Jason—this is a reasonable concern. The 4-year crypto asset cycle could indeed lead to cycles of windfalls and dry spells for donations. But I guess the burden would be on EA organizations to smooth this out by saving up some of the windfall money to cover the dry spells—rather than the donors trying to avoid high-volatility assets that show such cycles?
That makes sense in many contexts. I can think of some in which it might not work as well:
It is plausible that orgs may have planned for the crypto cycle, but not planned for FTX collapse and probable clawbacks, and that the assets that would otherwise be used for smoothing had to be diverted. That goes for double if the org was affected by a non-crypto financial issue (e.g., grant reduction/non-renewal from another source). As a practical matter, an org can only prepare for so many contingencies at once . . . even the US military with all its massive spending is designed to maintain a two-front war, IIRC.
I think it probably relies on an assumption that the org was old enough / established enough to have received a windfall during the high-water point of the previous crypto boom cycle. Without a windfall, there would be no windfall income to devote to smoothing.
Hopefully any donations from individual donors who have benefitted from actually taking profits (into fiat currency) from volatile assets (such as crypto) would be less subject to corporate collapses, scandals, and clawbacks than donations from crypto companies such as FTX. But it’s well worth thinking about these kinds of financial and legal risks.
Jason—this is a reasonable concern. The 4-year crypto asset cycle could indeed lead to cycles of windfalls and dry spells for donations. But I guess the burden would be on EA organizations to smooth this out by saving up some of the windfall money to cover the dry spells—rather than the donors trying to avoid high-volatility assets that show such cycles?
That makes sense in many contexts. I can think of some in which it might not work as well:
It is plausible that orgs may have planned for the crypto cycle, but not planned for FTX collapse and probable clawbacks, and that the assets that would otherwise be used for smoothing had to be diverted. That goes for double if the org was affected by a non-crypto financial issue (e.g., grant reduction/non-renewal from another source). As a practical matter, an org can only prepare for so many contingencies at once . . . even the US military with all its massive spending is designed to maintain a two-front war, IIRC.
I think it probably relies on an assumption that the org was old enough / established enough to have received a windfall during the high-water point of the previous crypto boom cycle. Without a windfall, there would be no windfall income to devote to smoothing.
Jason—yes, fair points.
Hopefully any donations from individual donors who have benefitted from actually taking profits (into fiat currency) from volatile assets (such as crypto) would be less subject to corporate collapses, scandals, and clawbacks than donations from crypto companies such as FTX. But it’s well worth thinking about these kinds of financial and legal risks.