I think it’s wise to separate the FTX and due diligence issue from the broader thesis. Here I’m just commenting on due diligence with donors.
Who was/is responsible for checking the probity or criminality of …
(a) FTX and Almeda?
(b) donors to a given charity like CEA? (I put some links on this below)
(a) First it’s their own board/customers/investors, but presumably supervisory responsibility is or should also be with central bank regulators, FBI, etc. If the CEO of a company is a member of Rotary, donates to Oxfam, invests in a football team, it doesn’t suddenly become the primary responsibility of all of those entities (ahead of board, FBI etc) to check out his business and ethics and views, unless (and this is important) he’s going to donate big and then have influence on programmes, membership etc.
(See the links below on how both due diligence and reputational considerations* can matter a lot to the recipient charity. If there is some room for doubt about the donor, but it doesn’t reach a threshold, it may be possible to create a layer of distance or supervision e.g. create a trust with it’s own board, which does the donating.)
(b) Plenty of charities accepted donations from Enron, Bernie Madoff and others.
Traditionally, their job is to do their job, not evaluate the probity of all their donors. However, there has been a change of mood since oil industry disinvestment campaigns and the opioid crisis (with the donations from the Sackler family, here in the UK at least**). Political parties are required to do checks on donors.
Marshall Rosenberg turned down lots of people who wanted to fund NVC and the cNVC nonprofit, because he felt that taking money put him into relationship with them, and some companies he just didn’t want to be in relationship with. This worked well for him, and made sure there was no pressure to shift focus, but it did frustrate his staff team quite often.
It might be possible as a matter of routine policy to ask large donors if they are happy to have their main income checked, especially if they want to be publicly associated with a particular project, or to go more discreetly to ratings agencies and so on. A central repository of donor checks could be maintained, to minimise costs. This wouldn’t be perfect, but a due diligence process, ideally open and transparent, would sometimes be a good defence if problems arise later?
These are the (more minimal) UK Charity Commission guidelines on checking out your donors, and even this might have helped if it had been done rigorously:
I think it’s wise to separate the FTX and due diligence issue from the broader thesis. Here I’m just commenting on due diligence with donors.
Who was/is responsible for checking the probity or criminality of …
(a) FTX and Almeda?
(b) donors to a given charity like CEA? (I put some links on this below)
(a) First it’s their own board/customers/investors, but presumably supervisory responsibility is or should also be with central bank regulators, FBI, etc. If the CEO of a company is a member of Rotary, donates to Oxfam, invests in a football team, it doesn’t suddenly become the primary responsibility of all of those entities (ahead of board, FBI etc) to check out his business and ethics and views, unless (and this is important) he’s going to donate big and then have influence on programmes, membership etc.
(See the links below on how both due diligence and reputational considerations* can matter a lot to the recipient charity. If there is some room for doubt about the donor, but it doesn’t reach a threshold, it may be possible to create a layer of distance or supervision e.g. create a trust with it’s own board, which does the donating.)
(b) Plenty of charities accepted donations from Enron, Bernie Madoff and others.
Traditionally, their job is to do their job, not evaluate the probity of all their donors. However, there has been a change of mood since oil industry disinvestment campaigns and the opioid crisis (with the donations from the Sackler family, here in the UK at least**). Political parties are required to do checks on donors.
Marshall Rosenberg turned down lots of people who wanted to fund NVC and the cNVC nonprofit, because he felt that taking money put him into relationship with them, and some companies he just didn’t want to be in relationship with. This worked well for him, and made sure there was no pressure to shift focus, but it did frustrate his staff team quite often.
It might be possible as a matter of routine policy to ask large donors if they are happy to have their main income checked, especially if they want to be publicly associated with a particular project, or to go more discreetly to ratings agencies and so on. A central repository of donor checks could be maintained, to minimise costs. This wouldn’t be perfect, but a due diligence process, ideally open and transparent, would sometimes be a good defence if problems arise later?
These are the (more minimal) UK Charity Commission guidelines on checking out your donors, and even this might have helped if it had been done rigorously:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/550694/Tool_6.pdf
Here’s a plain English version where the overall advice is “be reasonable”:
https://manchestercommunitycentral.org/sites/manchestercommunitycentral.co.uk/files/Ethical%20fundraising%20-%20how%20to%20conduct%20due%20diligence%20on%20potential%20donors_0.pdf
**This is for bigger donations:
https://www.nao.org.uk/wp-content/uploads/2017/08/Due-diligence-processes-for-potential-donations.pdf
*This is about how things went wrong for Prince Charles’s charities:
https://www.charitytoday.co.uk/due-diligence-for-charities-ensuring-transparency-and-trustworthiness/