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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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.
I'd say about 1:1, at minimum, of avoiding donors who a) will make up a charity-redefining portion of the funds, and b) are more than slightly likely to collapse.
Yes, you can dial up the specificity until this exact problem is very rare, but the broader class of scuzzy rich or 'rich' people with reputational and financial risks that will disrupt your organization isn't even specific to charity, and has tremendous downside that at best set back causes and financials by years, if not simply scuppering entire organizations. And let's be direct: this will kill a good few charities, including a few pretty good ones. And risky investors, at least at levels where of donation that can close an org, are high enough a percentage of the field that I don't think this runs into the joint under- and over-diagnosis problems.
I don't want to make too much of past problems internal to LessWrong-sphere charities (and tbf, many like the embezzlement thing at early SIAI is genuinely different), or crypto (although there are so damn many), or the specific combination of the two (tbf, far more marginal 'criminality'... and still a big financial risk). But this is not some alien problem teleporting in from another dimension, which no one could have expected. Nor are we in the heady days where a crypto rug pull was unprecedented: you can look at the stats a week or three years ago. And the guy was regularly taking interviews and talking his willingness to take very high risk bets!
Maybe people were making these evaluations internally -- a /
2% chance of fucking over your entire charitable giving organization against a 95% chance of having twice or five times the funding is an attractive bet for some people! -- and just rolled snake-eyes, and don't want to publicly admit it. Or maybe people were making these evaluations and guessed wrong, say, coming up with a /0.5% chance of FTX collapsing (whether as here, or just legal investment risks). But if you're getting a large portion of your funding from any crypto organization, this isn't just a risk someone somewhere was warning about: it was the default common knowledge.It's acceptable to be wrong; but refusing to recognize that loses a lot of potential for growth.
That's a fair defense, if it turns out we're talking 50% or 25% or 10% of randomly selected EA charities, or the 10% of thirstiest ones, or the 10% most political-candidate ones. I don't think that sounds to be the case: Scott himself has to change some plans for future grants because of this! This estimate says 35% of 2022 EA (organization?) funding!
That's a fairer defense, and the Ontario Pension Plan admins should be facing serious scrutiny, if not potential review of their licensing (if they have any), as should any who make serious crypto investment with other people's money and no extremely clear disclosure. And for people who are solely Effective Altruists, I can accept a certain level of naivete.
But a lot of the EA movement is LessWrong-sphere, or part of the broader rationality sphere. Nor were effected charities limited to EA-normie focuses like lead abatement; the Good Judgement Project is marked for a 300k grant, and Manifold Markets for half a million. That is, the people who were working to make this class of bet accurately. Now, that's necessarily going to be an aspirational thing... but it's good to notice when you've failed to meet your aspirations.
((The sportsball stadium thing is funny, but I don't think it's very wise to admit 'our movement for applied rationality is no better at predicting massive risks to our own interests than the corrupt organization that we've spent a decade using as an example for bad spending and quick ways to get a concussion'.))
And more importantly: EAs can walk away from the money. Someone who knows more than the market has to spend significant amounts of cash, at serious risk, over long periods of time, to make the millions that everyone's mentioning when motioning around EMH. Even the pensioner's funds, as wildly unethical as that was, have contractual or social obligations to get certain levels of increasingly hard to achieve return. Not to defense them, but this is a reason you can't consider their judgement at simple face value.
An EA organization has to... look at other funders? Which, according to Scott's claims here, were already thirsty for good causes to give money to? Scale down operations for a year? Maybe if you were talking a Pink Ribbon knockoff, where your failure means a thousand clones will come to fill the spot after you: Effective Altruism is supposed to, by definition, not be targeting the crowded fields. Risk aversion makes sense in a case where catastrophic failure has longer-term risk.
Or indeed, "turns out our much-lauded donor and funder was just as happy to have his company's name splashed all over the places we've used as examples of bad ways of donating money". Ouch, indeed.
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