There is no evidence that anyone in the EA movement was aware of the FTX fraud, and one of its founders, Will MacAskill, has strongly denounced Bankman-Fried’s actions. Still, the company’s collapse, and SBF’s November 2023 conviction for stealing billions of dollars from customer accounts, caused immense reputational damage to the movement.

The Baggage of Sam Bankman-Fried

It wasn’t just because FTX had funneled game-changing amounts of money in its direction. Until 2019, Bankman-Fried had also served on the Center for Effective Altruism board, which MacAskill co-founded. Mac-Askill served on the board of the FTX Future Fund—until resigning in November 2022. 

It was also a huge black eye for effective altruism’s “earn to give” philosophy, which encourages individuals to amass as much wealth as possible to give it away. MacAskill reportedly convinced Bankman-Fried to do just that by taking a high-paying job in finance when he was an undergraduate at MIT. SBF was later billed as the “world’s most generous billionaire” for his support of EA causes since then.

Intentionally or not, ‘‘earn to give’’ has concentrated decision-making power about who benefits from effective altruism around the globe in the hands of a small group of billionaires—the wealthiest of them in tech. Bankman-Fried was not even the movement’s largest funder. Open Philanthropy, set up by Facebook co-founder Dustin Moskovitz and his wife Cari Tuna, is by far the biggest donor to EA causes, and handed out over $650 million of grants in 2022 alone. 

Launching the Effective Altruism Movement

Effective altruism certainly didn’t begin this way in 2009, when MacAskill and fellow Oxford University postgraduate philosophy student Toby Ord founded Giving What We Can. The charity asks that normal people, not billionaires, pledge to give at least 10% of their income to “effective” charities, and to date it has received pledges from 8,703 people in 99 countries, totaling $3.8 billion.

Since then, the movement has spawned many other nonprofits in the U.K. and the U.S. that have collectively raised billions more from a large donor pool. GiveWell, a U.S. nonprofit that researches and funds charities that it estimates save or improve the most lives per dollar, raised over $600 million in 2022. 

How effective altruism expanded in a few short years was dramatic. Its key tenets—focusing on doing social good, making decisions informed by evidence and logic, and intentionally trying to do as much good as you can—were not new. So says Katherina Rosqueta, founding executive director of the Center for High Impact Philanthropy and faculty co-director at the University of Pennsylvania’s High Impact Philanthropy Academy.

However, increasing publicly available data about the nonprofit sector and the influence of Australian moral philosopher Peter Singer’s book The Life You Can Save, turned EA into a movement. “You had this set of young people who had access to data and information, and this philanthropic practice tied to this moral framework,” says Rosqueta. “That was a great package to engage a new generation of donors.”

Addressing Immediate Philanthropic Needs

Some effective altruism groups have had a real impact in saving and improving lives worldwide. GiveWell, for example, has donated over $120 million to New Incentives. The charity provides direct cash transfers to caregivers in Nigeria who take babies for routine childhood vaccinations. It has enrolled 2.6 million infants to date. 

GiveWell has also donated over $82 million to the Schistosomiasis Control Initiative and Evidence Action’s Deworm the World Initiative, two programs that treat children with parasitic worms. And over $176 million has gone to the Against Malaria Foundation, which has protected around 450 million people with mosquito nets. 

Once all its currently funded nets have been distributed, the Against Malaria Foundation estimates it will have prevented 185,000 million deaths. “When we first set up AMF there was a very simple aim: raise funds, purchase nets, distribute them so that they ended up over heads and beds, and make sure we had the data to prove it,” said Rob Mather, the Foundation’s CEO, during an AMA chat hosted by the Effective Altruism Forum in December. 

These early EA movement projects worked because they supported proven, cost-effective humanitarian solutions, says Brian Berkey, associate professor of legal studies and business ethics at the University of Pennsylvania Wharton School. “I think mosquito nets, deworming, and direct cash transfers are the cases where there is the clearest evidence of significant impacts,” he says. “They were all things where you could run randomized control trials and test the effects of the intervention.”

This focus on impact per dollar has been one of the EA movement’s most important influences on philanthropy. “It’s not the exclusive domain of effective altruism, but I hope that thinking about the relationship between impact and cost and philanthropy’s role in creating more public good persists,” says Rosqueta.

Shifting EA’s Focus to the Future

However, more recently, the movement’s focus, particularly among its wealthiest funders, has shifted towards advancing longer time horizons. The FTX Future Fund focused on “long-term improvements for humankind,” like pandemic preparedness and AI safety. Open Philanthropy has donated over $330 million to organizations—such as OpenMined, an AI audit software company—that are researching or tackling the potential risks of advanced artificial intelligence.

Longtermism, the tenet of EA that saving the lives of humans living in the future is as important as saving the lives of people living today, is a controversial philosophy. Interventions in longtermist causes are also based on educated guesses about their impact, not on proven, cost-effective solutions to current humanitarian needs, according to Berkey. “The core ethical commitment can be lost if you focus on cool tech and sci-fi stuff, as opposed to how we prevent more people from dying from malaria [and get] money to people who are suffering now,” he says. Still, it’s currently what excites EA’s powerful tech industry funders. “If longtermism dominates the resources and attention of prominent effective altruism organizations, bringing more people into the movement will become much more difficult,” Berkey says.

Measuring Effective Altruism’s Impact

Effective altruism needs to refocus on funding cost-effective solutions to current problems, according to Berkey. But cost effectiveness, while important, is only one way of measuring a charity’s impact. For example, Charity Navigator, the largest non-profit evaluator in the U.S., considers a charity’s impact and results alongside its accountability and finance, culture and community, and leadership and adaptability. 

“A key differentiator between Charity Navigator’s approach and effective altruism is that we’re also looking at the broader set of metrics that lead to high performance and a healthy organization,” says CEO Michael Thatcher. “Is this charity financially sound? Does it have good leadership and governance, with an independent board? Are its internal equity practices meaningful? Are they receiving input from their beneficiaries and using that input in a way that’s going to change how they deliver their programs?”

Input from beneficiaries is not a focus of effective altruism. “They determine the need and then fund the intervention that is supposed to address that need,” says Rosqueta. “If you believe that individuals should be able to determine their own lives, it should be the other way around. Philanthropists should be listening to what self-determined needs are.” This is the funding strategy of billionaire philanthropist MacKenzie Scott, who believes that people struggling against inequities, not large donors, should drive giving.

Rosqueta says that some effective altruism groups do consider the beneficiary perspective in their funding of direct cash transfers to those that need them most, but that’s the exception, rather than the rule. “There is a lot of evidence about how effective it is to give cash to individuals, but I have not yet heard effective altruists talk much about the philosophical underpinnings behind that evidence, which is the self determination of the individuals.”

Determining Altruism

EA can be prescriptive for donors, as well as for recipients. “Part of the philosophy around effective altruism is figuring out the most effective interventions to save lives,” says Thatcher. “That often restricts the cause areas that you would be donating to. Our position is that we’re going to help you find the best organization doing what you care about.” 

That adds to the perception that the leaders of the movement are scolding or condescending about other efforts to do good and ignore the role that the business and public sectors play in advancing social change. “In practice, the ways in which some of the movement’s leaders have approached it has been a little bit of ‘We’re smarter than you.’ That tends not to hold as a movement because you’re not inviting anyone in, but instead creating a crowd that feels sort of exclusive,” says Rosqueta. 

Which brings us back to the tech billionaires, who have the most sway in the movement. Instead of being a mechanism for tackling global inequality, hasn’t “earn to give” just led to an even greater concentration of power in the hands of a few, super-wealthy donors? Berkey does not see it that way. “If more people actually took up the recommendation to earn to give, then you’d have a lot more people whose salaries are really high, but who aren’t keeping most of the money…We don’t want to cede these positions of wealth and power to people who are incorrigibly selfish,” he says.

Changing Generational Values Around Philanthropy

But it could be that the concept of ‘’earn to give,” where individuals make money in one sector of the economy and give it away elsewhere, is already outdated. “I work on a college campus and, much more than a generation ago, young people are using their money to align with their values—what they eat, where they shop, where they donate, and where they save and invest,” says Rosqueta. “Instead of saying, ‘I’m going to optimize the amount of money I make and donate it to certain causes,’ more young people are blurring those lines.”

Experts say that for effective altruism to thrive and attract a new generation of young people, it needs to be more inclusive; to listen to the views of all of its donors, not just the very wealthiest; to incorporate feedback from beneficiaries; and to refocus on what it does best—funding proven, cost-effective solutions to today’s humanitarian problems. 

In a post on the Effective Altruism Forum last June, MacAskill acknowledged some of these requirements, writing that the effective altruism movement needed a more decentralized organizational structure, a greater diversity of funding sources, and a culture emphasizing that “there are many conclusions that one could come to on the grounds of EA values and principles, and celebrate cases where people pursue heterodox paths (as long as their actions are clearly non-harmful).” 

Following Bankman-Fried’s conviction and its impact on the movement, a lot of attention will be focused on whether that happens.  

Thus we have created a survey designed to delve into the intricacies of how HNW and UHNW individuals make investment decisions that align with their values, the role of financial advisors in shaping these choices, and the metrics used to gauge the success of impact investments. 

This initiative seeks to uncover the depth of engagement, investment strategies, and philanthropic endeavors of those leveraging their wealth for societal and environmental benefit. By participating, you contribute to a comprehensive exploration of how today’s elite navigate the complexities of creating a lasting impact while achieving financial returns.We invite you to share your experiences and viewpoints through this survey, contributing to a pivotal discussion on the future of impact investing and philanthropy. Your participation helps shed light on current trends and challenges and informs the strategies to drive more effective and meaningful change. Join us in this essential conversation and help shape the understanding of how wealth can be a powerful catalyst for positive global impact.

To take our survey, click here.

Today, two organizations that admit to very different philosophies around philanthropy released a joint survey that they say shows public disapproval of how DAFs operate. Describing themselves as an “odd couple,” progressive Inequality.org and conservative publication The Giving Review collaborated on a survey of 1,005 American adults conducted on February 15 and 16. (It’s a follow-on from a similar 2022 survey done by Inequality.org.)

According to the report, majorities of people—whether they identified as “left,” “middle,” or “right”—agreed (either “strongly” or “somewhat”) on several philosophical points. For instance, U.S. taxpayers shouldn’t subsidize wealthy Americans who create self-perpetuating charitable funds. There should be a limit on how much donors can claim for tax credits. And Congress should impose annual payout requirements for DAFs.

What’s a DAF?

But there was also wide agreement on another point: Most people don’t know what a DAF is or how it works. Only 17% said that they are aware of DAFs. And only 35% knew that wealthy donors could get tax breaks of up to 74 cents on the dollar.

“The reality is, most people do not understand them,” says Chuck Collins, director of the Program on Inequality and the Common Good at Inequality.org. “What this poll does is…we explain how some of these things work and then ask, ‘What do you think of this?'”

The gist of a donor-advised fund is that it provides a nonprofit vehicle for a wealthy individual, couple, or family to set aside tax-deductible money—and have more input on grantmaking than through a traditional charitable foundation. One big benefit is that the donor can claim the tax deduction the year they put money into the DAF, regardless how long it takes to get that money out to good causes. Another is that they can roll a wide array of “non-cash assets” into a DAF to get that tax deduction, such as appreciated stock (to reduce capital gains taxes) or cryptocurrencies.

No Spending Requirements

DAF donors can decide when and how much to parcel out. That’s a key sticking point for reformers like Collins and for some legislators looking to make changes. Once they know about it, the public doesn’t like the practice, either, according to the study. Fifty-four percent of survey takers said that DAFs should pay out funds in just two years. And 25% said it should be within five years. Just 18% chose the option, “Take as long as [you] want,” which is the status quo under current law. 

“What was fascinating is, most of the reform proposals for DAFs are like, you should have a payout in 15 years,” says Collins. “The public opinion is like, you should have a payout in five years, [or] you should pay it within two years.”

The most prominent of those proposals are in bipartisan Senate and House bills for the Accelerate Charitable Efforts Act. ACE, as it’s called, would push DAFs towards a 15-year payout. (The legislation has been introduced a few times in recent years but hasn’t gotten far.)

Regardless how long a DAF lasts, the survey indicates that people would like some yearly payout requirements, too. Most agreed (strongly or somewhat) that Congress should require DAFs to direct 10% of their assets to charities annually (and that the current 5% requirement for foundations should also go to 10%). The ACE Act would require that DAFs pay out at least 5% a year.

Cutting Back Tax Benefits

The demand for quick payout is justified, says Collins, because DAF owners are getting tax breaks—what the survey calls a subsidy for “billionaires and other wealthy Americans.”

“I think it reflects that sense that this is a value proposition here,” he says. “You get a tax break. And you do your part of the deal, which is to give it to the Boys and Girls Club, give it to the food bank, give it to somebody other than your charitable organization that you control.”

The ACEs act would create a financial incentive for this by awarding tax breaks, not when donations go into the DAF, but only when the funds go out to charities.

In addition, most survey takers somewhat or strongly agreed that there should be a cap on how much money donors can receive tax credits on—either per year or over their lifetime. About half of those favoring a lifetime cap would put it at $100 million. Others went higher—up to $1 billion.

Tax benefits also played into the question of whether donors should be able to make anonymous gifts. When asked that basic question, 58% said that recipients should not have to disclose their benefactors.

But the answers changed dramatically with another question that pointed out two things. These gifts are subsidized through tax breaks, and they could be given out to exert influence over the nonprofits. Here the numbers more than flip, with 83% overall favoring disclosure—spanning majorities from 74% among the right all the way to 92% on the left.

“If you give your money away, and you didn’t ask for a tax deduction, I don’t care what you do,” says Collins. “But if you want the rest of us to essentially subsidize your gift by reducing your taxes, then there’s a public interest in knowing what you did with the money and a public interested in wanting you to fulfill the promise.”