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What might FTX mean for effective giving and EA funding
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Jack Lewars
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3/5
Good(3)Good quality. Reputable source with community review or editorial standards, but less rigorous than peer-reviewed venues.
Rating inherited from publication venue: EA Forum
Written in the immediate aftermath of the FTX collapse, this EA Forum post offers early community reflection on systemic funding fragility and is representative of the governance and resilience debates that followed the crisis.
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204
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eaforum
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CommunityEffective givingBuilding effective altruismCriticism of effective altruismCriticism of the effective altruism communityFTX collapseFTX FoundationFuture FundSam Bankman-FriedEffective altruism funding
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Importance: 42/100blog postcommentary
Summary
Written immediately after FTX's November 2022 collapse, this post analyzes the structural vulnerabilities that left EA funding dangerously concentrated in a small number of volatile sources. It argues for diversifying donors across all wealth levels, reviving earn-to-give culture, and maintaining better awareness of reputational risks and funding optics.
Key Points
- •EA's funding was ~85% reliant on two pots of money tied to 2-3 highly volatile assets, a concentration risk inadequately reflected in forecasting.
- •Funding diversity reduces not just collapse risk but also the outsized influence of a few decision-makers on grant outcomes and philosophical direction.
- •Advocates bringing in donors at every level, including more ultra-high-net-worth individuals and renewed celebration of earning-to-give.
- •Warns that grantees may have taken on fixed-cost obligations (e.g., buildings) without adequately stress-testing funding scenarios.
- •Calls for retaining nuance and reputational awareness in funding discussions during both boom and bust periods.
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| FTX Collapse: Lessons for EA Funding Resilience | Concept | 78.0 |
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# What might FTX mean for effective giving and EA funding
By Jack Lewars
Published: 2022-11-15
FTX's demise is understandably dominating EA discussion at the moment. Like everyone in the community, I’m primarily just really sad about the news. A lot of people have been hurt; and a lot of funding that could have been used to do a staggering amount of good is no longer available.
I’m also aware of the dangers of publishing reactions too quickly. Many of the facts about FTX are not clear. However, the major effect of recent events on EA funding seems fairly unambiguous: there is substantially less funding available to EA today than there was a week ago.
Accordingly, I think we can lay out some early food for thought from the last year or so; and hopefully start an evolving conversation around funding in EA, and effective giving more broadly, as we learn more.
(P.s. Much of what is below has been said before but it seems helpful to summarize it in one place. If it’s your work I’m drawing on, I hope you see this as validation of what you saw that others didn’t. I’ll link to you where I can!)
We need to aim for greater funding diversity and properly resource efforts to achieve this
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Saying “we should diversify our funding” is almost cringingly obvious in the current circumstances. But a lot of the discussion about funding over the last year seemed not to acknowledge the risks when [~85%](https://80000hours.org/2021/07/effective-altruism-growing/#how-quickly-has-the-number-of-engaged-community-members-grown:~:text=available%20are%20exploding.-,How%20many%20funds%20are%20committed%20to%20effective%20altruism%3F,-Here%20are%20some) of expected funding is supplied by two pots of money; and when those pots are effectively reliant on the value of 2-3 highly volatile assets. Even when these issues [were explicitly acknowledged](https://80000hours.org/2021/07/effective-altruism-growing/#how-quickly-has-the-number-of-engaged-community-members-grown:~:text=Bear%20in%20mind,crash%20the%20price.), they didn’t seem to influence the way funding was forecasted sufficiently - discussions rarely seemed to consider a future where one or both sources of funding rapidly declined in value. We may find out in the coming months that grantees didn’t consider this risk sufficiently either, for example if they bought fixed assets with significant running costs.
Funding diversity is important not just to protect the overall amount of funding available to EA. It’s also vital to avoid a very small number of decision-makers having [too much influence](https://medium.com/@sven_rone/the-effective-altruism-movement-is-not-above-conflicts-of-interest-25f7125220a5#:~:text=By%20relying%20heavily,of%20these%20ideas.) (even if they don’t want that level of influence in the first place). If we have more sources of funding and more decision-makers, it is likely to improve the overall quality of fu
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