Effective altruism: What is Will MacAskill’s earning to give concept that drove FTX founder Sam Bankman-Fried?
By Peter Henn
12:49, 15 November 2022
When the FTX (FTT) cryptocurrency exchange collapsed and filed for bankruptcy, one could not help but think what the organisation’s founder, Sam Bankman-Fried, must have thought of it all.
Until a short while ago, Bankman-Fried was a man who met former presidents and prime ministers and was seen as someone who could usher crypto into a new, better run, better managed and better regulated era. It was thought he was giving blockchain-based coins and tokens the respect, credit and mainstream appeal they so desperately craved.
But the man known in crypto circles as SBF has moved rather quickly from being the poster boy of cryptocurrency to being a former billionaire. Now he is associated with the collapse not only of FTX, but also the filing of bankruptcy for its American subsidiary FTX.US and investing firm Alameda Research.
And yet, there is one thing about Bankman-Fried that people might overlook: his connection to a particular school of philosophical thought. The concept of Effective Altruism, also known as EA, appeared to play a big part in what the entrepreneur was seen to have been doing, even if there may be some doubt as to whether it had an impact on what he actually did.
But what is effective altruism? Let’s take a look and see what we can find out.
Effective altruism explained
If altruism is the idea that one should act for others rather than oneself, then effective altruism might well be the idea that one can be altruistic in an effective way. That might seem rather too simple, so let’s break it down.
The concept of effective altruism lies in the idea that people can and should choose careers where they are able to do as much good as possible and, having done so, give their money to people, places and organisations where it can do as much good as possible.
A cynic might well suggest that a billionaire’s take on effective altruism could best be defined by a quote from former British prime minister Margaret Thatcher: “No one would remember the Good Samaritan if he’d only had good intentions. He had money as well.” In other words, it could be argued – perhaps unfairly – that the idea was to make as much money as possible in the short-term in the hope that some good could be done with the cash in the long run.
Sam Bankman-Fried and effective altruism
You might wonder what effective altruism has to do with crypto entrepreneurship. Well, it transpires that Bankman-Fried, when he was a student at the Massachusetts Institute of Technology, had lunch with EA guru William MacAskill and it helped him change course.
He explained: “I know how good I am at passing out leaflets, and the answer is mediocre, so I ended up going to Wall Street after I graduated with the goal to donate what I made.”
After making his billions, Bankman-Fried managed to gain something of a reputation for a kind of philanthropy. He had given more than $35m of his fortune to a variety of campaigning organisations and good causes. These included OpenAI, a research organisation that works to ensure artificial intelligence benefits humanity, and animal welfare groups. His money also went on political funding, with him donating more than $5m to Joe Biden’s American presidential campaign fund.
But things took a turn for the worse in November 2022.
FTX’s charitable wing, the FTX Foundation, had donated, or at least promised, $190m to a range of causes and organisations. The Foundation’s main giving wing was called the Future Fund. Its board, which included MacAskill, all resigned in the wake of FTX’s collapse, stating: “We were shocked and immensely saddened to learn of the recent events at FTX. Our hearts go out to the thousands of FTX customers whose finances may have been jeopardised or destroyed.
“We are now unable to perform our work or process grants, and we have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.”
The statement continued: “We are devastated to say that it looks likely that there are many committed grants that the Future Fund will be unable to honour. We are so sorry that it has come to this. We are no longer employed by the Future Fund, but, in our personal capacities, we are exploring ways to help with this awful situation.”
The aims of effective altruism might well be both effective and altruistic, but they will come as little comfort to intended beneficiaries and those who may have lost substantial amounts of money in the wake of FTX’s collapse.
As Bankman-Fried himself said long before his crypto business empire fell apart: “It’s really, really hard to do good in one realm, if you’re seen as doing a lot of harm in another realm.”
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