Sam Bankman-Fried’s downfall as head of the cryptocurrency exchange FTX has dragged a reluctant co-star into the spotlight — effective altruism. As an ardent advocate of the movement, Bankman-Fried was closely connected to effective altruism’s intellectual leaders, especially Scottish philosopher and author Will MacAskill.
This fact is now widely known both inside and outside of philanthropy circles. But for those of us who work in the philanthropic world, Bankman-Fried’s involvement in the effective-altruism movement — and the public scrutiny it has engendered — offers a perfect opportunity to consider the consequences of a materialist, maximizing-giving philosophy. It’s no stretch to say that Bankman-Fried’s indifference to those whose investments were lost in the FTX implosion echoes effective altruism’s indifference to human nature.
Effective altruism appeals to the desire for measurable impact and confidence that each individual gift is doing as much good as possible. Its adherents, including many young, tech-savvy professionals like Bankman-Fried, claim the best way to have confidence in a gift is by giving only to organizations that save lives and alleviate physical suffering — and only to those that achieve these goals most cost-effectively.
Here’s the problem: Giving that addresses only physical or material needs ignores the reality that people are more than a collection of atoms. At a minimum, we are also social — making sense of ourselves and our world in relationship with others — as well as spiritual, creative, and intellectual. Because we contain all these dimensions, our needs extend beyond the material and our judgments are based on factors such as personal connection and sympathy, as well as reason.
But attributes such as these are precisely what effective altruism seeks to repress when making philanthropic decisions. In his book The Most Good You Can Do, philosopher Peter Singer, who originated the theory of effective altruism in the 1970s, describes effective altruists as “strongly influenced by analytical information,” which they use “to override those elements of their emotional impulses to act less effectively.” Emotional impulses, often rooted in a sense of community, family, and personal interests, are seen as making people worse at giving rather than better.
While it may sound noble to overcome personal preference when deciding where to give, is a neighbor in need after her house burns down really less worthy of help than an organization that provides bed nets to protect against malaria in Africa? Giving to that neighbor may not produce the measurable, long-term impact effective altruists desire, but the action expresses care, builds social trust, and can encourage others to contribute — further strengthening community bonds. Donations of this type meet social needs while helping to solve material ones. The two are not mutually exclusive, and to focus entirely on material ends risks losing sight of other needs that are also essential.
Fighting Poverty
Efforts to address poverty by focusing solely on the material needs of a community can be especially problematic. In some cases, international-development programs guided by an effective-altruism mind-set have even caused more harm than good. A notable example is the Millennium Villages Project in the Kenyan town of Dertu. The project was the brainchild of economist Jeffrey Sachs, whose 2005 book The End of Poverty claimed that a targeted approach to development aid could eliminate extreme poverty by 2025.
Sachs aimed to transform the impoverished community of Dertu by building much-needed infrastructure, including schools, health clinics, housing, and roads. The effort received $120 million in funding, including $50 million from George Soros, and for a period, seemed to markedly improve conditions in the region. Once the funding stopped, however, the situation took a turn for the worse, exacerbating the very problems Sachs sought to solve.
In her book The Idealist: Jeffrey Sachs and the Quest to End Poverty, Nina Munk describes her visit to Dertu after the project ended. She found an overcrowded town filled with refuse and broken-down equipment. Sachs’s improvements seemed easy to implement but were not sustainable. Without a steady flow of money, access to expert technicians, and electricity, the project fell apart.
According to effective altruism, addressing concrete issues such as housing, medical needs, or education is the most efficient, cost-effective way to make a difference. But what seems simple to solve, as the Dertu case shows, is often far more complicated.
How Real Change Happens
Many donors understandably want to know that their gift is making a tangible impact. But in a field that resists measurement, such certainty is hard to come by. Entrenched problems such as poor education, food shortages, and unsafe water stem from several factors, including culture, politics, and laws — not just a lack of funds. Some of the most effective philanthropic movements, including the civil-rights movement, embraced this complexity and recognized the broader cultural issues at play. Although each action taken at a given time may not have been the best possible choice according to effective altruism standards, they added up to transformed cultural attitudes and institutions.
In a conversation with Vox reporter Kelsey Piper, Bankman-Fried described how he made decisions about FTX, noting that “each individual decision seemed fine and I didn’t realize how big their sum was until the end.” He could just as easily be describing effective altruism. If every donor sought the type of measurable impact the movement requires, more dollars would likely flow to programs that addressed specific physical needs, such as the prevention of malaria or blindness. But funding for anything that lacked quantifiable returns, such as the arts, academic research, and broader social activism might quickly dry up.
Effective altruism and Sam Bankman-Fried share a flaw — they both ignore the human side of the equation. Bankman-Fried’s carelessness with decisions that affected thousands of investors shows a disregard for the people he harmed. Similarly, effective altruism, in aiming to help as many people as possible, fails to appreciate the fullness of who people are in both heart and body. In its search for certainty, effective altruism pushes aside the important human element of giving. It should be examined more critically before other emerging billionaires bet on its success.
