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suy  1yr ago (astralcodexten.substack.com)   Edited 1yr ago   3844 thread views

Scott Alexander on Sam Bankman-Fried, FTX and Effective Altruism

astralcodexten.substack.com

I made this a top level post because I think people here might want to discuss it but you can remove it if it doesn't meet your standards.

Edit: removed my opinion of Scott from the body

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Some people are asking whether people who accepted FTX money should have “seen the red flags” or “done more due diligence”.

I find this stuff really obnoxious. Since when has it ever been the job of charities to investigate the businesses of the people donating them money? EA or not, what charity does this? It would be a ridiculous waste of time and money, it's not their job and specialization exists for a reason. People are talking like it's some deep failing that they didn't find him suspicious and refuse his money, but just how many legitimate donors should they be willing to refuse as "suspicious" for the sake of avoiding a criminal? Not that it would have been practical anyway, EA-endorsed charities are not some unified group and a lot of his "EA" donations were stuff like directly supporting political candidates who promised to do something about pandemic preparedness

We're not talking about Sequoia Capital, the venture-capital firm that has now written down $214 million in FTX equity, had access to internal information, and actually had a duty to their investors to try to avoid this sort of thing. Similarly we're not talking about their other institutional investors like Blackrock, the Ontario Teacher's Pension Plan, Tiger Global Management, Softbank Group, Lightspeed Venture Partners, and Temasek. We're not talking about the state of Miami selling them the naming rights to a stadium for $125 million dollars, giving them a lot more advertising than some blog posts saying "this billionaire supports EA, great!". Somehow EA is held to a much higher standard than any of these, even though it seems obvious to me that accepting donations should be held to dramatically lower standards than investing teacher's retirement money. EA should focus on effective charity, that is already a sufficiently-ambitious specialty, it shouldn't focus on doing unpaid amateur investment analysis trying to beat institutional investors at their own jobs for the sake of refusing donations that might turn out to be from a criminal.

There are generally regulations around the operations of a charity. To quote from the Charities Governance Code in my own country:

Conflict of loyalties

A conflict of loyalties is when a charity trustee’s loyalty to another group could prevent them, or even just appear to prevent them, from making a decision in the best interests of the charity.

Example: This might happen when the charity trustee has joined the board as a nominee of a particular group, such as members in a particular county, a funding body, or staff.

This situation could cause the charity trustee to think that they should act in the interests of the group that nominated them, rather than the charity as a whole.

Exercising Control

Why this principle is important

All charities, no matter what their complexity, must abide by all legal and regulatory requirements that are relevant to the work they do. The charity trustees are responsible for making sure this happens. Charity trustees must understand that the governing document of a charity is a legally binding document in its own right.

The trustees are also responsible for a charity’s funds and any property or other assets that it holds. As much as is possible, they must also consider and reduce risks to which their charity is exposed.

Standards

Make sure you have appropriate financial controls in place to manage and account for your charity’s money and other assets.

Identify any risks your charity might face and how to manage these.

At a minimum, your board agendas should always include these items:

█ reporting on activities;

█ review of finances; and

█ conflicts of interests and loyalties.

There's a ton more of this stuff, but this gives you a taster. I'd be highly surprised if American charities weren't bound by similar constraints, and EA is a charitable body so it has to work under these kinds of regulations.

A lot of this will be "closing the stable door after the horse has bolted" but it won't hurt them to review their practices and see how they can tighten up assurances in future.

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