It turns out “effective altruism” isn’t so effective when a billionaire donor’s money dries up.
That realization rang especially true this week for members of the FTX Foundation’s Future Fund, whose entire team resigned on Thursday saying they “are now unable to perform our work or process grants.” The resignation comes amid a continued meltdown at one of the world’s largest crypto currency exchanges which evaporated billionaire founder Sam Bankman-Fried’s wealth seemingly overnight. Now, the founder’s pet project and one of the effective altruism movement’s most important funds appears dead in the water.
Effective altruism refers to the field of research and philanthropy that applies the scientific method and reasoning to maximize charitable giving, typically by relatively wealthy individuals. The movement, (referred to sometimes simply as EA) though broad in adherents, has developed a committed following amongst Silicon Valley’s wealthy founders in recent years. Critics of the movement worry its focus on so-called “longtermism” and opaque ideas like reigning in rogue AI prevents it from properly addressing current economic and social issues. Others argue effective altruism, though often well intentioned, can serve as vehicles for billionaires to avoid paying taxes.
Bankman-Fried himself once described effective altruism as a way to, “get filthy rich, for charity’s sake,” according to Axios.
Members of the FTX Foundation’s Future Fund posted the resignation news on the Effective Altruism Forum, a community space for members of the philanthropic movement, saying there were many committed grants the fund would no longer honor. Even if FTX still had money in the bank, the former members said recent scandals led them to have, “fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation.” Will MacAskill, known as the co-founder of the effective altruism movement, was among the signatories.
“We don’t yet have a full picture of what went wrong, and we are following the news online as it unfolds.” the former team members wrote. “But to the extent that the leadership of FTX may have engaged in deception or dishonesty, we condemn that behavior in the strongest possible terms. We believe that being a good actor in the world means striving to act with honesty and integrity.”
Bankman-Fried, whose crumbling crypto empire continues to send cryptocurrency prices tumbling, is reportedly under investigation by the SEC for potentially violating securities rules. The founder took to Twitter Thursday to apologize in a lengthy 22-part thread where he admitted to overestimating FTX’s cash availability and underestimating FTX users’ margins.
“I fucked up, and should have done better,” he said. The CEO, once worth over $20 billion, officially resigned from his position less than 24 hours later following the company officially filing for Chapter 11 bankruptcy.
Bankman-Fried’s fall from grace risks dealing a lasting blow to the effective altruism movement. The CEO subscribed to the philosophy before founding FTX, and appeared to put his money where his mouth was even after attaining massive wealth. In an interview with Bloomberg earlier this year, Bankman-Fried said he was committed to giving away 99% of wealth and took pride in continuing to drive a beat up Toyota Corolla. Bankman-Fried was, by far, the effective altruism movements’ wealthiest adherent.
In hindsight, it’s unclear how much of the founder’s billions actually ever made it to the causes he espoused to support. As of September 1, the Future Fund said it only committed around $160 million in grants and investments. In the meantime, Bankman-Fried reportedly spent nearly as much ($135 million) on naming rights for the Miami Heat’s basketball arena and an estimated $30 million on a single Super Bowl Ad.
“We are so sorry that it has come to this,” The FTX Future Fund members wrote. “We joined the Future Fund to support incredible people and projects, and this outcome is heartbreaking to us.”