Regulatory inquiry into Effective Ventures Foundation UK

Howie_Lempel30 Jan 2023 14:33 UTC
183 points
15 comments3 min readEA link

Earlier today, the Charity Commission for England and Wales announced a statutory inquiry into Effective Ventures Foundation UK (EVF UK). We issued a short statement acknowledging the inquiry. As the recently appointed Interim CEO of EVF UK, I also wanted to say a bit more to the community.

As you might imagine, writing this post feels a bit tough for a bunch of reasons. It’s a sensitive topic, there are lots of complicated legal issues to consider, and it’s generally a bit weird to write publicly about an agency that’s in the middle of investigating you (it feels a little like talking about someone in the third person without acknowledging that they’re sitting at the dinner table right next to you). One thing I really want to do is avoid speaking for the Charity Commission, which makes me hesitant to speculate too much about why exactly they chose to begin this inquiry, etc.

But I’m going to do my best to figure out what’s helpful to say here.

Summary

  • Effective Ventures Foundation UK (EVF UK) is the UK charity which, together with Effective Ventures Foundation US (EVF US), acts as host and fiscal sponsor for a wide range of projects including CEA, 80,000 Hours, and others.

  • Following the FTX collapse, the Charity Commission for England and Wales has opened an inquiry into EVF UK’s financial situation and its governance and administration by its trustees.

  • We were not particularly surprised by the Commission’s decision to open an inquiry.[1] As it notes, some FTX-linked entities (such as the FTX Foundation) and related individuals were major donors to EVF UK, and there was the potential for a variety of conflicts of interest with respect to governance (e.g., two of EVF UK’s board members were affiliated with FTX Foundation). Especially given the scale and profile of the FTX collapse, it makes sense that the Commission wants extra visibility into whether we’re appropriately protecting our property, managing potential conflicts of interest, and generally complying with UK charity law.

  • The UK board and executive team are cooperating in full and the Commission has confirmed that the trustees have fulfilled their duties by filing a serious incident report.

  • Sharing updates in the midst of an ongoing inquiry is legally complicated, so there will probably be some limitations to the updates we’ll provide before the inquiry is complete. But we’ll do our best to share whatever (if anything) is legally sensible.

What is Effective Ventures Foundation UK?

For context, EVF UK is the UK charity which, together with EVF US, acts as host and fiscal sponsor for a wide range of projects, including CEA, 80,000 Hours and others. Everything in this post is only referring to the UK entity since that’s the entity which is regulated by the Charity Commission. (You can read more about the structure and role of EVF UK here.)

What is a statutory inquiry?

The Charity Commission is a regulator whose responsibilities include:

  • Preventing mismanagement and/​or misconduct by charities;

  • Promoting compliance with charity law;

  • Protecting charities’ property, beneficiaries, and work; and

  • Safeguarding the public’s trust and confidence in charities.

A statutory inquiry is one tool the Commission has for establishing facts or collecting evidence related to these responsibilities. Opening an inquiry gives the Commission information gathering powers; they can require a charity to send relevant information or documents and they can require individuals to answer questions. The Commission also has wide-ranging powers for protecting charities and ensuring compliance. Outcomes can range from taking no action or issuing a warning to appointing an interim manager to manage the charity or even replacing trustees. You can read more about the Commission’s powers from 4.3-4.6 here.

We were not particularly surprised by the Commission’s decision to open an inquiry, especially given the scale and profile of the FTX situation, the funding that EVF UK received from FTX-linked entities and individuals, and the potential for a variety of conflicts of interest.

Why is FTX relevant to EVF?

EVF UK received substantial funding from FTX-linked entities (such as FTX Foundation) and individuals. Since FTX’s collapse, the trustees have carefully assessed the financial situation and the charity is not reliant on the FTX-related funds for its future operations.

There are also several other types of ties to FTX beyond funding — these vary significantly from one project to another. As one example which affects the whole entity, some EVF UK board members had links to FTX’s philanthropy; most notably, UK board member Nick Beckstead ran the FTX Foundation, and UK board member Will MacAskill served as an unpaid advisor to the Foundation. Since FTX’s collapse, Nick and Will have been recused from all board decisions that concern FTX, but are engaged where appropriate in our response to the Commission.

Is the Charity Commission alleging wrongdoing?

No. Opening an inquiry is not an allegation of wrongdoing, though we can’t know in advance what the inquiry might conclude. Of course, the possibility of finding misconduct or mismanagement is one of the factors the Commission considers when deciding whether to open an inquiry. But the Commission specifically says in its statement that ‘there is no indication of wrongdoing by the trustees at this time’.

The Commission’s job is wide-ranging, and its key aims include protecting charities and safeguarding the public’s trust in the charity sector, even in the absence of wrongdoing.

In our specific case, the Commission is interested in how the trustees are addressing any financial risks to EVF, as well as issues around governance and administration by the trustees, and the management of conflicts of interest. However, the scope can increase once the inquiry is underway.

What next?

The UK board and I have already worked to keep the Commission informed throughout the process. We filed a report with them just after FTX’s collapse and have kept them updated since. We will continue to fully cooperate with them on their inquiry.

We’ve never been through a process like this before, so I’m genuinely unsure what sorts of updates it will be legally sensible to share before the inquiry is finished. Inquiries usually take at least a few months and the Commission usually publishes a report once the inquiry is complete.

  1. ^

    For context, here is the Charity Commission’s discussion of when it opens inquiries.

Howie_Lempel30 Jan 2023 14:33 UTC
183 points
15 comments3 min readEA link