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Billionaire philanthropy: (Part 5: Sources of wealth)

Effective altruists present their philanthropic program … in a manner that reflects no awareness of the significance of their situatedness within capitalist forms of life. How it happens that EA has at its disposal an audience of people with excess wealth is not a question that they take up.

Alice Crary, “Against `effective altruism’

1. Introduction

This is Part 5 of my series on billionaire philanthropy. Part 1 introduced the series. Part 2 looked at the uneasy relationship between billionaire philanthropy and democracy. Part 3 examined the project of patient philanthropy, which seeks to create billionaire foundations by holding money over a long period of time.

Part 4 brought the focus back to philanthropists themselves, focusing on their motivations for giving. There, we saw that although many philanthropists exhibit a degree of genuine altruism, there is often a divergence between their stated altruistic motivations and other unstated motivations.

One issue that came up in this discussion is the question of how philanthropists made their money. Discussing Congressional opposition to the formation of the Rockefeller Foundation, the first billionaire-sponsored philanthropic trust in the United States, we saw:

[One] reason why nobody trusted Rockefeller is that nobody liked the way in which he had made his money. Rockefeller was one of a small-number of men styled `robber barons’, who made their fortunes through a combination of low wages, anti-unionist crackdowns, and monopolistic business practices. At the same time, Rockefeller was widely accused of having played a key role in the Ludlow massacre, in which over a thousand striking workers were mowed down in their tents by machine-gun fire.

Doubts about the origins of Rockefeller’s wealth colored how Rockefeller’s contemporaries viewed his philanthropy. Methodist minister Hugh Price Hughes reminded the faithful that:

This immense development of commercial wealth has been purchased at the cost of equally immense evils.

The pastor Washington Gladden urged on these grounds that Rockefeller’s donations should be refused, asking:

Is this clean money? Can any man, can any institution, knowing its origin, touch it without being defiled?

As we saw, Gladden spoke for the majority: the United States Congress refused to allow Rockefeller to establish his foundation, in large part because they didn’t like his business practices.

In the age of the prosperity gospel, we are somewhat less accustomed to asking hard questions about the origins of philanthropic wealth. But these questions must be asked. My aim today is to look at some instances where the wealth acquired by billionaire donors to the effective altruism movement may place constraints on whether and how that wealth should be used, and how we should account for the benefits and harms of projects funded by tainted wealth.

Let’s start with the worst case.

2. The worst case: Fraud

Until late 2022, one of the leading sources of funding for effective altruist projects was the FTX foundation established by Sam Bankman-Fried and associates. The fund appears to have made at least $100m of donations (though readers are cautioned that some information about spending may be inaccurate), spending lavishly on causes such as:

  • A $1.5m prize to convince a panel of judges that AI will (or will not) soon kill us all.
  • A fellowship lavishing $50,000 on high-achieving high-school students without regard to need.
  • $900,000 in prizes for blogs discussing ideas related to effective altruism.

Bankman-Fried also made tens of millions of dollars of campaign contributions to elected officials, many of which prosecutors allege to have been illegal.

At its height, FTX was valued at over $30 billion dollars. Last year, the company collapsed after it was alleged that Bankman-Fried had pillaged billions of dollars in customer deposits to prop up its failing trading arm. After the company became insolvent, Bankman-Fried was arrested along with several of his executives for what prosecutors describe as an ongoing pattern of fraud dating at least back to 2019. From the indictment:

From at least in or about 2019, up to and including in or about November 2022 … Bankman-Fried, along with others, engaged in a scheme to defraud customers of by misappropriating those customers’ deposits, and using those deposits to pay expenses and debts of Alameda Research, Bankman-Fried’s proprietary crypto hedge fund, and to make investments

Since then, new charges have been added, relating to bribes of up to $40 million paid to Chinese officials, and illegal political donations.

The result of this catastrophe is over $8 billion in missing customer funds, much of which is unlikely to be returned. $8 billion in consumer losses against at most a few hundred million dollars of charitable donations is not a good legacy.

What worries does the FTX fraud raise for effective altruism? At least four concerns stand out.

First, there is a question of whether effective altruists are entitled to funds received from FTX. A large proportion of donations made by the FTX Future Fund went to EA-aligned groups, and many of these donations have yet to be returned. In holding on to these donations, might effective altruists be profiting from ill-gotten gains?

Second, many have argued that effective altruists were to some degree complicit in promoting the image of Sam Bankman-Fried as an altruistic, frugal billionaire, an image which may have allowed him to attract more funds, or to conceal allegedly fraudulent activities for a longer period of time. And effective altruists were certainly extensively involved in the management of the FTX foundation. If that is right, then effective altruists may have a moral obligation to compensate some of the victims of the alleged fraud.

Third and relatedly, we need to make sure that the altruistic balance sheet of charities reflects the harms done by their funders. It is all too easy to publish tables of chickens saved from factory farms or researchers hired to prevent existential catastrophe, while neglecting to mention that this work was funded by money acquired through harmful or fraudulent activities. Even as we rightly celebrate the benefits of altruistic work, we need to take careful and accurate accounting of its costs, including costs involved in fundraising.

Fourth and finally, due to the size of FTX, its collapse has imperiled the future not only of customers, but also of organizations which now find themselves with a clawed-back hole in their balance sheet. For example, Zacharia Kafuko, a Zambian biochemist and director of 1Day Africa, writes for Foreign Policy:

My organization, 1Day Africa, received money from FTX’s charitable arm, the Future Fund. I am struggling with what to do next. The grant was awarded to support vaccine equity and pandemic preparedness advocacy work in Africa. 1Day Africa aimed to use the money to push for a pandemic insurance fund, an international fund that would receive annual contributions to be used to purchase vaccines for all people during the next pandemic—especially for those in poor countries who have struggled to acquire COVID-19 vaccines.

That work may be scuttled as a result of the FTX collapse. The problem is much more general than this. Kafuko continues:

Much has rightly been written about the suffering that FTX’s fraud caused, and I feel for those who lost their personal funds and savings. But there is another group that will suffer as a result of this fraud as well: vulnerable and poor people worldwide who were lined up to benefit from the projects that FTX funded. This includes many projects Future Fund supported that were meant to uplift the welfare of others, improve quality of life (especially in poor countries), and save lives. There was money set to help eliminate lead exposure for children worldwide, to help gifted children in poor regions of India excel, and to help develop a wide array of new vaccines, which may never materialize or may be left in legal limbo. For the organizations that did receive promised funding before FTX’s bankruptcy, there has been talk of clawbacks of grant money, but only time will tell.

When we draw up the altruistic balance sheet of Future Fund-driven activities, we need to account not only for harms to consumers, but also for harms due to charities now scrambling to stay afloat and sustain their programming.

All of these concerns are familiar and have been widely discussed in recent months. What is less frequently discussed is that this is not the first time that a billionaire donor to effective altruism has come under criminal investigation for their business dealings.

3. Ben Delo and BitMEX

Ben Delo is the billionaire co-founder of BitMEX, a cryptocurrency exchange. Delo is a signatory to the Giving Pledge, which commits him to giving the majority of his wealth to philanthropic causes. The focus of Delo’s pledge is on supporting causes connected to effective altruism:

My ambition now is to do the most good possible with my wealth. To me, this means funding work to safeguard future generations and protect the long-term prospects of humanity. This includes mitigating risks that could spell the end of human endeavour or permanently curtail our potential. My approach is inspired by philosopher William MacAskill and the effective altruism movement, which promotes the use of reason and evidence when deciding how best to help others.

Over the past several years, Delo has generously supported effective altruist causes. For example, Delo contributed at least $1.4m to supplement Open Philanthropy’s funding of the Machine Intelligence Research Institute, and funded other research projects including the Center for Human-Compatible AI‘s research on AI safety, Decision Research‘s work on nuclear weapons, and a collaboration between the Future of Humanity Institute and John Hopkins Center for Health Security on pandemics.

Initial reactions to Delo’s philanthropy were largely positive. Here is Kelsey Piper, writing for Vox:

Ben Delo founded a cryptocurrency startup five years ago — and now he’s the UK’s youngest self-made billionaire. The 35-year-old Brit founded BitMEX, a cryptocurrency trading company … In 2018, BitMEX’s value was estimated at $3.6 billion; Delo owns 30 percent of the firm, which makes his net worth more than $1 billion. This past month, he did something noteworthy: He promised to give much of his fortune away. Delo signed what’s known as the Giving Pledge, a commitment started by Bill Gates and Warren Buffett to encourage fellow ultra-wealthy people to “dedicate the majority of their wealth to giving back.”

But there was a dark side to Delo’s philanthropy. The early days of cryptocurrency were haunted by a pervasive influence of money laundering, as mafias, drug gangs, sanctioned officials and criminal syndicates discovered cryptocurrencies to be a safe and cost-effective way to clean and transfer dirty money. This put cryptocurrency trading executives in a nasty pickle: they could crack down on money laundering, but doing this would alienate their customers. On the other hand, they could turn a blind eye to money laundering, an act which would attract customers, but which would also be highly immoral as well as illegal.

Last year, Delo and his co-founders pled guilty to violations of the Bank Secrecy Act. According to the Department of Justice press release on the case:

From at least September 2015, and continuing at least through the time of the Indictment in September 2020, [BitMEX co-founder Arthur] HAYES and DELO willfully caused BitMEX to fail to establish and maintain an [anti money-laundering] (AML) program, including a program for verifying the identity of BitMEX’s customers (or a “know your customer” or “KYC” program). As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform. For example, in May 2018, HAYES was notified of allegations that BitMEX was being used to launder the proceeds of a cryptocurrency hack. Neither HAYES, DELO, nor their company filed a suspicious activity report thereafter (indeed, BitMEX filed no suspicious activity reports at all between 2014 and September 2020), nor did they implement an AML or KYC program in response. Unsurprisingly, BitMEX was also a vehicle for sanctions violations: HAYES and DELO both communicated directly with BitMEX customers who self-identified as being based in Iran, an OFAC-sanctioned jurisdiction, but did nothing to implement an AML or KYC program after doing so. HAYES and DELO failed to institute AML or KYC programs at BitMEX despite closely following U.S. regulatory developments that made clear their legal obligation to do so

Delo got off with a slap on the wrist: probation and a $10 million fine. One can only hope that the victims of criminal organizations laundering money on the platform got off as lightly as this.

Delo’s case raises concerns similar to the case of FTX. First, there is a question of entitlement: to what degree are effective altruists entitled to funds given by Delo, to the extent that those funds were not otherwise returned? Second, there is a question of complicity: could effective altruists’ involvement with Delo have helped to bolster his image or business? And finally, there is a question of accurate accounting: when assessing the benefits of charitable activities funded in this manner, we need to weigh these benefits against the harms done in acquiring funds.

It might also pay to reflect on the fact that both Delo and Bankman-Fried were cryptocurrency billionaires. Crypto billionaires have a deservedly mixed reputation in the charitable sector, as a result of which many charities are increasingly skeptical about working with them. Perhaps effective altruists should be skeptical as well.

4. Carbon emissions

Many of the largest donors to effective altruist causes made their money in Silicon Valley, often in energy-heavy industries such as cryptocurrency. Bitcoin alone consumes more electricity than the entire country of Norway. More generally, the technology sector is responsible for at least 2-3% of global emissions, a level comparable to the entire aviation industry.

The harms of global warming will fall fastest and hardest on many of the world’s poorest nations, particularly on some of the most disadvantaged residents of these nations. For this reason, many have proposed that those responsible for greenhouse gas emissions have restorative duties to pay for the harms of their emissions.

A striking fact about effective altruism is that effective altruists have placed at best modest emphasis on mitigating climate change, one of the best-evidenced and most impactful long-term trends in society today. They have also increasingly shifted money away from projects such as global health and anti-poverty work, which primarily benefit the world’s most disadvantaged populations, towards expensive research into existential risks carried out largely in developed Western nations. In this sense, longtermist research funded by technology billionaires represents:

  • A direct harm to existing and future humans, in the form of carbon emissions, falling heaviest on the most disadvantaged populations.
  • A failure to pay to mitigate that harm.
  • An increasing effort to direct other sources of funding away from disadvantaged populations and towards high-salaried researchers in wealthy countries.

This is not a good look, and one might rightly ask whether it is morally defensible behavior on behalf of technology billionaires.

That is not to say that donors should be obliged to give all of their wealth to climate-related causes, or that all climate-related work should be directed at offsetting the harms of climate change in disadvantaged populations. However, there may well be a moral obligation for donors to give a good deal of money to climate-related causes, placing special emphasis both here and in other work on harms falling on disadvantaged groups.

5. Taking stock

Today’s post looked at the sources of wealth given to effective charities. We considered one instance (FTX) in which much of that wealth is alleged to have been fraudulent, and another (BitMEX) which the US Department of Justice went so far as to describe as “in effect a money laundering platform”. We also looked at the costs of climate emissions produced by technology companies and the failure of many donors to pay to mitigate the harms caused by climate emissions.

I want to close by situating discussions of billionaire philanthropy within the broader project of this blog. I am often asked whether concerns about billionaire philanthropy should be, on their own, strong enough to justify refusing donations. The answer, at least in some cases, may well be that while the concerns are forceful and important, they are not decisive on their own.

What, then, is the good of complaining about billionaires? The answer dates back to a discussion in the conclusion of my series on existential risk pessimism. Many people propose that a single complaint, such as non-aggregative moral views, fraudulent donations, or neglect of racial justice is enough to scuttle the case for longtermism or for effective altruism more generally. A difficulty of this strategy is that the single complaint raised had better be a very forceful one if it is to carry so much argumentative weight. It usually is not.

I proposed a different strategy, one which would not trade on controversial philosophical assumptions, and which would also not put all of its eggs in one basket.

It is a long and winding road. One-shot philosophical moves such as denying that future people matter, or that small claims can aggregate to outweigh large claims, would shorten the road, but precisely because they make the road so short, they tend to be a bit too strong for many readers. This blog proposes an alternative path: work, for the sake of argument, within a framework that is broadly totalist, consequentialist, and the like. Then develop a series of challenges within this framework which combine to put pressure against longtermism.

How, then, are we to view concerns about billionaire philanthropy? As one large egg in an increasingly weighty basket of concern about effective altruism and about the current practice of longtermism. We can disagree about the aggregate weight of the basket. But we needn’t disagree that concerns about billionaires are an important egg in the basket.


4 responses to “Billionaire philanthropy: (Part 5: Sources of wealth)”

  1. JWS Avatar

    Hi David, I want to thank you for continuing to extend your criticisms of a variety of fronts. Your posts are well-written and continually give me things to reflect on.

    The only part of this post I’d take issue with is some claims in section 4:

    “mitigating climate change, one of the best-evidenced and most impactful long-term trends in society today”:
    So I think an EA could accept this and agree that mitigating the effects of climate change is a priority for the world, but might not qualify as a priority for the EA movement. Funding to mitigate the effects of climate change vastly outstrips most other EA cause areas, as far as I know, if at the margin EA funding would do more good through a GWWC recommended charity such as Helen Keller International, for example.

    “They [effective altruists] have also increasingly shifted money away from projects such as global health and anti-poverty work, which primarily benefit the world’s most disadvantaged populations, towards expensive research into existential risks carried out largely in developed Western nations.” – So I think that this is a big crux. I don’t think this is actually true, as best as I can tell? On the clearest source I could find ( suggests that EA funding to Global Health & Development causes has never been higher. Now, you could say that you’re objecting to the *proportion* of EA funding going to longtermist causes , but the proportion of funding going to GHD is likely to rise drastically as FTX funding drops to $0 in future years and in any case, surely the absolute amount of funding matters more. Alternatively, you could say that the object is to the *opportunity cost* of longtermist funding, but I think those who do so open them up to the full strength of a Singerian critique of all spending, not just that of EA longtermist research. I think most who use this critique think that EA funding by cause area has changed far more drastically than it really has.

    From my perspective, the “EA 1.0 used to be about bednets, but EA 2.0 has gone bonkers with longtermism” is a common refrain throughout EA criticism and outside coverage of EA (it came up a lot in popular press articles about EA/MacAskill during the launch of ‘What We Owe the Future’), but as far as I can tell it may actually be false empirically (I welcome alternative evidence on this point). So I think this is probably a big hole that the EA movement has dug for itself, by its major institutions (like 80k) publicly pivoting towards longtermism, but a lot of the actual impact through donations continuing to go to the GHD sphere.

    As always, I look forward to hearing your perspective.

    1. David Thorstad Avatar

      Thanks JWS, as always, for your comments! I’m sorry for the late response. I was at a conference this weekend.

      **EA 1.0 and EA 2.0**

      I think you are absolutely right that the critique “EA 1.0 used to be about bednets, but EA 2.0 has gone bonkers with longtermism” is a common refrain. It’s also fairly close to my view. I often think that there’s a lot to be said for the truth of common refrains. When large numbers of people who like reasons, evidence, effectiveness, science, and altruism turn from actively supporting effective altruism to strongly opposing effective altruism and do so based on something like the turn to longtermism, that’s some reason to think that the turn to longtermism might have been a wrong turn.

      Recently, the longtermists have grabbed unprecedented power within the movement. For example, 80,000 Hours just revised its ranking of the world’s most pressing problems ( to rocket all of the longtermist causes to the top. Factory farming and malaria are now relegated to the damning subheading “problems many of our readers prioritise” (ouch!). And in research centers, university groups, EA Forum discussions and the like, the longtermists are gaining more power every year.

      **Amounts and proportions of funding**

      You are absolutely right to stress that while the *proportion* of funding has begun tilting toward longtermism, the *amount* of funding devoted to short-termist causes has increased steadily. This has been possible because effective altruists have aggressively grown the amount of total funding year after year. Now, for the first time, the pie is shrinking: the collapse of FTX means that there is less money available this year than there was last year. For the first time, we face the real possibility of a shrinking dollar commitment to short-termist causes, with the result that poverty, disease, and factory farming may be less well-addressed this year than they were last year. If that happens, people and animals will die.

      I do think that the collapse of FTX could push the proportion of funding back towards short-termist causes, insofar as FTX was primarily interested in funding longtermist causes. However, I worry that major funders are instead going to pick up the longtermist funding slack. I don’t know how to find the exact tweet, but if I recall correctly, Dustin Moskovitz told me outright on Twitter when I raised this worry that OpenPhil will increase its longtermist funding to make up for the shortfall left by FTX, and OpenPhil is by far the largest remaining funder.

      **Climate change**

      I sometimes worry about the ability of the ITN framework to be selectively finessed to support or oppose any cause. It is true that climate change is not as neglected as some causes are, though I think it should be readily admitted that the world is doing far too little to fight climate change, given its impact. But it is also true that effective altruists are willing to support other less-neglected causes, such as opposition to factory farming or initiatives in global health and development.

      You do raise a good question of whether climate mitigation is more cost-effective than short-termist causes such as global health and development. To be honest, I am not sure. One thing that might be important to stress is that on many ethical theories, those who have been responsible for significant amounts of carbon emissions in the past might have an obligation to pay to mitigate the effects of those emissions, even if there are more effective things they could do with their money. (Compare: I can’t crash into your car and then refuse to pay on the grounds that someone else needs the money more than you do). But it’s also important to stress that the world faces a pressing climate emergency, and the window for action is closing.

  2. Jason Avatar

    I hope you’ll do a post on EA’s response to FTX/SBF-related clawbacks when more information is publicly known. From where I sit, there are some at-times-difficult ethical questions floating around — and the way they are handled may tell us something interesting and important about EA. (These questions are interlaced with legal questions, but as a US lawyer, I don’t think the legal questions are difficult in most cases.)

    Like you implied above, SBF left a lot of indirect victims. A large part of bankruptcy/insolvency theory is about figuring out how to allocate the pain when there are more people who deserve to be made whole than there is money to do that.

    One set of questions involves organizational responses. If legally allowed, is it OK to retain the portion of ill-gotten grants that were already “earned” prior to the organization learning that the funds were secured by fraud? The answer could depend on whether the organization should have known at the time of spending the money that SBF was at best super-shady. To me, this is a challenging question in some instances because we wouldn’t expect ordinary vendors (like hotels, professional service providers, etc.) to return money that they had already earned for work performed in good faith even though it ended up coming from Madoff, SBF, etc. Are the charitable “vendors” in a different position?

    Likewise, will organizations use legal manuevers to attempt to get out of returning money (to the extent they have assets on hand to liquidate)? My initial reaction would be to judge any organization that plays games pretty harshly. But past bankruptcies have exposed ethical dilemnas, often involving funds that the organization had accepted with informal or formal donor restrictions — like a Catholic diocese that went bankrupt over sex-abuse liability that had money in a cemetery endowment given by those whose loved ones were buried to maintain those cemeteries. Legality aside, how does an organization balance its ethical obligation to donors from whom it accepted restricted funds with its ethical obligation to return monies obtained by fraud?

    Another set of questions involves donor and movement-wide responses. Is it OK for donors to restrict or channel future grants/donations in a way that prevents those grants/donations from being used to repay claims by the FTX bankruptcy estate (and ultimately, by the defrauded depositors?) Do donors in the cause areas SBF was funding have some sort of obligation to contribute toward making the FTX victims whole to the extent monies are not clawed back? If so, how should the extent of that obligation be determined? (For instance, a position that the cause area should not on net be better off than it would absent SBF’s existence is narrower than a position that the amount of money SBF put into the cause area needs to be disgorged.) There’s something uncomfortable about “allowing EA to benefit” from SBF’s misdeeds, but there’s also something uncomfortable about making all EAs — even those who did not take any of his money — somehow responsible for his misdeeds.

    That is not to suggest that these questions are difficult in all scenarios, just in some of them.

    1. David Thorstad Avatar

      Thanks Jason! You’re absolutely right that these are fascinating questions. I’ll do my best to write about them, and I hope you will let me know what you think of them too.

      To be honest, I could use some advice before I write about these topics about what I can safely write without being the target of a lawsuit.

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