I really appreciate this post! I have a few spots of disagreement, but many more of agreement, and appreciate the huge amount of effort that went into summarizing a very complicated situation with lots of stakeholders over an extended period of time in a way that feels sincere and has many points of resonance with my own experience.
Thank you for writing this comprehensive and candid post. As the ED/CEO of GWWC during this period, I deeply appreciate the transparency about both the challenges faced for us all during that period and reforms implemented. Some of the decisions, like the restrictive communications policy, were undoubtedly difficult and had real costs for the community, but I believe you and the team navigated an incredibly complex situation with integrity, putting in place important governance improvements while managing serious (and often unknown or unclear) legal risks.
I'm particularly grateful for the clear explanation of the trade-offs involved in various decisions. The section on crisis preparation really resonated with my experience - it's so much harder and more expensive to implement reforms during a crisis than to build robust systems proactively. The lessons around valuing operational experience, investing in capacity early, and carefully considering organisational risk profiles are especially valuable for other EA organisations.
While the FTX situation created immense challenges, I believe there's a silver lining in how it led to governance improvements across the ecosystem. The EV team's support during the spin-out process helped organisations like GWWC establish robust governance frameworks and operational systems from day one. Thanks to their guidance and the lessons captured here, I expect many of the spin-out organisations to emerge as particularly well-governed and resilient institutions.
I particularly want to acknowledge the immense effort of everyone who worked to reform EV during this period - both the visible leadership and the many staff members who put in long hours behind the scenes. This kind of operational and governance work isn't always celebrated in EA, but it's essential for building trustworthy institutions that can effectively pursue our shared goals.
This is an awesome post, and it's a strong update in the direction of EV & CEA being much more transparent under your leadership. Very keen on hearing more from you in the future!
One other risk vector to EV stood out to me as concerning, but went somewhat unaddressed in this post. Consider:
EV was in a financial crisis; it had banked on receiving millions from FTX over the coming years
If a fraudulent or otherwise problematic individual hasn't been caught by the legal system, EV's donor due diligence tools may not catch them either.
I worry that the focus on legal risks is potentially missing a counterfactual here where a funding source is systematically upset. EV was not just banking on FTX to stay solvent / unfraudulent, but was also implicitly depending on cryptocurrency to remain frothy (the same can be said for EA, especially long-term risk cause areas, more broadly). Counterfactually, had FTX not been fraudulent, I still think that's it's likely that cryptocurrency would have collapsed over the following years. Assuming that the LTFF was receiving a proportion of FTX's funds, this still could've meant more than a 50% drop in funding from FTX (for example, Ethereum lost ~3/5ths of its market cap between November 2021 to November 2022).
You note:
Guardrails to prevent projects from running out of funding in a disorderly way and runway requirements to maintain resilience to possible future crises.
I would love to understand more about these financial controls. I can imagine that EV could probably withstand a sudden halving in funding from a major donor, by reallocating funding between projects, which is probably what's alluded to here.
(It's outside the scope of this post, but I'm not so sure that the broader long-term risk cause areas could have withstood this, and indeed, in the present scenario many organisations did not. I sort of worry about this kind of systematic risk with Anthropic, who could be hit quite hard if the current AI bubble starts winding down, even if they aren't directly responsible for it; I'm sure there are others.)
FTX as a funding source also had plenty of non-fraudulent failure modes. Having "banked on receiving millions from FTX over the coming years" to the extent that not receiving those funds created a crisis seems like a serious misjudgment. That being said, it isn't clear to me the extent to which FTX's donation amounts would have tied into short-term fluctuations in crypto values.
I can imagine that EV could probably withstand a sudden halving in funding from a major donor, by reallocating funding between projects, which is probably what's alluded to here.
The extent to which donations could be reallocated is unclear to me; it is possible for a donor to restrict donations to a specific purpose in a legally binding way. At least in some jurisdictions, those restrictions can often be binding even against the charity's creditors if the charity manages its finances correctly.
I read Zach to mean that projects need to have enough funding on hand to shut down in an orderly enough way -- which includes a way that does not create problems for sister projects -- in a near-worst case scenario. This could be a problem, for instance, if a project had financial commitments that bound EV but could not be satisfied out of resources allocated to the project.
There are, however, limits on what good financial controls can do for you if there's a massive funding shortfall and/or a massive unplanned liability. If (e.g.) a 50% revenue loss (not of a short-term nature) wouldn't seriously disrupt a charity's work, then that charity is probably too conservative on its spending or is raising excessive amounts of money that should go elsewhere.
Thanks for writing this Zach! The broad strokes of the dynamics here are not news to me (I work at 80k which is a project of EV) but lots of the detail was novel and feels good to know.
Thank you for writing this! I imagine this took a lot of time to put together, and I really appreciated being able to read it.
From the position of someone without a lot of connection or insight into the day-to-day functioning of EV (and its projects) this provided a lot of context, and gave me confidence that reforms at EV were seriously considered, and then instituted. Its one thing to read an announcement that an organization is working on, or investigation reforms — but being able to see the specifics of those reforms feels differently, and meaningfully, important to me. I feel glad to have read this post, and for some of the updates it allowed me to make!
Thanks for such a thorough update!
Thank you for this update.
I'm curious what is going to happen to EA Funds specifically? Is it going to be an independent entity that continues to function more or less in the same way? Or something else entirely?
EA Funds is still figuring out some of the details for their future setup. I imagine they'll say more once plans are closer to finalized.
I became the CEO of EV US in January 2023. I worked alongside the EV US and UK teams, former EV UK CEO Howie Lempel, and current EV UK CEO Rob Gledhill to recover and reform Effective Ventures and improve the robustness of the EA ecosystem in the aftermath of FTX’s collapse. Amidst these efforts, I and others learned or fortified lessons that I think aren’t unique to EV and could be valuable to the wider EA community. Being able to look at hard problems, discuss them with candor, and update based on what we learn are values that I admire, and I see them as a positive and necessary mechanism for doing good. I want to act on those values here.
The views in this post are my own. I don’t represent or speak on behalf of my current or former colleagues at EV US or UK, or from my current role as CEO of CEA, or on behalf of the EV US or EV UK boards. While I did seek input from others to help write and fact-check this post, I would expect differences of perspective and that reasonable people might disagree about the history or lessons learned.
Before I get into the rest of the post, I think it’s important to note that a number of issues have made it harder for the EA community to have a group conversation, process what happened with FTX, take decisive action, and get back on track. For instance:
All of this can mean that some basic but important points tend to get lost or left unstated. So, I want to explicitly say:
I value people in the EA community and want to invest in the EA community’s health. Sometimes I (and EV and CEA) will need to make choices that require a trade-off between the community’s desires and the betterment of the world as a whole, and I endorse making those trade-offs when they occur.[1] At the same time, much of the impact I expect CEA to have is by helping the community flourish in its pursuit of our shared goals. I also want to acknowledge how stressful and challenging the past couple of years have been for many people involved in EA. I know that some people have felt confused, abandoned, or betrayed by some leaders and institutions in EA. I want to do what I can to improve the situation. To be an effective collaborator with the community and build shared trust, I think it’s worth communicating extra context around areas of concern when possible.
The EA Forum is also a channel that I hope to use more to share updates with the EA community. At the same time, I want to flag that given limits to my bandwidth, I will probably not be commenting very much.
I’m focusing on the following:
What’s not in scope:
Additional notes on this post and how to read it:
Effective Ventures Foundation (“EV”) refers to two separate legal entities, each with their own CEO and boards:
What we now call Effective Ventures was created in 2011 as an umbrella entity for the fledgling 80,000 Hours and Giving What We Can projects, and was originally called the Centre for Effective Altruism (which is not the same as present day CEA, which is a project within EV).[2] Then-CEA, now-EV, played an important role in the growth of the EA ecosystem. EV eventually became a fiscal sponsor and enabled projects to launch with lower friction than they would have otherwise. Projects were also able to take advantage of economies of scale by centralizing operations. By November 2022, EV had grown to legally sponsor and help operate the following projects (some of which are now their own independent entities):
(Yes, this is extremely confusing.)
EV’s operational and oversight capacity didn’t keep up with this growth. The governance and operational systems EV originally put in place were set up to support a much smaller organization that housed fewer projects and had significantly fewer financial resources. These systems were not adequately updated when EV rapidly scaled to house around a dozen projects and tens of millions more dollars. As a result, EV had internal governance issues and EV as a legal entity was poorly set up to handle the fallout from crises.
For example, in mid 2022, there was only one in-house lawyer. She had just started in July 2022 (just a few months before the FTX collapse), covered all projects that operated in the UK , and had no full-time equivalent at EV US to manage EV US legal issues. As another example, EV board members spent more time on EV-related duties than board members spend on a typical non-profit, but because their efforts were divided between many independent projects the time per project remained too low to provide optimal oversight. There also weren’t policies in place for what would happen if one project took actions that risked the wellbeing of other projects, e.g. by taking inappropriate risks, attracting negative PR, or running out of funding.
To the boards’ credit, my understanding is that they had begun to discuss reforms before the FTX collapse. However, for the most part they did not take significant steps to implement these reforms until after. The FTX collapse directly and indirectly triggered many serious challenges and exposed underlying problems that stemmed from a lack of sufficient executive capacity and oversight within EV US and UK relative to its legal, financial, and operational importance in the EA ecosystem.
After a year of instituting reforms for all organizations under the EV umbrella, which the rest of the post discusses, the boards of EV US and EV UK decided to wind down their respective umbrella orgs and spin out the various projects. Several of the projects under the Effective Ventures umbrella have already completed spinning out as individual nonprofits, and the remainder are in the process of doing so.
You can read more about EV’s structure here.
Background context
Prior to the collapse of FTX, EV US and EV UK did not have CEOs or executive teams tasked with holistic responsibility for EV. The decision-making process for the organizations relied on board decisions.
What actions were taken and why
The FTX collapse prompted EV to notice how much it needed to mature. In particular, we needed CEOs and chief of staff-type roles: people who worked on EV full-time and were empowered to make cross-entity decisions faster than a board or other committee could. Moreover, these individuals would feel a more direct sense of responsibility for EV’s outcomes compared to a broader set of volunteer board members.
Howie Lempel was hired as the Interim CEO of EV UK in November 2022 and I was hired as the Interim CEO of EV US in January 2023. As the announcement post on this said at the time, “It’s not ideal to have boards playing the role of executives, so the boards have now also appointed Interim CEOs to each charity.” More recently, Rob Gledhill replaced Howie Lempel as CEO of EV UK, while I remain CEO of EV US, but with intentionally reduced capacity. I have handed off many responsibilities to Rob while I focus primarily on CEA.
We also hired and made changes to the EV operations, finance, and legal teams. Related to finance, we needed people with more experience leading the team, especially given the more complicated situation EV was in after the FTX collapse (as noted in the recent report from the Charity Commission). Similarly, we needed further legal capacity and advice, so we hired a full-time legal team.
Culture change was also important, and one of the best ways to change culture is to change people. This is particularly true for senior staff. By bringing in CEOs and other staff with a specific mandate to improve compliance and professionalization, we both introduced decision-makers without emotional ties to the status quo and sent a signal to existing staff about the importance of these new priorities.
Ongoing considerations
We would ideally have separate CEOs of EV US and CEA, both for time allocation reasons and conflict-of-interest (COI) mitigation. Ideally, I would have been replaced in my role as CEO of EV US; but after a long hiring process, the EV executive team and US board couldn’t find a candidate who had the same level of context regarding complex tradeoffs (including idiosyncratic ones specific to the EA community) and operations experience that the role requires. (Similarly, CEA’s incoming COO, Anna Weldon, has served on the EV US board and has context on the work that will be hard to replace.) Since CEA has yet to spin out of EV, though, in many ways CEA and EV’s interests converge; CEA is affected by issues that affect all of EV. If and when there are COIs, I disclose those to the board and will be recused when appropriate (for example related to CEA’s future spinout).
The difficulty in finding a suitable CEO replacement gestures at a broader point that it can be extremely challenging to attract excellent CEOs and board members. Consider:
I hesitated to include the content above, as I don’t intend for this to read as a “woe is me” list. I’m happy I took the job! But I also think I’m unusually emotionally resilient and that my experience wouldn’t generalize to most others. Moreover, I believe there’s an important point to be made about EA culture. In particular, I think it would be highly valuable to figure out how to better celebrate people who contribute to the community by stepping up into leadership positions out of a sense of altruism and how to combine that with constructive criticism so that it becomes less of a deterrent to people taking on leadership roles. I think these cultural changes would make it easier for EA organizations to attract strong candidates for important positions.[3]
Background context
As two distinct legal entities operating in different countries, EV US and EV UK each have had their own individual board since their creation. The responsibilities of a charity or non-profit board in both the US and the UK broadly include governing and overseeing the organization’s activities, which can include responsibilities like ensuring legal compliance, strategic planning, and fiduciary duties. Especially prior to the hiring of CEOs of EV US and UK, the boards served as major decision-makers for the charities.
It can be difficult and somewhat misleading to view boards as unified entities; there are many different individual decision-makers on each board. When we say one of the boards made a decision or took an action, readers shouldn't assume that everyone on that board reached the same conclusion or had the same reasons for what they did.
What actions were taken and why
Both the EV US and EV UK boards have had complete turnover in the past few years, as represented below:
Different changes to the boards occurred for different reasons, often related to circumstances specific to an individual or what was happening with EV at the time. Some of these reasons include:
The selection and vetting process for new board members also changed over this time period. Selection criteria now place relatively more emphasis on operational experience compared to the prior focus on fields like philosophy and familiarity with EA. That said, it’s still very important for a board member to have sufficient EA context, particularly as they may need to think through trade-offs that concern the broader EA ecosystem. Integrity also became a significantly more explicit criterion in selecting board members.
Our most recent vetting process included:
Ongoing considerations
Having significant turnover on a board has some disadvantages. Board members with experience have been battle-hardened, so to speak, and bring experience from past situations or crises they’ve helped handle. Longer-standing board members can also bring more institutional memory and knowledge to their decision-making.
On the other hand, new board members can bring fresh eyes and perspectives that help EV notice important areas of improvement and avoid repeating past mistakes.
Another consideration when discussing board turnover is the difficulty and demands of board roles. The recent burden of responsibility for board members of EV US and UK has been much higher and more demanding than what the average board member at a nonprofit or charity takes on. As an example, even after CEOs were brought in, the boards still had hour-long meetings twice a week for many months (on top of other responsibilities that happened outside of meetings); only recently has work slowed enough that we have managed to average below one hour of meetings per week. The combination of demanding responsibilities, high levels of external scrutiny, and high stakes can make it difficult to find people who are interested in the role. I think it’s worth considering compensating trustees for their time, but it doesn’t help that in the UK, it is extremely difficult to pay charity board members for their work.
I also think the current EV US and EV UK boards (with four and three members respectively) are smaller than would be optimal if EV were going to continue operating indefinitely. While boards that are too large can make it difficult to corral all of the necessary decision-makers, small boards risk making it difficult to operate if someone has a COI, resigns, or otherwise can’t participate in a vote. My current plan is for CEA to have five board members once we spin out from EV.
Another suboptimal dynamic that the new boards are currently addressing is the supervision of CEOs and project leads. Project-level supervision has improved in some significant ways, in particular via deeper engagement with project budgeting. At the same time, board focus is still focused primarily on EV as a whole, and I think that each project would ideally have more proactive engagement and support from a board. I see this as a significant advantage of projects having their own boards. If EV were going to continue as a fiscal sponsor indefinitely, I think it would be worth experimenting with other governance structures, e.g. having advisory boards for each project.
See Julia Wise’s Advice for EA boards for more board advice tailored to an EA context. (Although advice not tailored to an EA context will be helpful for boards too!)
Background context
EV had ties to FTX and Sam Bankman-Fried at the time of the collapse, including receiving funding from the FTX Foundation and two EV trustees also holding positions at FTX Foundation. Both EV UK and EV US agreed to settlements with the FTX bankruptcy estate. Trustees Nick Beckstead and Will MacAskill, who were respectively the CEO of and an advisor to FTX Foundation, were recused from all FTX-related discussions.
There have been calls from members of the community for further investigations into the relationship between EA and FTX. You can see variations on this proposal posted on the EA Forum linked in the Appendix.
What actions were taken and why
EV commissioned an independent investigation about the relationship between EV and FTX from the law firm Mintz, which concluded in September 2023 (and was announced by me on the Forum in December 2023 and followed by a statement from Mintz).
The investigation served multiple purposes and is an example of a project initiated by many stakeholders who put different emphases on different reasons. Much of the reasoning stemmed from a lack of knowledge on what had actually happened at FTX and who was involved. Some of the justifications included:
The investigation included dozens of interviews as well as reviews of tens of thousands of messages and documents. Mintz found no evidence that anyone at EV (including employees, leaders of EV-sponsored projects, and trustees) was aware of the criminal fraud of which Sam Bankman-Fried has now been convicted.
We have not and are not planning to publish any additional details regarding the investigation. Doing so could reveal information from people who have not consented to their confidences being publicized and could waive important legal privileges that we do not intend to waive.
Ongoing considerations
I’m not currently convinced that EV or CEA should invest resources into running something like a public investigation.
Different people see different reasons for conducting further investigation, which I think can roughly be sorted into two broad categories of goals:
Optimizing for different goals would mean running different versions of an investigation. For instance, investigations aimed at the first set of goals might focus on individuals, trying to find out who knew what and when. An investigation aimed at the second set of goals might take a more structural approach, trying to better understand what happened at FTX and what processes in EA might have mitigated the resulting issues.
I don’t think an investigation is likely to be successful in achieving either of these sets of goals. To uncover novel actionable information about what happened at FTX would depend on an investigator having access to substantive information not found or made public by the extensive legal proceedings or the many authors and journalists who have reported on this story. One barrier to finding novel information is that so much has already been reported, both inside and outside of the EA community. In some conversations I’ve had with people who were interested in further investigation, I realized that they weren’t aware of all of the information that was already public (which I think is very reasonable given how confusing the situation is and how the information isn’t centralized), which is one of the reasons we’ve gathered links to various information in the Appendix. I don’t think that information paints a definitive account of what happened or why. But I also think that’s an unrealistic standard for such a complex story. We have only partial accounts from different actors, many of whom we have reason to be skeptical of.
Any novel and action-oriented reporting would likely require an investigator to get access to sensitive and privately held information from individuals. However, rebuilding community trust would depend on that investigator being able to publicly share the information they learned, and much of the theoretically relevant information would be held by individuals who are not incentivized to cooperate, whether because of legal or reputational risks, or the threat of public criticism. I expect that in exchange for receiving information an investigator would need to commit to communicating their findings in a non-detailed and anonymized fashion, which would undermine the attempt to make legible and credible claims to have been rigorous, comprehensive, and impartial.
I don’t think an investigator from within EV, CEA, or other established EA organizations would be considered a credible enough investigator of those organizations or their staff to satisfy some skeptical audiences. At the same time, I’m skeptical a non-EA investigator would produce nuanced findings or conclusions compelling to the community. Our distinctive community dynamics are hard for external observers to navigate and our standards for evidence and reasoning are unusually high.[4]
If individuals do have information related to FTX they want to share, they can do so regardless of whether an investigation has taken place. Many individuals already have (Appendix). In addition, EV has updated its communication policy so it is no longer blocking anyone from sharing relevant information.
It’s possible that the probability of success is higher than I think, and I can imagine some arguing that it’s worth pursuing even with a very low probability of success. With that being said, trying to run an investigation like this would be costly in terms of time and money (for context, the legal fees for the Mintz investigation and related work were over $750,000, which does not also count the extensive additional costs associated with time spent by EV staff), and in my assessment there are better ways for us to use those resources.
I am excited about efforts to strengthen EA culture and practices (which is part of the motivation for sharing actions taken by EV in this post and will continue to be part of the motivation for CEA’s stewardship of EA), but I don’t think an investigation is necessary for or likely to help with these endeavors. I think posts like this one and ones others have written (Appendix) can help identify updates the community should consider to reduce the risks from FTX-like incidents.
Background context
I think that pre-FTX EV was not living up to the standard of financial rigor we should hold ourselves to as a collection of projects that operate globally with a cumulative budget over $100 million.
One embarrassing example worth sharing as a lesson learned: in 2022, some EV projects spent money that had only been promised from the FTX Foundation, although they hadn’t actually received that funding yet. That effectively meant that these projects were spending unrestricted funding that had not yet been committed to any of the projects. EV also didn’t have a clear process in place for what would happen if a project ran out of funding allocated to it. This was a clear mistake, and we have created policies to prevent similar incidents.[5]
As EV untangled itself from the FTX crisis, it was clear that it needed strict financial reforms and oversight. EV was in a financial crisis; it had banked on receiving millions from FTX over the coming years and faced the prospect of claims from the FTX estate over the funding it had already received (see resulting settlement).
What actions were taken and why
In response to our scrutiny of EV’s financial systems following the FTX collapse, in the midst of EV's financial crisis, we instituted better financial controls and put in place more experienced finance leaders.
Some examples of the financial controls implemented include:
EV US also changed its financial auditing service to Moss Adams, resulting in better advice compared to previous years.
Ongoing considerations
Background context
EV accepted money from FTX-related sources, which later turned out to be money from a company that has been found to have engaged in large-scale fraud. Based on an independent investigation, I’m confident nobody at EV knew about this fraud. Both EV UK and EV US agreed to settlements with the FTX bankruptcy estate.
EV had a donor due diligence policy prior to November 2022, but it is unclear to me how much effort was put into proactively researching and addressing potential donor issues.
What actions were taken and why
After learning about FTX’s fraud, EV instituted a better donor due diligence process that requires checking the background of all people who donate or seem likely to donate more than $50K to EV or its individual projects (for context, a donation of $50k would represent less than 0.1% of the total funding the EV entities received in 2023).
EV also now has a lower bar for what warrants caution about whether to accept a donor's money. (This caution could also imply returning a donor's money if it has already been donated, although EV has yet to return a donation because of due diligence concerns.) Some decisions to not accept funds from someone are based on clear facts (e.g., public reporting on past misconduct), while others are based on broader judgments of a person's character that may not involve evidence of criminal activity. Compared to the pre-FTX era, we’re more likely to take character judgments into account when assessing donors.
EV also maintains an internal list of people from whom we will not accept money, which influences where our constituent projects go to fundraise. In at least one case, an EV project chose not to fundraise from someone because of our updated processes.
The heightened focus on donor due diligence is a direct result of EV being hurt by accepting money from Sam Bankman-Fried and FTX, and I think this change is good. However, I still think it’s unlikely that our current level of donor due diligence would have discovered that FTX was committing large-scale fraud. I think you would have needed (at least) financial audits from experts for that.
Ongoing considerations
Background context
I was not the primary person who designed the communications policies, so this section in particular involves me piecing together different components from different people. Some of the decisions discussed here were made before I joined EV in January 2023, and because others had more context we settled on a division of labor in which I mostly deferred on communications policies (which might have been a mistake in itself, though when I did spend some time trying to get up to speed on the reasoning behind the decisions, my views moved closer to those who had made policy decisions).
What actions were taken and why
In the months after FTX, EV adopted a communications policy that placed restrictions on staff and board members' external communication (EA Forum posts, podcast appearances, etc.). In November and December 2022, this new communications policy meant that all public communications related to FTX needed to go through a central approval process. Shakeel Hashim, then CEA’s Head of Communications, posted about this on the EA Forum in November. The policy was updated and loosened a bit in late December. In February 2023, the restrictions were reduced more significantly: staff only needed approval if commenting on EV’s relationship with FTX or EV’s legal structure (there was also some pre-approved language).
The current EV communications policy only requires approval for comments on the details of the FTX settlement and legal implications for either EV or other EV grantees, or EV’s legal structure (and there is still some pre-approved language). Its intent is to make sure staff are only saying accurate things about complex and sensitive legal issues.
There isn’t a singular “why” to any of these decisions, as there wasn’t a singular decision-maker. EV US and EV UK collaborated to make them, which originally involved two sets of boards and would later also involve two CEOs. Different individuals put different weights on different reasons.
The original communications policy was a direct response to the FTX collapse. Our lawyers repeatedly and strongly advised us that issuing public statements carried significant legal risk, which matched our sense of general legal best practice. EA norms are significantly different than legal norms, and adversarial lawyers are generally significantly more interested in money and a favorable outcome for their clients than truth-seeking. The bankruptcy lawyers you are up against follow no principle of charity — they are paid to get as much money from you as possible. From a legal perspective, it’s often best to be quiet if you’re in a crisis that carries the risks of lawsuits from actors who may be incentivized to portray you negatively.
Our approach to risk mitigation overall (including but not limited to the communications policy) intentionally erred toward conservatism. This was largely due to the correlated nature of risks at EV, where speaking about FTX might be a priority for a subset of EV projects, but the legal risks incurred would accrue to all of the projects, including ones that don’t place much value on speaking about FTX. For example, while CEA or an individual affiliated with EV (like Will MacAskill) may have wanted to say more about FTX, from the perspective of some other projects, EV staff members talking publicly and freely about FTX wouldn’t help advance their mission while incurring costs and risks. The decoupling of risk is one of many reasons I am glad that EV is shutting down and projects will become independent.
We also didn’t want staff to accidentally say something inaccurate or confusing that could be used by adversarial parties. Until our independent investigation was complete (described here), we didn’t know what we didn’t know. Even seemingly simple questions like “how much of FTX’s money do you have” took time to figure out, as it involved complicated financial questions around which money was in which EV entity, which entities related to FTX counted in that equation (e.g. Alameda), how much money attributable to FTX had already been spent, and the status of money that the FTX Future Fund had promised to transfer but had not yet reached EV’s bank accounts.
There were also difficulties in communicating internally to staff about the nature of FTX-related risks. We didn’t want to violate privilege in a way that could later be exploited by an adversarial party. These difficulties were further exacerbated by the complicated legal structure of EV US and EV UK, where each organization not only had to understand (A) how legal privilege worked within their own organization, but also (B) how legal privilege worked when sharing information with another collaborative organization, and (C) how that privilege might be affected by the fact that EV US and EV UK operated in two different legal jurisdictions with two different sets of laws governing privilege. The US and UK’s legal systems are also set up differently, such that less information is privileged in the UK than in the US, but the UK is also generally a less litigious society. Waiving privilege risked being a lowest-common-denominator situation where the more limited privilege rules may apply from the UK but the stronger legal risks could apply from the US. This intersection of multiple jurisdictions was particularly difficult to navigate.
Understanding how legal privilege worked took a significant amount of time and money. Moreover, I’ve been told that some people at EV believe the legal advice they originally received about privilege was inaccurate, further slowing down the process of loosening the communications policy. These challenges also made it more difficult to disseminate information within the organization, including correcting potential misconceptions.
With that being said, we were fairly confident along the way that the communications policy was too conservative — and we knew it was costly. This was in part because when we did take time to press our external counsel for greater clarity on their reasoning, we frequently found that their advice was overly broad. Moreover, we were repeatedly able to find additional areas to carve out where communication risks were not as high. We felt this was partly because external counsel wasn’t always trying to give us nuanced advice, and partly because we felt that our lawyers likely weren’t accounting for all of the non-legal benefits that could come from a less restrictive communications policy. However, it was hard for us to understand the specific ways in which the policy might be too conservative, and we didn’t want to toss it all out as some communications restrictions seemed warranted. Because the group of people who could actually invest in changing the communications policy had very little spare capacity, we had to make difficult trade-offs on what to prioritize. Given the immense time it took for us to understand the relevant legal nuances, we often prioritized other important and urgent tasks.
Ongoing considerations
This was the policy that was at least partly responsible for prominent figures in EA, especially those affiliated with EV, not making many public statements on the EA Forum. Will MacAskill, then a board member of EV UK, is an example. As Will writes, he tried numerous times to post something, and our legal counsel strongly advised us not to permit this (though the reasons why were complicated and partially related to the investigation that was occurring). It seems likely to me that if individuals had also sought their own independent personal legal counsel they would have received the same advice (i.e. not to talk publicly), though those individuals may have weighed their own personal trade-offs differently.
In hindsight, I think we made some wrong judgment calls about this policy. Here are some ways in which I think we might have made mistakes:
This policy had unavoidable tradeoffs between reducing legal and financial risk and sharing information openly. It is true that we both frequently followed legal advice and that we said more than our lawyers sometimes wanted us to. Nonetheless, I think the policy seriously worsened community sense-making post-FTX, negatively affected many individuals affiliated with EV, and contributed to a loss of trust in prominent EA figures and institutions — and this is true whether or not we generally made the right calls overall. People were understandably confused as to why they weren’t hearing more from the people who knew the most about the situation. This restrictive comms policy also stood in contrast to the EA community’s culture of transparent reasoning and public debate. While I think the EA community sometimes errs too far on the side of public disclosure, I think the overall desire for truth-seeking is an unusual and valuable strength of the EA community that I value, and I’m saddened when decisions trade off against it.
But overall, I feel very unsure if adopting a strict comms policy was a mistake. It seems plausible to me that it protected individuals and institutions from undeserved lawsuits and settlements, and we had to make these decisions under challenging circumstances of uncertainty and extreme urgency. Board members and EV executive staff didn’t have much legal experience ourselves, and we didn’t have time to form our own views about the legal arguments against communicating publicly. So in practice, we were making a decision between following legal advice or overruling it without a strong inside view, and erring on the side of deferring to the experts in an area where the more EA-aligned decision-makers don’t have relevant background generally seems like a good heuristic to me. Nevertheless, this policy had significant costs, and I think it’s reasonable to critique it for its stifling effect on the community. I hope we never have to institute a policy like this again.
Background context
Effective Ventures (EV) has long had a whistleblowing policy in place, but it lacked clear procedures. Some employees may not have been aware of its existence. EV’s policies and processes were probably about as good as is normal for most organizations, but I think streamlining the whistleblowing process was important so that employees feel capable and protected when raising legitimate and important concerns.
What actions were taken and why
EV updated its whistleblowing policies to better protect whistleblowers and reduce the fear or friction that could prevent people from speaking up about potentially important issues. This was done through a series of small design improvements, such as ensuring that the whistleblowing policy is easily findable, that employees are aware of it, and that there are multiple points of contact to raise concerns to. The points of contact purposefully include one male-identifying and one female-identifying contact, as well as people with varying degrees of involvement with the EA community.
Additionally, EV set up emails and forms for staff to directly and anonymously reach out to the EV US and UK boards and shared an independent avenue to get whistleblowing advice with EV UK staff.
EV also clarified what isn’t part of the whistleblowing policy. For example, while we care about confidentiality and will work to maintain it when desired, we want to be explicit that we aren't promising absolute confidentiality. Whistleblowers’ identities may become known if that information is essential to the investigation progressing, particularly if required by law.
Ongoing considerations
Background context
The revision of EV's anti-harassment and misconduct policies was prompted by allegations of sexual misconduct against Owen Cotton-Barratt, an EV UK board member. An independent investigation solicited by the UK and US boards and conducted by a law firm additionally provided evidence of misconduct.
When the allegations against Owen publicly surfaced in early 2022, a “review and revise” workflow was already underway for the misconduct and anti-harassment policies, and these allegations made editing the anti-harassment policies one of the highest priorities for the EV executive team.
What actions were taken and why
EV US and UK updated their misconduct policies, keeping in mind the following priorities:
Some specific changes we made to the anti-harassment and misconduct policies include:
These changes were developed based on advice from external legal counsel and feedback from each of EV’s fiscally sponsored projects. The EV executive team also solicited best practices from other organizations that have experience with preventing and responding to misconduct, but I don’t remember how much these best practices ultimately influenced EV’s policies.
Ongoing considerations
The misconduct policy could still be more clear and accessible. EV has a misconduct policy, grievance policy, and an anti-harassment policy, and the process of identifying which exact policy and escalation process is most relevant to a given situation might be confusing for a staff member on the fence of reporting something.
Background context
EV had suboptimal conflict-of-interest (COI) policies and processes in the past. For instance, some board members had relationships with the FTX Foundation, which could potentially bias them. (Nick Beckstead was the CEO of the FTX Foundation, and Will MacAskill was an advisor.) Although a COI policy existed, it wasn't regularly discussed, and there were no robust mechanisms to ensure that COIs were regularly reported. Additionally, the board culture didn't incentivize other board members to encourage each other to recuse themselves from decisions that might involve COIs. That said, the Charity Commission inquiry found no evidence to suggest that there were any unmanaged conflicts of interest regarding funds the charity received from the FTX Foundation or that any trustee had acted in a way contrary to the interests of the charity.
What actions were taken and why
EV formalized conflict-of-interest reporting for board members and CEOs of EV US and EV UK and implemented processes to make it more likely that these COIs are kept up to date. New board members now have to complete forms detailing possible sources of COIs, such as investments, gifts, or hospitality received from third parties, and close relationships with anyone at EV or a closely related entity.
Mechanisms have been put in place to ensure that board members continue to report their conflicts of interest. For example, whenever the boards vote on something, they are asked to disclose any relevant COIs. There are also annual reminders to report new COIs. We have successfully changed the culture around COIs, with board members frequently recusing themselves even when our new stricter policies don't say that they have to, and according to a board member who was present before November 2022, board members feel more comfortable nudging one another to consider recusing themselves from board decisions if COIs may be involved.
Furthermore, EV mandated the reporting of all staff's personal relationships within a project and between projects if it affects hiring, grantmaking, or management.
Ongoing considerations
Background context
Charity law works differently in different countries. Typically, charities need to fulfill specific legal requirements in order to get official status as a charity in a given jurisdiction. To give you a sense of how this works: what people often refer to as “the charity Oxfam” is actually a “confederation” of 21 affiliates — independent member organizations. They apparently have 22 CEOs — one CEO (and one board) for each affiliate, plus an additional international Executive Director and international board.
EV UK and EV US are separate legal entities, which collaborate together to support our projects. Among other things, this structure enables projects to hire staff and accept tax-deductible donations in both the UK and the US. (See Background on EV for more detail.)
What actions were taken and why
In December 2022, Effective Ventures improved and clarified the level of independence between EV US and EV UK. The two charities kept working closely together, but the boards of both entities appointed their own CEOs and made many operational improvements.
We also changed our internal and external communication to make it clearer that EV US and EV UK were affiliated yet independent entities. As an example of one of the reforms taken, we created a formal written document called an “affiliation agreement” that detailed governance norms such as board independence, resource sharing, and inter-institutional communication norms.
This reform wasn’t directly caused by the collapse of FTX, but was triggered by EV’s increased focus on governance and careful legal compliance in the aftermath. In particular, unclear governance structures increased the chance of regulatory confusion (which could in turn result in significant time and legal fees being spent addressing regulatory concerns). This is important as regulators understandably want to know that institutions under their jurisdiction are following their regulations, which are not necessarily the same as those in other jurisdictions.
This was an extremely large undertaking with significant time, monetary, and coordination costs. It also serves as an important example of a reform that could and should have been taken long before FTX collapsed. Undergoing these reforms would have been significantly easier and less stressful to do without other reforms to implement simultaneously or EV UK being under investigation from the Charity Commission. Moreover, it costs more in legal fees to have lawyers move more quickly, and it would have been easier and less costly to solicit legal advice had it been done earlier. It was also difficult to find staff who were willing to work on this and other related projects, as the degree of stress involved was high. I had one person I spoke with tell me they were excited about a career that focused more on writing policies like the type EV needed, but they were understandably reluctant to work on such policies in an environment with intense regulatory scrutiny.
Ongoing considerations
Background context
See Background on EV (and the rest of this post!) for more historical info.
What actions were taken and why
The EV US and EV UK boards have decided to spin out all of EV's projects and EV will not start sponsoring new ones. This process began towards the end of 2023 and is expected to take up to 2 years to complete in full. It's unclear exactly what will happen to the EV US and EV UK legal entities, although it's likely that they will gradually wind down and dissolve.
Several factors contributed to the decision to wind down EV, such as:
Allowing projects to set up independent entities will decorrelate any legal, reputational, or financial risks between projects, and I think it will help to build a more robust and resilient EA ecosystem.[6]
When organizations spin out, they will be able to use EV policies and best practices as the basis for their own policies and institutional norms. Some organizations may significantly revise their policies to meet their own needs, while I expect some will adopt something very similar to EV's policies.
Ongoing considerations
This process will take significant amounts of time to complete. Spinning out all projects is expected to take up to 2 years because the EV team and the project leads want to ensure that the new entities are set up well. Decisions about legal structures and organizational configurations are important to get right the first time, as they can be difficult to change later. Plus, setting up a charitable entity typically takes longer than setting up a corporation.
I also think there is real demand for alternative options for fiscal sponsorship, and sometimes organizations may insufficiently explore sponsorship options that are not part of the EA ecosystem. I think it would probably be good if someone were to responsibly set up and run a fiscal sponsorship organization, though I think it is difficult to do so well. I hope that some of the information in this post can help someone if they do choose to pursue such a project. If someone wants further advice, they can feel free to reach out to me, though I may have limited bandwidth to engage.
Some of the challenges faced and actions taken by EV were specific to our particular context, but many were not. There’s an opportunity to learn from our experience. The list below probably isn't exhaustive, but it’s a good place to start.
As a baseline, it’s important to recognize the implications of organizational governance aspects like how you set up your organization, how your organization interacts with its board, when to seek legal advice, and how your policies relate to local regulations. Organizational governance isn’t always sexy, but the boring details matter, both internally (e.g. establishing structures that can scale effectively) and externally (e.g. implementing policies that are compliant with local regulations in multiple jurisdictions). Not thinking carefully about governance can come back and bite you (whether through reputational damage, regulatory scrutiny, or requiring more effort to overhaul than to establish at the outset), particularly during periods of heightened scrutiny when you may already be strapped for organizational resources.
Some people will look at the list of reforms described in this document and think that it goes overboard. For some organizations, they may be right. It’s common advice for startups not to be overly focused on compliance as they’re getting their organization up and running. However, if you are running an organization of a large enough scale or with enough of a public footprint (e.g. because you are trying to or liable to attract media attention), then it is worth investing more in ensuring your legal and operational practices are sound.
Some activities (like communicating a lot or very transparently) and operational decisions (like setting up a complex legal entity in order to facilitate hiring or grantmaking) are also inherently harder to navigate without incurring some level of risk. Many organizations or projects knowingly take on those risks because the benefits are sufficiently valuable to them, but other organizations might value those benefits less or generally be less risk-tolerant. An organization’s risk profile — the risks it takes on and how conservative it is when engaging in potentially risky areas — should match its needs and theory of change.
EV historically didn't have a particular philosophy to approaching risk in mind and didn’t communicate a risk strategy to projects when they joined. As a result, there were many different risk profiles that collectively made the risk profile of EV more difficult to navigate than it needed to be (e.g. some orgs were grantmaking orgs while most weren't; some orgs had a very comms-forward strategy while others didn't). This meant that the reforms taken in the aftermath of FTX were oftentimes a compromise that made different projects unhappy in different ways. It also meant that these reforms felt unpredictable to the projects, because they hadn’t realized what overall risk profile EV had when they joined.
Prior to joining EV, I felt that I valued formal training and professional experience more than many others in EA, and I now believe even more strongly that this is under-valued by many organizations and decision-makers in the EA ecosystem. I think this is particularly true for areas that require significant specialized knowledge (e.g. law, finance).
I don’t think a universal approach is appropriate for all roles. It’s worth asking both how much you believe your organization’s approach should differ from an average (non-EA) organization, and how much EA context an individual will need to make tradeoffs that benefit the organization. For example:
Not all lawyers are created equal. We had highly variable experiences with the quality of our external legal counsel. Vetting counsel was difficult as we were under time pressure to move quickly. Nonetheless, I think it was a mistake not to spend more time evaluating our external counsel before making a decision to move forward with them. Given how frequently you may need to rely on their expertise during a crisis, I think it’s worth thinking of them similarly to a high-stakes hire. It can also be difficult to change counsel midway through a complicated legal process, as getting other counsel up to speed can cost significant time and money. Had EV engaged more legal counsel before the crisis, I think it would have been easier to operate during the crisis, as we would have had a better sense of whom to turn to for advice.
In the aftermath of the FTX crisis, it stood out to me how little of my time was spent on things that were explicitly tied to FTX (e.g. reaching a settlement with the FTX estate) and how much effort was spent on second-order effects (e.g. finding board members and an executive team). A crisis will oftentimes put strain on many parts of an organization and demonstrate where there’s insufficient resiliency.
When I look at the list of changes and reforms discussed in this post, I think there are many that could have been done in advance of the FTX crisis. Our lack of preparation meant we were less able to respond to crises as they came and addressing various issues was more costly than it might have been. For example, because external counsel is more expensive than internal counsel and because external counsel is even more expensive when you want them to be available on short notice, we paid significantly more in legal fees to put in place policy and compliance reforms than we would have had EV proactively built a legal team in advance of the crisis. In other words, our lack of preparation created a “legal debt” that had to be paid down quickly and expensively. Another example is the aforementioned lack of understanding of legal privilege as it related to our communications policy.
Of course, not every theoretical risk is worth addressing in advance, but it’s good to ensure that you’re making deliberate and informed decisions on what to prepare for and what not to as opposed to not thinking about it and then being surprised. I think many organizations should do risk assessments and create risk registers to help them assess what potential risks are worth further resources.
The aftermath of the FTX collapse was a constant state of triage. I don’t think additional capacity would have ever stopped the need to make difficult trade-offs, but I do think we frequently found ourselves short-staffed and overwhelmed. I think this led to a very large number of downsides. Some projects were significantly deprioritized with severe costs, e.g. those related to internal and external communication. The lack of capacity also had significant morale and sustainability risks, where people felt like they were unable to take time off due to the urgent nature of the crisis (I remember talking with someone when I was deciding to take the role at the end of December who told me that one day on the upcoming weekend was going to be their first day off since FTX’s collapse).
As discussed above, bringing on CEOs and other staff was a huge improvement. Nonetheless, I still think we should have spent more time hiring other additional staff. At one point in early 2023, one person left the team because there was a lull in crisis response and they mistakenly believed that this meant they would no longer be needed (we were almost immediately hit by multiple other surprise issues to deal with after their departure). I think this was the result of false optimism about the ability to plan for a crisis, when in reality we should have expected the unexpected and built in buffer accordingly.
Some people argued that we shouldn’t spend time on hiring because we didn’t have the capacity to spare to run a hiring round or onboard someone. In retrospect, I think this was a mistake, and we should have been willing to let fires burn more in the short-term if it would have gotten us more capacity in the long term. Better yet, we would have had executive teams and other staff before the crisis began, giving us enough flexible and experienced capacity to deal with the crisis.
EV’s lack of good public communication during the crises hurt the EA community’s ability to collectively make sense of what was going on. This lack of public comms was partly because of legal advice, but it was also partly because everyone at EV was very busy with crisis response, and for the majority of my time in the role, there was nobody who was clearly dedicated to prioritizing EV’s overall communications strategy. I think it would have been helpful to have more capacity for that (this is in some ways a subset of the lesson above).
Moreover, not creating common knowledge about EV in the EA community prior to November 2022 made it hard for observers to understand what was happening at EV. For example, having clearly communicated earlier about EV’s structure and the projects involved could have helped people understand how many seemingly disparate people were affected by the same comms policy.
Reflective of the many people who contributed to EV’s successes and transformation over the past two years, this post took an army of people to publish. I want to give a special thank you to Oscar Howie, Michel Justen, Emma Richter, and Lizka Vaintrob, all of whom did significant amounts of work in drafting, revising, and project managing this post. I also want to thank Ben Esche, Ryan Fugate, Rob Gledhill, Claire Larkin, Howie Lempel, Chana Messinger, Kathleen Perell, Eli Rose, George Rosenfeld, Nicole Ross, Susan Shi, Cole Varvel, Anna Weldon and Tyler Whitmer, all of whom contributed input and feedback. Any mistakes in this post are, of course, my own responsibility.
I also want to give a huge thank you to everyone who has contributed to EV over the years. Despite the mistakes that were made, I think EV had many important successes in its early days and helped enable the existence of many impactful projects. I’m also incredibly grateful to everyone at EV and elsewhere in the EA ecosystem who contributed to shepherding EV through the post-FTX crisis and beyond. I think people poured significant amounts of effort into EV at significant personal cost, and I found it inspirational for the ways in which the community was able to come together to tackle an immensely difficult and impactful challenge. Many people took pay cuts, volunteered time and expertise, took on career instability, and left significantly more comfortable jobs to tackle these challenges. I’m grateful to all of you for the work you’ve done to learn from the past and set the EA community up for future success.
This isn’t intended to be exhaustive. Also, it is limited to EA Forum posts — not comments, or content from other sources. But it might be useful for readers to have access to a consolidated list of links to other Forum posts related to EA and FTX (there is also the FTX collapse Forum topic). Including a link here does not endorse its content. The links in each section are listed in reverse chronological order.
As Eli Nathan says here, for instance: “EAG exists to make the world a better place, rather than serve the EA community or make EAs happy. This unfortunately sometimes means EAs will be sad due to decisions we’ve made — though if this results in the world being a worse place overall, then we’ve clearly made a mistake.”
For a while there was "CEA" the community-focused organization within the "CEA" umbrella organization, which was especially confusing. Following the name change of the umbrella organization to Effective Ventures, CEA now only refers to the community-focused organization.
Importantly, many leaders have told me this culture contributes to them being reluctant to communicate publicly on the EA Forum, and I believe it also contributes to the leadership vacuum discussed in this Rethink Priorities research.
I am also concerned about the effects of indiscriminately publicizing errors of judgment (e.g. on the Forum). There is a risk that they might be over-interpreted, and I think it’s possible that strengthening this norm might be counter-productive as it could make decision-making more conservative to an extent which outweighs the benefits of transparency. To be clear, I think certain errors are worthy of public publishing and condemnation, but I don’t think the principle of transparency should be applied uniformly. If, for example, we found sufficient evidence of clear ill-intent I think it would be right to have public accountability for things like “this person knew or actively contributed to fraud,” but I haven’t seen any such evidence for individuals beyond that which has already been published for people like Sam and his inner circle.
I strongly encourage non-profits to ask donors for money in advance instead of retroactively, and I know it has caused issues for other organizations when they have incorrectly assumed they would be able to fundraise.
Note that I don’t think decentralization is an absolute good. I think there are reasons why multiple activities can and should be part of the same project, but if there aren’t good reasons, then I think there should be a greater bias towards decentralization. For example, it seems to me that there is very little Longview and GovAI have to gain from being part of the same legal entity, and I am glad they no longer are.
Thanks for writing this! One small comment:
I believed this and wanted EV to hire more outside experts. To support my case, I made a spreadsheet of all the major issues EV had run into that I was aware of and whether having non-EA experts helped. To my dismay, the result was pretty equivocal: there were certainly instances where non-EA experts outperformed EAs, but ~as many instances to the contrary.
I don't think EA is unique here; I have half a foot in the startup world and pg's recent Founder Mode post has ignited a bunch of discussion about how startup founders with ~0 experience often outperform the seasoned experts that they hire.
Unfortunately I don't have a good solution here - hiring/contracting good people is just actually a very hard problem. But at least from the issues I am aware of at EV I don't think the correct update was in favor of experience and away from value alignment.[1]
If I had to come up with advice, I think it would be to note the scare quotes around "value alignment". Someone sincerely trying to do well at the thing they are hired for is very valuable; someone professing to care about the organization's mission but not actually doing anything is not very valuable. And sometimes people confuse the two. [This is a general comment, not specific to EV.]
Seconding Ben, I did a similar exercise and got similarly mixed (with stark examples in both directions) results (including in some instances you allude to in the post)
I think it's possible our views are compatible here. I want expertise to be valued more on the margin because I found EV and many other EA orgs to tilt towards an extreme of prioritizing value alignment, but I certainly believe there are cases where value alignment and general intelligence matter most and also that there are cases where expertise matters more.
I think the key lies in trying to figure out which situations are which in advance.
I guess the main thing to be aware of is how hiring non-value aligned people can lead to drift which isn't significant at first, but becomes significant over time. That said, I also agree that a certain level of professionalism within organisation becomes more important as they scale.
Drift isn't the issue I was pointing at it my comment
Were these mostly situations in which EV had run into a major issue and then an outside expert was brought in? To the extent that the underlying developments that led to an issue came about from an EA / EV-insider way of thinking, I would expect significant performance costs associated with changing horses in midstream. So I wouldn't update much on the advisability of bringing in outside experts before a problem happens, or after a problem happens if the outside experts had played a role in setting up the underlying developments.
As a rough analogy, one can imagine a gridiron football offense that has been built (in terms of training, personnel, etc.) to align with a particular offensive strategy (e.g., the West Coast offense). If your team is set up that way, subbing in a key player whose skill set doesn't align to the previously chosen offensive strategy isn't usually going to work well in the short to medium run. This doesn't imply that the new player is bad -- just that your team has pre-committed to playing a particular offense. Ex ante, the new guy could have been the right player for your team contingent on your team having built a flexible enough system for him to work effectively in.
I would find it valuable if you could share some public version of the spreadsheet, or if you quickly remember some specific examples. Hiring/contracting is very hard but almost always necessary.
Surely it’s not a case of either-or. EA exists because we all found that existing charity was not up to scratch, hence we do want EA to take different approaches. However, I think it’s important to also have people from outside EA (but with good value alignment) to provide diversity of thought and make sure there are no blindspots.