The downfall of crypto exchange FTX and its founder, Sam Bankman-Fried, has thrown a spotlight on “effective altruism,” the philanthropic movement that Bankman-Fried championed as he amassed a fortune that peaked at an estimated $26.5 billion.
That money appears to have evaporated along with FTX’s customer deposits, leaving the effective altruism movement reeling. It has simultaneously lost one of its biggest funders and suffered a reputational blow. Some observers have even suggested Bankman-Fried’s embrace of effective altruism was partly to blame for FTX’s implosion. (FTX, which is now led by new CEO John Ray III, didn’t immediately respond to a request for comment.)
So what is effective altruism? Here are seven key facts — and one big question.
What ‘effective altruism’ is
Some media coverage of the FTX collapse has defined effective altruism solely as “earning to give” — the belief, espoused by Bankman-Fried, that the best way to make a difference is to earn as much money as possible so you can donate it to charity. But that’s just one facet of the broader effective altruism movement.
Essentially, effective altruism is the idea that people should use their resources in a way that does the most good for humanity. Followers try to view their charitable giving and sometimes their career choices through an impartial, pragmatic lens and seek out the best evidence-based solutions to the world’s most pressing problems.
Its guiding principles include trying to discover the best ways of helping humanity; making data-driven decisions about which solutions are most effective; and counting everybody’s well-being equally, even if that means prioritizing people and causes you’ve never seen firsthand and never will. In other words, an effective altruist would probably recommend donating to a nonprofit handing out insecticide-treated bed nets to prevent malaria in Sierra Leone over contributing to your local food pantry, because the bed nets are a cost-effective way to save more lives.
“It’s the idea that we should be using our resources to do as much good as possible, and we should be using science, evidence, and the best research and analysis that we can marshal to figure out how to do as much good as possible,” Josh Greene, a Harvard University psychology professor, told MarketWatch in a 2021 interview about an effective altruism project called The Giving Multiplier.
Effective altruism isn’t just a framework for charitable giving. It’s also a field of study, a social community whose members call themselves “EAs,” and for some, a lifestyle choice that steers career decisions and personal financial choices.
Where effective altruism originated
The short answer is Oxford University, where a group of philosophy students coined the term effective altruism in 2011.
The movement is rooted in utilitarian philosophy, the idea that the best course of action is the one that produces the most good, counting everybody’s well-being equally. The Oxford philosophers who conceived effective altruism were inspired in part by the Australian philosopher Peter Singer’s 1972 essay “Famine, Affluence and Morality,” which argued that people in wealthier countries have a moral obligation to use their money to help save the lives of people in less-well-off countries. (Singer later helped bring effective altruism into the mainstream with a 2013 TED Talk.)
Singer’s work set Oxford philosophy student Will MacAskill on a “moral journey,” he said in a BBC podcast interview. That led him to co-found two of the earliest EA groups with fellow Oxford philosophers: Giving What We Can, a group that encourages people to donate at least 10% of their income to effective charities, and 80,000 Hours, a nonprofit that helps guide people who want to pursue high-impact careers that help solve the world’s most pressing problems. Both groups are now under the umbrella of the Centre for Effective Altruism, which has offices in the U.K. and the U.S.
(The Centre for Effective Altruism and Will MacAskill did not respond to requests for comment.)
The big names in effective altruism
MacAskill, 35, garners most of the movement’s media attention and has become its de facto public face. He’s authored two books: “Doing Good Better,” which introduced effective altruism’s philosophy to a wider audience in 2015, and “What We Owe the Future,” which was published earlier this year and makes a pitch for “longtermism,” a new iteration of EA focused on solving existential risks in the distant future, such as out-of-control AI, pandemics and nuclear war. The book was a bestseller, and Elon Musk plugged it on Twitter, calling it a “close match for my philosophy.”
MacAskill has known Bankman-Fried (who is often called SBF) since 2012, personally advising him and serving on the leadership team of SBF’s philanthropic group, the FTX Foundation’s Future Fund. The fund gave grants to mostly longtermist causes, which is Bankman-Fried’s preferred branch of EA, he told the New Yorker in a lengthy profile of MacAskill that ran three months before FTX’s collapse.
MacAskill and the rest of the Future Fund’s leadership publicly resigned when FTX collapsed in November, saying they had “fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.”
As for effective altruism’s biggest financial backers, Bankman-Fried and Facebook
co-founder Dustin Moskovitz were by far the movement’s top supporters until FTX’s bankruptcy. Moskovitz and his wife, Cari Tuna, donated more than $14 million to the Centre for Effective Altruism this year, and the FTX Foundation’s Future Fund reportedly donated $13.9 million.
In addition to money, SBF’s rising prominence as a young crypto billionaire gave new cachet to effective altruism. His business and philanthropy were presented as one and the same: He said he founded FTX with the intention of donating to the world’s most effective charities.
How much money is involved in effective altruism
In 2021, an EA leader estimated that around $46 billion had been “committed to” the movement going forward, including $16.5 billion from Bankman-Fried and FTX-related sources, and $22.5 billion from Moskovitz. Since then, SBF’s net worth has shrunk to less than $1 billion, and Facebook’s plummeting stock price has cut Moskovitz’s wealth significantly.
In the context of overall charitable giving in the U.S, which amounted to $484.5 billion in 2021, the effective altruism movement is a relatively small slice. Still, its resources seemed to be expanding rapidly until recently — so much so that MacAskill outlined concerns about how the movement should handle its funding influx.
“There’s one huge difference between aiming to do good and aiming to make profit,” he wrote on the 80,000 Hours website earlier this year. “If you set up a company aiming to make money, generally the very worst that can happen is that you go bankrupt; there’s a legal system in place that prevents you from getting burdened by arbitrarily large debt. However, if you set up a project aiming to do good, the amount of harm that you can do is basically unbounded.”
The post has since been updated with a note explaining that “Until recently, we had highlighted Sam Bankman-Fried on our website as a positive example of someone ambitiously pursuing a high-impact career. To say the least, we no longer endorse that.”
Which charities are funded by effective altruism
The effective altruism movement’s initial focus was on improving the lives of poor and vulnerable people, but it has since expanded to include issues like animal welfare and longtermism. EAs often choose causes that they feel are neglected by others because they believe they can have the biggest impact in those areas.
Examples of EA-aligned groups include the Malaria Consortium, the Against Malaria Foundation, Helen Keller International and Give Directly, among others. One of the best-known EA groups is GiveWell, which was founded in 2007 by two former investment bankers who wanted to be more effective with their charitable giving.
The longtermist groups funded by the FTX Foundation’s Future Fund include ALLFED, a nonprofit that identifies new food sources that could be used to feed people after a global catastrophe, and the Alignment Research Center, which works to keep artificial intelligence “aligned with human interests.”
How SBF got involved in effective altruism
Bankman-Fried, 30, came to effective altruism long before he got involved in crypto trading. He discovered EA when he was a sophomore in college, and the moment was a “turning point,” according to a Yahoo Finance profile. He met MacAskill later that year, which is also when he first started thinking about the idea of “earning to give.”
That idea solidified in his junior year, as he was trying to decide between pursuing a job at the Centre for Effective Altruism and working on Wall Street, Yahoo Finance reported. At MacAskill’s suggestion, Bankman-Fried talked to some EA-aligned nonprofits about how he could best help them, SBF told a BBC interviewer. He was then a physics major at MIT and would potentially have a high-paying job after graduating. Bankman-Fried says the nonprofits told him he wasn’t charismatic or outgoing enough to be an activist for them. “They basically all said, ‘We’d prefer your money than your time,’” he told the BBC.
During a three-year post-college stint at the quantitative trading firm Jane Street, Bankman-Fried has said, he gave away more than half his income to charities. Earlier this year, he signed the Giving Pledge, a public promise that billionaires make to give away most of their wealth.
Other effective altruists say they give away significant amounts of their earnings, and some say they live very modestly. MacAskill has said he lives on about $36,000 a year and donates more than half his income. He estimates that he’s saved thousands of lives by doing so, and says he’s become a happier person as a result, he told the BBC, because his life has a sense of purpose.
Criticisms of effective altruism
Effective altruism’s emphasis on impartiality can leave some people cold. People who want to donate to research on a disease that killed a loved one, or to a nonprofit that helps people experiencing homelessness in their town, can feel judged when effective altruists deem those causes not worthy of funding.
The movement also lacks diversity. People inside EA have pointed out that its followers skew mostly young, white, male and upper-middle-class, and come primarily from male-dominated fields, mostly tech. Other EAs say the movement fails to take women into account when it gives advice about the most effective careers.
Critics have also said effective altruism doesn’t consider systemic problems like racism and misogyny when it makes funding decisions.
There’s been no small amount of criticism of effective altruism in the wake of FTX’s downfall. Anand Giridharadas, a frequent critic of billionaire philanthropy, called the EA movement a “con” in a tweet last month. “It promoted ‘earning to give,’ which was our existing plutocratic norm on steroids: make as much money as you can, even in socially destructive ways, and then donate to soothe your soul,” he said.
One big question: What’s next for effective altruism?
At the very least, effective altruism has lost one of its biggest potential financial backers. It’s also possible that nonprofits that received funding from FTX Foundation’s Future Fund could be asked to give back grant money as the bankruptcy unfolds.
The movement will also have to build back its reputation following its long and public association with Bankman-Fried, who hasn’t been charged with any crimes. An “outraged” MacAskill tweeted in the wake of FTX’s collapse, trying to distance effective altruism from its onetime benefactor.
“I want to make it utterly clear: if those involved deceived others and engaged in fraud (whether illegal or not) that may cost many thousands of people their savings, they entirely abandoned the principles of the effective altruism community.”