreme rich (while going for their gold). But there is no transparency within this complex web of organizations and non-transparent donor-advised funds … so we just have to trust them in their benign altruism. In reality, the effective altruism movement is becoming something more like a white, male cult of the young, tech elite with many reports of widespread sexual abuse of young women.
I prefer the old ethics based on human dignity and integrity.
The Business of Philanthropy
Tech entrepreneurs are rarely smart with money, and the thought of untold wealth surely never came into their minds when striving to achieve their projects and solve the problems of their new technologies. The movie, The Social Network, portrayed giving billions to Mark Zuckerberg as like enriching a poodle – he had no idea what money meant. These billionaires don’t have the time or the interest to manage their money and often spend it on stupid ideas (like funding missions to populate settlements on Mars). Fortunately the Effective Altruism group of foundations is there to help these innocents to “strategically” give their money away (while discretely taking commissions on each donation).
With Effective Altruism chapters across the world, they are building networks of upcoming, young philanthropists. Before COVID-19, the social element of philanthropy surrounded the arts and medical research with the great and the good attending ribbon-cutting ceremonies, gallery openings and theatrical galas to have glasses raised in their honor. Now they are giving to often quite bizarre solutions to prevent existential threats to the earth and humanity. And the Effective Altruism group offers events, conferences and training sessions to bring together networks of givers (and pitch them to give more).
What the Sam Bankman-Fried scandal showed was not the great fraud, but that this fraud was committed in order for him to pursue the belief that he could save the world. He got sucked into the Effective Altruism marketing machine and basically stole what he could to donate billions to these donor-advised organizations. He justified his fraud and a litany of SEC violations via his celebrated altruism, and like any young high-achiever addicted to success, he definitely extended his giving.
When he was finally stopped and FTX and Alameda Research collapsed, eight billion dollars of customer’s funds had gone missing. The money disappeared. How much was given away in some Effective Altruism giving spree? Given the secrecy of such donor-advised funds, we will never know (and the foundation founders will never tell).