Since the bankruptcy of FTX and the news that it was extending loans to its sister organization came to light, there has been a spotlight on Effective Altruism. Here’s all you need to know about it.
What is Effective Altruism?
Recently, news revealed that FTX was extending funds deposited to the exchange to Alameda, its sister foundation. The spotlight on Effective Altruism, a philosophy championed by the founder Sam Bankman-Fried has been rising. As per the Effective Altruism (EA) website, it “isn’t one organization, but a broad community of people working on a diverse set of projects with a common goal: doing as much good as possible.”
While it may sound like other philanthropic organizations, the EA focuses on “finding ways of doing good that work”. This means they use evidence and reasoning for figuring out “how to benefit others as much as possible and take action on that basis”. Data, impact, and statistics are described as the three main aspects.
“In the end, my goal is to do as much good as I can for the world. I am part of the effective altruism community. It’s a group of people trying to figure out how you want to maximize the good that you do, and the positive impact you have on the world. What does that imply? What does that mean you do with your life?… I got into finance in the first place to try and maximize the amount I can donate to some of the most effective causes,” stated the former CEO and founder in an interview with Forbes.
Why is it being criticized now?
Following FTX’s bankruptcy, the EA community is trying to distance itself from Bankman-Fried. “The EA community has emphasized the importance of integrity, honesty, and the respect of common-sense moral constraints… A clear-thinking EA should strongly oppose ‘ends justify the means’ reasoning,” tweeted William MacAskill. MacAskill is the co-founder of EA.
After leaving Wall Street, Bankman-Fried worked at the Center for Effective altruism before founding FTX. As per a Forbes report, Sam and his team “agreed to collectively fund the FTX Foundation, which set out in 2021 to give billions of dollars away over the coming decades”. However, one day before the firm filed for bankruptcy, Bantam-Friend stepped down as the CEO. FTX is said to owe money to over 1 million creditors.
“Former effective altruists have proposed structural reforms, some of which echo broader calls for ‘participatory funding’. Democratic control of philanthropic organizations by those who are impacted by the organization’s endeavors. These criticisms also seem to have been largely ignored in favor of a tech and capital-friendly research agenda. And a system controlled by the few with enough money or access to participate,” stated Olúfẹ́mi O Táíwò, and Joshua Stein in an opinion piece for The Guardian. Táíwò is a professor of philosophy at Georgetown University and Stein, is a post-doctoral fellow.