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’“
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 FTX.com 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.
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