The FTX crisis highlights a deeper cultural problem within EA - we don't sufficiently value good governance

Hi, I'm pretty new here, so pls correct me if I'm wrong. I had, however, one important impression which I think I should share. 
EA started as a small movement and right now is expanding like crazy. The thing is, it still has a "small movement" mentality. 
One of the key aspects of this is trust. I have an impression that the EA is super trust-based. I have a feeling that if somebody calls themselves EA everybody assumes that they have probably super altruistic intentions and most of the values aligned. It is lovely. But maybe dangerous?
In a small movement everybody knows everyone and if somebody does something suspicious, the whole group can very easily spread the warning. In a large groups, however, it won't work. So if somebody is a grifter, an amoral person, just an a*hole or anything similar - they can super easily abuse the system, just by, for example, changing the EA crowd they talk to. I have an impression that there was a push towards attracting the maximum number of people possible. I assume that it was thought through and there is a value added in it. It, however, may have a pretty serious cost. 

I think this is a very helpful post.

I think some of the larger, systemically important organisations should either have a balance of trustees and/or a board of advisors who have relevant mission critical experiences such as risk management, legal and compliance, depending on the nature of the organisation. I appreciate senior executives and trustees in these organisations do seek such advice; but often it is too opaque who they consult and which area the advice covers; and there could be a lack of accountability and risk of the advisors lacking sufficient knowledge themselves.

I have raised this directly a number of years ago but perhaps still inadequate. As noted by others this becomes more important as we get bigger.

Ps I don’t post much and not as accurate with my choice of words as other forum users.

Agree. I'd also add that this is a natural effect of the focus EA has put on outreach in universities and to young people. Not to say that the young people are the problem--they aren't, and we are happy to have them. But in prioritizing that, we did deprioritize outreach to mid and late-stage professionals. CEA and grantmakers only had so much bandwidth, and we only had so many people suited to CB/recruiting/outreach-style roles. 

We have had glaring gaps for a while in ability to manage people, scale programs, manage and direct projects and orgs, and perform due diligence checks on and advising for EA organisations. In other words, we lack expertise. 

I'd say 80K has been somewhat aware of this gap and touched on it lightly, and the community itself has dialled in on the problem by discussing EA recruiters. Yet CEA, funders, and others working on movement-building seem to repeatedly conflate community building with getting more young people to change careers, revealing their priorities, IMO, by what they actually work on.

Open Phil has done this as well. Looking at their Effective Altruism Community Growth focus area , 5 out of the 6 suggestions are focused on young people. The sixth is translating EA materials, so all options to directly work with promising people are focused on young people.  Admittedly there is a form to submit other ideas, but given what looks like a ~5/5.5 base rate of thinking youth are worth mentioning where they could have mentioned something else, I'm not hopeful they care about non-youth interventions. When I look at that page, I cant help but think, "So, are we building a sustainable movement and network of professionals, or are we essentially running disjointed Thiel fellowships?" 

Things I'd like to see to increase expertise and experience in EA (in addition to new roles, interventions, and EA orgs focused on improving governance in EA):

I hope it's not moot to discuss funder priorities now: I'd like to see funders and grantmakers overtly acknowledge that we need expertise from professionals outside the EA movement. The expertise bottleneck is the other side of the coin to the operations bottleneck, and it never got addressed. I'd also like to see blunt transparency of their reasons to have not prioritized or called for people to work on building experienced professional leadership and leadership assistance in EA orgs. If reasoning is made overt, perhaps we can workshop it, eg, if they think EAs are bad at talking to late-stage professionals, we hire someone who is good, or we ask a couple promising comms EAs to go through some class on recruiting executives.

I'd also like to see EA individuals and orgs themselves take on this mantle of increasing expertise in EA. It feels like EA individuals have been saying this for a while but very few have been trying to solve the problem. Charity Entrepreneurship could even add charities with related missions to their incubation program. It can't be that different from Animal Advocacy Careers which they incubated already.

I'd also like to see more nuanced terms than "community building" or "movement building" to better clarify what is being prioritized under the hood. Governance-building, professional network-building, and direct-worker building all have different focuses (and I could name so many more). I think the vagueness of the CB term could be responsible for a lot of our gaps, and also responsible for the lack of promising outcomes CB grantees might have seemed to yield, from the point of view of funders and grantmakers.

This is a terrific post, thank you! And it’s generated some excellent discussion too. I particularly agree with Ivy’s thoughts about the effects of focusing on recruiting young people (I’ve discussed some similar things here and here) and Tobyj’s comment about how “more work needs to be done on governance at the ecosystem level” vs. the level of specific organizations.

In my opinion, the case for increased attention to governance is even stronger because your list of examples omits some of the community’s largest historical and ongoing instances of weak/unprioritized governance:

• The board of Effective Ventures currently has an oversight mandate that seems on its face to be completely unrealistic. This five person board is responsible for overseeing CEA, 80k, Forethought Foundation, EA Funds, GWWC, Centre for the Governance of AI, Longview Philanthropy, Asterisk, Non-Trivial, and  BlueDot Impact. I’m not sure what is meant by “The Board is responsible for overall management and oversight of the charity, and where appropriate it delegates some of its functions to sub-committees and directors within the charity”; it sounds like some of the organizations that make up EV might be responsible for their own oversight (which would raise other governance questions).
• Effective Ventures has not communicated its thinking with respect to cause prioritization (though perhaps tellingly all five EV board members appear to hold a longtermist world view) and how (if at all) that thinking affects which organizations are allowed to operate under the EV umbrella. EV also hasn’t communicated anything  about whether/how EV is accountable to the broader EA community in any way. 
• Community-level governance institutions are limited, and arguably non-existent. CEA’s community health team could possibly fit this bill, but it seems important that (as far as I know) there are no mechanisms in place to make that team accountable to the broader community or to independently assess instances where CEA itself (or individuals closely affiliated with CEA) could be causing a community health problem.  
• In my detailed Red Teaming analysis of CEA’s community building work, I found that (particularly prior to 2019) CEA routinely underdelivered on commitments, rarely performed meaningful project evaluations, and understated the frequency, degree, and duration of mistakes when publicly discussing them, often leading to negative externalities borne by the broader community. Some of the problems, such as favoring CEA’s cause priorities over the community’s in contexts like EA Global, effectivealtruism.org, and the EA Handbook, directly relate to community governance issues. (One of my conclusions from this analysis was “the EA community should seriously engage with governance questions.”)
• When GiveWell changed the composition of its board in early 2019 three board members resigned, two of whom publicly described concerns they had with the board’s composition and role.
  • Brigid Slipka: “I am unsettled by the decision to reduce the Board down to a hand-picked group of five, two of whom are the co-founders and another of whom is the primary funder (in addition to also funding Holden at Open Philanthropy). This feels regressive. It represents a tightening of control at a moment when the focus should be on increased accountability to the public GiveWell serves.”
  • Rob Reich: “I have continuing concerns that the board’s important governance role is not taken seriously enough by GiveWell leadership. Board meetings are too frequently nothing more than the performance of meeting legal obligations. For an organization as large and as important as GiveWell, the oversight of GiveWell operations should be much greater, and welcomed by GiveWell leadership as an opportunity for diversifying input on GiveWell strategy. Recent decisions by GiveWell to shrink board membership are in my view a mistake, making it less likely that the board will play any serious role in steering the organization into the future.”
• OpenPhil has a small board populated almost entirely by insiders who have been part of the organization since its founding. “The Open Philanthropy 501(c)(3) is governed by a Board of Directors currently consisting of Dustin Moskovitz (Chair), Cari Tuna, Divesh Makan, Holden Karnofsky, and Alexander Berger. Open Philanthropy LLC is governed by a Board of Managers currently consisting of Dustin Moskovitz, Cari Tuna, Elie Hassenfeld, Holden Karnofsky, and Alexander Berger.” 
• CEA, both historically and currently, has deprioritized public program evaluations that would add accountability to community members and outside stakeholders. Instead, CEA has prioritized accountability to board members and major funders. Notably there is significant overlap between those constituencies, with three of CEA’s five board members being employed by either Open Phil or FTX Foundation (until the latter’s team resigned due to the scandal).

Who am I? EA aligned private equity investor / donor who has tried to become more involved in EA for almost a decade.

Ok. These incidents are all new to me but they’re all very bad.

Let’s separate two concepts: governance and controls. Governance is a whole bunch of structure and decision things including what boards of directors do. Controls are a whole bunch of policy and procedure things any and every organization should have to not have occasional very bad things happen. They include things like limits on account access, signatories, cash reserves and investment policies, independent auditors and, critically, audit expertise and the board level via an audit committee. Maybe we all know this but I wanted to separate them because:

I have been in a number of meetings where EA company/org leaders express concerns around establishing or expanding their boards because of “alignment issues” around potential members. I get it (kind of) - it’s hard to put a board together with the right expertise AND devotion to the cause the way you like to see it. I have heard similar sentiment around bringing in finance/accounting professionals. Anyway, a key point: if you are paranoid about mission drift and tight control by aligned founders, you can create an entire board infrastructure of non voting or ex officio members to serve on important committees like audit and governance etc. I have done this a few times at normie nonprofits: it’s a win for me because I get to contribute to something I care about without taking on the time commitment and liability associated with joining a board.

You all may know this stuff already, but I’ve been surprised how weak EA boards look from the outside: a handful of founders and the same 5-10 people from Oxford and adjacent circles… not ideal and frankly a huge red flag as a prospective donor/partner etc.!

Seems this is a good place to mention the EA Good Governance project.

Exactly this. 

It's not a scalable solution to be doing analyses to investigate every source of funding in the ecosystem. It is scalable to have an overarching framework of governance requirements that must be in place for the institutions (FTX, CEA, etc.) that we interact with. Mandates around transparency in budget, inclusion of multiple stakeholders on boards, whistleblower infrastructure, etc. 

I see this as a symptom of a larger problem that exists within the movement, which others have made light of over the past few days: We think we're special. 

Sure, we are approaching a different set  of problems, often in a pretty substantially different way, with epistemic norms that we aspire to, etc. 

But at the end of the day, I think we often write off the fact that we are all also human. Whatever happened at FTX, be it mistake or mislead, is a human error, and it's core to human nature. That's why  companies have boards. Because when we have no oversight, sometimes dumb stuff happens. 

I also see this reflected in movement-building dynamics. EA is ultimately a social movement. Sure, it's lots of other things too, but at the end of the day, if people don't like EA's, or don't feel socially accepted here, they will leave.  I feel like we often over-rationalize this part of the movement and think that if we can only show enough people enough right arguments, then they will understand and join. But really, the growth dynamics of our movement are not too different from those of any other social movement. There is a lot that we can learn from this, from others' mistakes, and I fear that we will continue to think that we are different and not learn the lessons that history can teach us.

Despite what some of us might hope, we are people just like all the other people in the world. So let's acknowledge that and work with it!

Holden Karnofsky has some interesting thoughts on governance:

• https://forum.effectivealtruism.org/posts/c3y6khh7mxiWrDyeb/nonprofit-boards-are-weird

• https://forum.effectivealtruism.org/posts/hxTFAetiiSL7dZmyb/ideal-governance-for-companies-countries-and-more

One theme is that good governance isn't exactly a solved problem. IMO EA should use a mix of approaches: copying best practices for high-stakes scenarios, and pioneering new practices for lower-stakes scenarios. (For example, setting up a small fund to be distributed according to some experimental new method, then observing the results. EDIT: Or setting up a tournament of some kind where each team is governed according to a randomly chosen method.) Advancing the state of the art doesn't just help us, it also seems like a promising cause area on its own.

Here are some forum tags that are potentially relevant:

• https://forum.effectivealtruism.org/topics/nonprofit-governance

• https://forum.effectivealtruism.org/topics/improving-institutional-decision-making

• https://forum.effectivealtruism.org/topics/effective-institutions-project

Really helpful contribution: focuses on the key issues, balanced, evidenced and has concrete next steps. Thanks.

As someone who's been around the scene for a while, happy to try providing some takes here:

1. In general, I agree this area is important, and improvement here could be beneficial. That said, it's tough to do well (as with most important things).

2. My take is that the EA/rationalists nonprofit scene, before ~2019 or so, didn't have the best senior operations/management talent. One primary reason is that funding was tight and precarious. Setting up a 501(c)(3) and managing it is a major pain. The EA/rationality scene attracted a bunch of young people with research-type skills. These people typically really dislike doing operations and don't have great networks of experienced manager types. Over time, the funding situation and the EA-adjacent talent pool have both improved a lot. (But of course, we still have bottlenecks here).

3. I think it's easy to compare EA orgs with either top tech companies, top political organizations, or whatever one could imagine being really amazing and then be underwhelmed in comparison. I'd encourage critics to try to find more reasonable comparisons. EA orgs typically offer much lower salaries and are less prestigious than top tech companies. They're very different from political groups. I'm legitimately curious here. I'm not sure what examples are best for us to emulate. Many EA groups look up to 80,000 Hours and Open Philanthropy as examples of well-run nonprofits.

4. One tractable question could be - "what percentage of a nonprofit's resources do you think they should dedicate to governance improvements / self-evaluation"? Organizations typically don't exactly have the choice to be "really good or not", but they do have the option to just allocate more resources to this sort of thing, if donors approve. I guess few donors would want this to be greater than 20%, but I'm not sure.

5. Related to (3), many non-EA nonprofits seem pretty mediocre to me, likely in large part due to mediocre funding incentives and amounts. I've dug to find clever voices in this area and have been underwhelmed. I think the median organization in the US is just not that great when it comes to governance, and I could easily imagine nonprofits being worse than average businesses.

6. This might be a nitpick, but the 80k accounting issue, specifically, didn't actually seem terrible to me? Like, out of all the mistakes they point out on that page, that doesn't seem the biggest to me. Plus, I can't think of other orgs with mistakes pages that are better than that. (Most orgs don't even have any mistakes pages)

7. I'm a board member of two EA nonprofits and run an EA nonprofit (QURI). I've dug for great resources or advisors for nonprofit management (maybe 2-4 solid weeks total, plus more for narrow skills), and have yet to be very impressed. Some EAs have been trying to invent their own patterns from scratch (i.e. Mistakes pages), due to this lack of being able to find great outside experience. There's a bunch of bad managerial consultants and materials out there - I'm sure there is some great stuff too, but at least I don't feel like I've been able to discern it yet.

8. I'd love it if we could find ways to be more honest about these situations. Like, "from 2014 to 2016, our organization was only able to get C+ talent to be in charge of our bookkeeping. Given our many constraints at the time, we thought this was a reasonable move.". However, given cultural norms, it's unclear how we can say things like this without invading someone's privacy or similar. I think if you have conversations with organization leaders, they will generally be honest about their organization's limitations, but it's awkward to discuss publicly online.

I hope this doesn't sound too much like I'm giving excuses for these organizations. I'm trying to provide a better model for why these challenges exist.

I intend to spend a fair bit more time at this point investigating issues of governance. Doing so of course, means that I'll spend less time doing object-level tasks in the near term.

If people reading this are interested in helping, more posts/work on this topic could be great.

I broadly agree with the claims in this post in general, but am not convinced that the FTX collapse is evidence for them? I don't think FTX could reasonably be counted as an EA org - its senior people were EAs but most employees were not, it was aggressively optimizing for making money, it was a move fast + break things (too many things...) startup. I think that even if EA had much better norms of governance, I doubt this would have affected FTX's governance, though I agree that FTX's governance was clearly bad.

I'm open to the argument that the Future Fund was badly governed, but that feels non obvious and hard to tell to me - it was maybe a screw up that many EA orgs took Future Fund money in a way that left them vulnerable when it was abruptly cut off, though I think this outcome was genuinely hard to see coming. And I doubt they had much say into what was going on at FTX.

Thank you for adding this James. I think you clearly articulated some important points. Last week's events are going to give the EA community a lot to reflect on and learn from. I feel this is one of those growth moments that, because it is so unusually difficult and painful, gives an important opportunity to collectively re-examine  just how valuable some historically under-appreciated organizational structures can be. 

The Effective Altruism community is a young organization in all meanings of the phrase and, despite some challenges like this that can arise as a result, I still believe that it has extraordinary potential to learn, nimbly evolve, and grow in ways unparalleled by any other organization I know of. I hope we can continue to value mistakes as learning opportunities and  use them as signposts where we need to direct our attention for future development. 

I agree that good governance is important, but I'm bemused that your source for principles of good governance is the Council of Europe. Though it's not identical with the EU, I'm skeptical that an EU-affiliated institution is a good source to take lessons about good governance. Also, the list is about democratic governance, and hence not particularly relevant to businesses or nonprofits.

More generally, there's a significant tradeoff between doing stuff and having oversight. (See e.g. this Vitalik Buterin post on the bulldozer vs vetocracy political axis.) Many big institutions are very far on the oversight end of the spectrum, and are hence very slow to act in any situation. Conversely, startups are probably too far on the doing-stuff end of the spectrum, but for good reason.

That said, in a lifecycle of institutions, it makes sense for the surviving ones to become more bureaucratic and professionalized over time. Paul Graham:

There is more to setting up a company than incorporating it, of course: insurance, business license, unemployment compensation, various things with the IRS. I'm not even sure what the list is, because we, ah, skipped all that. When we got real funding near the end of 1996, we hired a great CFO, who fixed everything retroactively. It turns out that no one comes and arrests you if you don't do everything you're supposed to when starting a company. And a good thing too, or a lot of startups would never get started. [5]

[5] A friend who started a company in Germany told me they do care about the paperwork there, and that there's more of it. Which helps explain why there are not more startups in Germany.

And separately, it's easy to pay lip service to good governance, but hard to put it into practice. For instance, almost all Western democracies use highly suboptimal voting systems.

Plus in practice a lot of oversight is just CYA, which can incidentally be soul-crushing for the employees who have to implement it. (E.g. consider complaints by doctors about how much time they have to spend on administrative tasks rather than taking care of patients.)

I am still curious what changes have been made or adopted ever since FTX crisis on good governance part within the EA community and EA affiliate organizations including how they:

• hire staff/fellows
• receive and use funds 
• practice transparency and accountability
• practice diversity and inclusion

Any links/reports of the new changes/policies ?

Thank you for this post! One thing I wanted point out was that, this post talks about governance failures by individual organizations.  But EA orgs are unusually tightly coupled, so I suspect a lot more work needs to be done on governance at the ecosystem level.

I most recently worked for a government department. This single organsiation  was bigger, more complex, and  less internally value-aligned than the ecosystem of EA orgs. EA has fuzzier boundaries, but for the most part, functions more cohesively than a single large organisation.

I haven't thought a tonne about how to do this in practice, but I read this report on "Constellation Collaboration" recently  and found it compelling. I suspect there is a bunch more thinking that could be done at the ecosystem level.

Regarding your examples from the "Weak Norms of Governance" section:

1 - As I understand it, wasn't that a crime committed by an accountant and CFO (see the embezzlement charge here), i.e. by the kind of person you hire for oversight? How does that affect your conclusion?

4 - Surely the main lesson here is "don't update on, and maybe update against, criticism that sits on 75 karma despite 193 votes", especially when tons of comments have several times that karma.

I'm not familiar with the other situations.

Thanks for writing this--I largely agree. One thing I have been thinking about a lot in the scandal is Harry Potter and the Methods of Rationality. For those who haven't heard of it, it is a very popular book in EA circles based on the premise of "what if Harry approached the magical world with a rational spirit of scientific inquiry." It's one of my favorite books of all time, and I am in no way blaming Eliezer Yudkowsky (the author) for any of this mess.

However, one of the messages that I at least take away from the book is "you are personally responsible for your failure to improve the world. This includes your failure on account of waiting for permission from authority or approval from society or from feeling like the thing you are failing to do has too many evil-ish vibes even though it's actually good." I think the attitude that people should be personally ambitious to improve the world and that they can do it themselves without approval from society (or a board of directors or an IRB or anyone) is maybe a little too strong in EA circles. I am also personally pretty sympathetic to this attitude--sometimes a board of directions and an IRB really are stopping you from making the world a better place and sometimes you really should ask yourself if you really need them from a practical and a moral perspective. But it just seems one should be aware of the virtues of occasionally thinking "yes I could technically do something about this but no, I am not personally responsible for unilaterally changing the circumstances, but golly it just really depends on the situation and I should think long and hard about this and maybe get some other perspectives."

To be fair, HPMOR also has the message that "you are personally responsible for when you try to improve the world but then fuck everything up because you were so reckless" and also it's just a work of fiction and this is only my interpretation of it. Also you should read it if you haven't because it's really good.

What a useful discussion of a challenge to this and other aspirational communities.  As I read the comments, many of them reflect the need for a virtue I highly value - humility.  Humility leads to double checking what you do, not assuming it is always right.  Humility creates the desire to confer and learn from others.  Humility acknowledges that other perspectives may be helpful in achieving the most effective result.  In an organization it leads to creation of checks and balances, even when they may not seem essential  

Humility is not a road block to progress.  To me it is an essential part of achieving broad and effective results.  When I was young, I often “knew best”.  Sometimes that let me forge ahead and succeed, not being slowed by considerations beyond my vision.  And that success often multiplied my sense that I was being effective, further limiting my ability to listen to differing voices. As I look back, I see how things could have been done more powerfully if I had exercised a little more humility.  
 

I think a practical intervention here would be outlining how much governance should be in place at a variety of different scales. "We employ 200 people directly and direct hundreds of millions of dollars annually" should obviously have much more governance-structure than two people self-funding a project. A claim like "by the time your group has ten members and expects to grow, one of them, who is not in a leadership role themselves, should be a designated contact person for concerns, and a second replacement person as socially and professionally distant from the first as practical should be designated by the time your group hits 30 people." I expect explicit growth models of governance to be much more useful than broad prescriptions for decision-makers, and to make explicit the actual disagreements that people have. 

I can't agree with this post more. I raised concerns about the number of times I heard those placed into leadership positions of new EA spin-offs/projects relaying that they felt they didn't have sufficient oversight/ reporting mechanisms in place to get the best out of these programmes or even their talents. Idealistic as we all are, big bucks need big governance - it's as simple as that. 

So let's get scientific about all this. It is now absolutely essential that EA makes the a-priori publication of impact metrics, programmatic design and oversight mechanisms with absolutely all affiliated activities business as usual. It is too easy to get creative with this accounting if done retrospectively - reach gets inflated and declared financial waste gets minimised/ swept under rugs.  If we want the public to ever trust us with their funds again, we have to show all our workings and we have to be open about our failings. The only way of cleaning up the reputational damage of our FTX affiliation is concerted effort around external and objective oversight/audit (annual charity commission reporting is not sufficient) and layered internal governance via boards and committees and, yes, I'm afraid a metric tonne of bureaucratic paperwork. 

EA now has brand-value and must act accordingly: it cannot shirk responsibility as 'an ideology' or even as an accelerator perhaps can. Any negative association is now our liability and our responsibility.  A single bad apple ruins the brand equity barrel - not least when the public bloodlust for all things EA is considered. Do we really want to be the makings of just another bad Netflix documentary? 

I have worked in and alongside global programs via corporate philanthropy, international relations and political parties. I have helped to manage the oversight of programmes ranging from £50k to £50mil in valuation and have seen how paperwork and wraparound scrutiny mechanisms are supposed to increase exponentially with each added zero. This is the only way of safeguarding beneficiaries, of behaving ethically: failing to step up to this bureaucratic burden risks the poor programmatic design or fiscal mismanagement that does unthinkable harm to those who come to depend upon the hope and means to social mobility that these interventions purport to providing. 

I would be delighted to leverage this experience and help EA in its current crisis and - it must be stated - was glad to see that when I did raise these initial concerns with EA leadership, they were responded to positively and I was immediately invited to meet with the governance team. That said, my concerns still stand so the offer does too :) 

Let's get our house in order folks.

Hi Fods, 

This is a great post with historical accounts from within EAs previous issues which somehow shows a trend that needs reviewing.. Thank you for sharing this.

Let me add that reviews of decision making policies and accounting controls plus declaration of conflicts of interest on a regular basis are deemed best practices in preventing large scale fraud or errors. When large sums of inflows and outflows of funds are involved any organization should strongly advocate systems that can help prevent future mishaps and not seek to correct them when such unfortunate events happens....

All the best, 

Miguel

Related advocacy of better governance shortly before FTX collapsed: https://forum.effectivealtruism.org/posts/7urvvbJgPyrJoGXq4/fallibilism-bias-and-the-rule-of-law

Among other things, the article advocates the rule of law and criticizes a MIRI worker's claim that EA is a good and rational community, that does a better job than others, because "EAs have similar goals and so EA doesn't waste tons of energy on corruption, preventing corruption, negotiation, etc."