Suppose that Alice is a committed EA in good standing with tons of social ties to other EAs, and Alice can achieve a lot more stuff in the world because her EA associations help establish her benevolence, integrity, etc.
Alice then goes on a burglary spree and steals $100 each from Bob, Carol, and Dan.
Alice burns Bob’s $100.
Alice donates Carol’s $100 to FHI.
Alice holds on to Dan’s $100, and ends up giving it back to Dan (or a court returns the money).
FHI spends $70 of the stolen money, before learning that it was stolen. Alice gets arrested, etc.
My proposal in this hypothetical is:
FHI keeps the $30 (if this is compatible with the law of the land), and doesn’t give $70 back either. (Because I think the generalized norm “the onus is on the donation recipient to give everything back” would destroy a lot of projects and hurt a lot of people who are innocent bystanders that had no reason to believe the money was stolen.)
The larger EA community makes it a priority to internally raise $100 and give it to Carol. (IRL, we could do this immediately because $100 is a small sum. If the sum is a lot larger, then we should try to pay it off over a few years, in a way that’s not thrashing a lot of EA careers and projects unnecessarily / keeps funding flows as stable as possible.)
EAs don’t make it a collective priority to raise money for Bob (or for Dan).
This is the norm I’m proposing in this super-simplified hypothetical. I’m pretty uncertain about how relevantly analogous it is to the FTX situation, however. So I’m separately interested in hearing disagreement with the proposed norm (if anyone disagrees), and disagreement with whether it applies here.
I snap my fingers to instantly teleport all unspent money in this category (totaling $n) back to its owners.
I snap my fingers to instantly start a conference call with the thirty largest EA donors that’s guaranteed to result in commitments to pay $n back to the same people ASAP.
I’d expect 1 to cause a lot of long-term damage to a big chunk of the world’s quality-adjusted philanthropic efforts. I don’t know what spread of things has received FTX money, but I’m imagining orgs and projects shuttering (orgs and projects that would have been fine if they’d had a year or two to secure new funding, rather than a few days or weeks), individuals suddenly scrambling to make rent or try to apply to other grant processes, and a cascade of EAs (and EA allies) being unable to keep formal and informal commitments they’ve already made (e.g., to employees).
This seems like a weird form of destruction to inflict on a bunch of bystanders who didn’t know anything about FTX’s dysfunctions. Money is fungible! If we think this is important, then it seems perverse to make things right in a way that messes up a bunch of other people’s lives or careers, when we have other options as a community.
Obviously not every project will be affected in a big way by giving back the money. But I’m still wary of orgs doing stuff that might contribute to a virtue-signaling equilibrium that destroys a lot of value (“I gave back X, which makes my friend look like an asshole if she doesn’t give back Y, which makes her friends look like assholes if...”), if there are in fact any better options.
And I feel broadly icky about putting the moral onus on recipient orgs and individuals to make things right (when they bear no more blame than any of the rest of us), as opposed to taking ownership of the responsibility at a community level. (Not the full responsibility for everything bad FTX-ish folks have ever done; but community-level responsibility for any wrongfully acquired funds the community has used.)
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.
Suppose that Alice is a committed EA in good standing with tons of social ties to other EAs, and Alice can achieve a lot more stuff in the world because her EA associations help establish her benevolence, integrity, etc.
Alice then goes on a burglary spree and steals $100 each from Bob, Carol, and Dan.
Alice burns Bob’s $100.
Alice donates Carol’s $100 to FHI.
Alice holds on to Dan’s $100, and ends up giving it back to Dan (or a court returns the money).
FHI spends $70 of the stolen money, before learning that it was stolen. Alice gets arrested, etc.
My proposal in this hypothetical is:
FHI keeps the $30 (if this is compatible with the law of the land), and doesn’t give $70 back either. (Because I think the generalized norm “the onus is on the donation recipient to give everything back” would destroy a lot of projects and hurt a lot of people who are innocent bystanders that had no reason to believe the money was stolen.)
The larger EA community makes it a priority to internally raise $100 and give it to Carol.
(IRL, we could do this immediately because $100 is a small sum. If the sum is a lot larger, then we should try to pay it off over a few years, in a way that’s not thrashing a lot of EA careers and projects unnecessarily / keeps funding flows as stable as possible.)EAs don’t make it a collective priority to raise money for Bob (or for Dan).
This is the norm I’m proposing in this super-simplified hypothetical. I’m pretty uncertain about how relevantly analogous it is to the FTX situation, however. So I’m separately interested in hearing disagreement with the proposed norm (if anyone disagrees), and disagreement with whether it applies here.
Why not give back unspent funds though?
Comparing two scenarios:
I snap my fingers to instantly teleport all unspent money in this category (totaling $n) back to its owners.
I snap my fingers to instantly start a conference call with the thirty largest EA donors that’s guaranteed to result in commitments to pay $n back to the same people ASAP.
I’d expect 1 to cause a lot of long-term damage to a big chunk of the world’s quality-adjusted philanthropic efforts. I don’t know what spread of things has received FTX money, but I’m imagining orgs and projects shuttering (orgs and projects that would have been fine if they’d had a year or two to secure new funding, rather than a few days or weeks), individuals suddenly scrambling to make rent or try to apply to other grant processes, and a cascade of EAs (and EA allies) being unable to keep formal and informal commitments they’ve already made (e.g., to employees).
This seems like a weird form of destruction to inflict on a bunch of bystanders who didn’t know anything about FTX’s dysfunctions. Money is fungible! If we think this is important, then it seems perverse to make things right in a way that messes up a bunch of other people’s lives or careers, when we have other options as a community.
Obviously not every project will be affected in a big way by giving back the money. But I’m still wary of orgs doing stuff that might contribute to a virtue-signaling equilibrium that destroys a lot of value (“I gave back X, which makes my friend look like an asshole if she doesn’t give back Y, which makes her friends look like assholes if...”), if there are in fact any better options.
And I feel broadly icky about putting the moral onus on recipient orgs and individuals to make things right (when they bear no more blame than any of the rest of us), as opposed to taking ownership of the responsibility at a community level. (Not the full responsibility for everything bad FTX-ish folks have ever done; but community-level responsibility for any wrongfully acquired funds the community has used.)
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.