The nature of insolvency and fraud is that someone ends up getting hit with pain. The question is who should have to bear it. I don’t think it is correct to say that the community was the beneficiary of any ill-gotten funds; the true beneficiaries were the public. “The community” is even further removed from FTX than grantees, and the people who won’t be getting bednets (or whatever) because we diverted funds from effective charities are at an even further remove. I do not like the idea of diverting the pain from FTX depositors to bednet recipients unless that is morally obligatory. Without suggesting that the depositors are to blame, they are both better off and were more connected to the incident than the bednet recipients.
And I don’t see a moral obligation to return spent funds; the grantees were contracted to perform certain work that FTX-aligned people wanted done and they did it. We didn’t expect ordinary employees at Enron to give back their earned wages because their payor was a massive fraud.
However, the Enron employees were not morally entitled to unearned wages when that money could have gone to fraud victims. So too here. Because I think there generally is a moral obligation to return unused funds if those were the product of fraud, I am more inclined toward the idea of the community replacing those funds on behalf of grantees. But I would conceptually frame that a bit differently: we would be providing a grant to former FTX grantees to allow them to meet their obligation to refund unspent grant funds, so that their charitable work can continue. Maybe it’s just a matter of optics, but that feels subtly different than seeking monies to clean up the messes created by FTX.
The nature of insolvency and fraud is that someone ends up getting hit with pain. The question is who should have to bear it. I don’t think it is correct to say that the community was the beneficiary of any ill-gotten funds; the true beneficiaries were the public. “The community” is even further removed from FTX than grantees, and the people who won’t be getting bednets (or whatever) because we diverted funds from effective charities are at an even further remove. I do not like the idea of diverting the pain from FTX depositors to bednet recipients unless that is morally obligatory. Without suggesting that the depositors are to blame, they are both better off and were more connected to the incident than the bednet recipients.
And I don’t see a moral obligation to return spent funds; the grantees were contracted to perform certain work that FTX-aligned people wanted done and they did it. We didn’t expect ordinary employees at Enron to give back their earned wages because their payor was a massive fraud.
However, the Enron employees were not morally entitled to unearned wages when that money could have gone to fraud victims. So too here. Because I think there generally is a moral obligation to return unused funds if those were the product of fraud, I am more inclined toward the idea of the community replacing those funds on behalf of grantees. But I would conceptually frame that a bit differently: we would be providing a grant to former FTX grantees to allow them to meet their obligation to refund unspent grant funds, so that their charitable work can continue. Maybe it’s just a matter of optics, but that feels subtly different than seeking monies to clean up the messes created by FTX.