For Australian philosopher Peter Singer, the fraud charges laid against Samuel Bankman-Fried will not trigger a death blow for “effective altruism,” a philanthropic movement championed by the FTX cryptocurrency exchange founder.
“It may lead the movement to reconsider its relationship with billionaires and reconsider its relationship with crypto,” said Singer, who some have labelled the “father of effective altruism,” in an interview with CBC News.
“Is this going to do long-term reputational damage? I think the answer to that is no.”
But the arrest of Bankman-Fried — who U.S. federal prosecutors allege “devised a scheme and artifice to defraud FTX’s customers” — has sparked some speculation that the scandal could cause serious damage to the controversial effective altruism philanthropy movement. Bankman-Fried was also one of its largest donors, so that flow of funds has dried up.
Singer sees no “direct relationship” between what Bankman-Fried is accused of and effective altruism. But the scandal has definitely raised questions as to what links there are to Bankman-Fried’s alleged conduct and the movement itself.
‘Damaging for effective altruism’
The founder and director of the U.K.-based think tank Why Philanthropy Matters considers Bankman-Fried’s involvement in effective altruism “an absolutely core part of the story.”
“It’s damaging for effective altruism because the fact that Sam Bankman-Fried was an effective altruist doesn’t seem to be incidental to the whole story and what’s happened [with] FTX,” said Rhodri Davies.
As described by the effective altruism organization Giving What We Can, the movement is based on using “evidence and careful reasoning to work out how we can do the most good with our limited resources.”
Its core idea, then, is that when it comes to trying to do good in the world, and particularly give to charity, people shouldn’t focus on what they think is important or what they want to do.
For example, does it make sense to give money to a local charity, like a food bank? Or might that money, according to effective altruists, be better utilized going toward something that would have a larger impact, more bang for the buck, like the purchase of mosquito nets to help in the global fight against malaria.
“[The idea is] you should kind of take yourself out of the picture, be totally neutral about causes, and think ‘What’s the way I can do the most good in the world with the money that I’ve got,'” Davies said.
But the idea of effective altruism has also drawn criticism for being too utilitarian, or consequentialist, and accused of prescribing an ends-justifies-the-means kind of philosophy.
“I think the narrative in a lot of people’s minds now is he he has sort of pushed that idea to its limits and beyond … up to and including [alleged] fraud and kind of corporate malpractice,” said Davies.
The U.S. government has charged Samuel Bankman-Fried, the founder of now-defunct cryptocurrency exchange FTX, with a host of financial crimes after being arrested in the Bahamas. He faces decades in prison if convicted.
Make your pile, give later
The movement has also been criticized as arrogant for suggesting that effective altruists can determine just what charities are most worthy for donations.
“It basically says we’re a bunch of very smart philosophy graduates and we kind of know what the problems of the world are and how to solve them. So it’s very top-down,” said Davies.
Leslie Lenkowsky, professor emeritus in public affairs and philanthropic studies at Indiana University, said that effective altruism makes a virtue out of arrogance.
“If I had $1,000,000 to spend, I’d love to put it into something that would change the world. But the truth of the matter is, I don’t know what that is. The world’s a pretty complicated place, and there’s not one button you could push.”
He said the allegations against Bankman-Fried raises big questions about the ethical nature of the movement.
Effective altruism had, at least initially, also advocated that instead of working at an NGO, people should seek to work in a job where they can earn a high salary, the so-called “earning to give” philosophy, and use that money to pursue their philanthropic goals.
Cryptocurrency analyst David Gerard describes FTX as a ‘clown financial institution’ that held many ‘imaginary assets.’ FTX founder Sam Bankman-Fried has been charged with eight criminal offences after the collapse of the company.
“Bankdman-Fried was following one of its principle injunctions, which is if you have the ability to make money, go make money, rather than go into some non-profits or pursue a social cause,” Lenkowsky said. “Once you’ve made your pile, you can give later.”
“If in fact, he was knowingly doing something illegal, he was trying to make it justifiable because it was going to be for philanthropy. That raises a big ethical question about the central premise of effective altruism.”
But Singer says the fact that Bankman-Fried if facing serious fraud offences suggests he was acting “much less rational” than effective altruism, “which is all about evidence and reasoning.”
“To do something that is that blatant and that obviously is going to carry a serious risk that you will go to jail for a long time … I mean, that’s just pretty crazy,” he said. “And I don’t think there’s anything in effective altruism that would say you should do that.”
‘Sam did not listen’
While Singer has been called the intellectual father of effective altruism, the movement itself was co-founded by Scottish philosopher William MacAskill in 2009 as an Oxford student, inspired by Singer’s work.
MacAskill himself, shortly after news of the FTX scandal broke, tweeted that “for years, the EA community has emphasised the importance of integrity, honesty, and the respect of common-sense moral constraints.”
“If customer funds were misused, then Sam did not listen; he must have thought he was above such considerations.”
Singer said he believes the effective altruism movement has done a lot of good and he is hopeful that it is going to go on to do considerably more.
FTX founder Sam Bankman-Fried, once hailed as the ‘King of Crypto,’ spoke on video for the first time since the sudden collapse of his cryptocurrency exchange company, pushing back against allegations of fraud.
But he acknowledged the fact that billions of dollars slated to go to effective altruistic endeavours has now “gone up in smoke” is “pretty terrible.”
Bankman-Fried, who reportedly became interested in effective altruism after a lunch meeting with MacAskill around a decade ago, had entrusted MacAskill and four of his lieutenants to oversee grant making at the Future Fund, according to Forbes. The Fund, launched in February, is thought to be a subsidiary of the FTX Foundation.
Yet gifts made by the Future Fund could now be clawed back by FTX’s creditors in bankruptucy court, Forbes reported.
And MacAskill is now under fire by many in the effective altruism community.
“The recent FTX scandal has, I think, caused a major dent in the confidence many in the EA Community have in our leadership,” wrote Gideon Futerman, whose small nonprofit received money from the Future Fund, on a community forum, Forbes reported.
Singer, however, remained optimistic about the future of the effective altruism movement.
“I think it’s it’s now quite well established it’s quite well-known. It’s causing very substantial sums of money to be donated to highly effective charities. And that’s all a good thing. And I think that’s going to continue despite the FTX collapse.”