The field of global catastrophic risk has been jolted by the recent collapse of the cryptocurrency company FTX. Its philanthropic arm, the FTX Future Fund, was, for a brief stretch of time, a major funder of work on global catastrophic risk and related topics. Some projects related to global catastrophic risk were also funded directly by FTX co-founder and former CEO Sam Bankman-Fried.
We at GCRI are deeply saddened by this turn of events. Our hearts go out to all the victims who have suffered from FTX’s behavior. Based on the reports we have seen, it does appear that FTX engaged in behavior that is clearly wrong and inexcusable, including alleged fraud.
Given the role of the FTX Future Fund as a funder of work on global catastrophic risk, this is an appropriate occasion to speak more broadly on the issue of funding sources. The collapse of FTX vividly demonstrates that not all funding is equal. Some funding sources are, for ethical and legal reasons, better than others. Here, we wish to outline GCRI’s principles for evaluating funding sources. We also wish to encourage other groups and individuals involved in global catastrophic risk to think through their own standards for receiving funding.
First, in the interest of transparency, here is the relationship between GCRI and the FTX Future Fund. This past March, we submitted a proposal to the FTX Future Fund. The proposal was not funded. Additionally, in September, we were approached by someone to see if we would be interested in a project funded by the FTX Future Fund. The project was not a good fit for us and we declined. Therefore, GCRI has not received any funding from the FTX Future Fund, but we did consider it. At no point did we consider that it may be inappropriate to pursue funds from this particular source.
Upon reflection, we should have been more cautious. Hindsight is 20/20, and we could not have known the full extent of FTX’s poor business practices or predicted its collapse. However, the collapse does fit a pattern. Cryptocurrency is a notoriously volatile financial sector that can hurt ordinary investors who don’t adequately appreciate the risks. It is also associated with crime and environmental degradation. Furthermore, a previous cryptocurrency philanthropist, Ben Delo, had been a funder of work on global catastrophic risk until he was charged by the US Department of Justice with failing to prevent money laundering. Delo also had ties to the FTX Future Fund personnel, who have done many good things but should not be blindly trusted. Had we investigated the FTX Future Fund more closely, we may have considered these points and proceeded more cautiously.
This is not to say that cryptocurrency is irredeemably bad and that all funding related to cryptocurrency should be categorically rejected. We are not cryptocurrency experts, but that strikes us as too strong of a conclusion. Instead, the evidence we see, including but not limited to the case of FTX, indicates only that cryptocurrency funding may carry a relatively high risk of causing financial, ethical, legal, and reputational problems, and therefore it merits closer scrutiny and caution.
GCRI is fortunate to have not received funds from the FTX Future Fund. If we had, then we would currently be halting any spending of those funds and preparing for the possibility of returning the funds, including through a process known as clawbacks (see further discussion here). Some colleagues of ours are now doing precisely this at considerable cost to their operations and their personal lives. Through no fault of our own, we dodged a bullet.
The receipt of bad funds does not just hurt the recipient. It can also hurt the world. One way it can do this is through reputation laundering, in which a nonprofit receiving funds improves the reputation of the funder, enabling them to continue their harms.
A notable case is that of Jeffrey Epstein, the notorious sex offender who died in jail in 2019. Epstein’s philanthropy supported scientific research on topics including artificial intelligence. We at GCRI never had any interaction with Epstein, but we know people who had. Several scientists were approached to receive Epstein funding after his status as a sex offender was known. Some accepted the funding; others declined out of concern about his status. Even when made anonymously, the donations could rehabilitate Epstein’s reputation, helping him cause more harm.
Conflict of interest can also be a significant issue in the funding of nonprofit work on many issues, including global catastrophic risk. For example, there is ongoing concern about fossil fuel industry funding of academic climate change research due to the inherent conflict of interest, which could bias research in ways favorable to the fossil fuel industry. (Reputation laundering is also a concern here, in this context known as greenwashing.) The fossil fuel industry is another sector whose funding merits close scrutiny and caution. Likewise, any potential funding that poses conflicts of interest should be handled carefully to ensure that funded work is focused on reducing global catastrophic risk instead of advantaging funders.
There is a tension between the harms of accepting funding from improper sources and the good work that could be done with the funds. Likewise, there are no definitive rules about how to handle these situations. Instead, there can be reasonable disagreement about which funding sources are or are not good to accept. Indeed, which funding sources are acceptable can vary from organization to organization. For example, Amnesty International does not accept funding from governments, as befits their focus on human rights. In contrast, GCRI is happy to accept funding from governments, and indeed we have before.
For our part, we at GCRI commit to the following:
First, we will favor funding sources that do not pose the sorts of risks and ethical issues described here. Many funders pose no significant issues and we are grateful for their support.
Second, we will scrutinize funding sources in proportion to the amount of funding we may receive. We lack the resources to examine every funder, including those who donate directly via our website. However, a large portion of our funding comes from a small number of large funders. They merit scrutiny.
Third, we will abstain from accepting funds that pose significant risks and ethical issues. We do not have a precise formula for determining when funds should be declined, nor can we guarantee that we will always make the correct decision. We can say that we will use our best judgment as risk analysts and ethicists, and that we strive to hold GCRI to a high standard of conduct.
Fourth, we will engage across the field of global catastrophic risk to help the entire field maintain high standards. As senior leaders in the field, we recognize our responsibility for promoting sound conduct.
Sincerely,
Seth Baum, Executive Director
Tony Barrett, Director of Research
McKenna Fitzgerald, Deputy Director
