“Alternative Protein” Nonprofits Should Return Donations To FTX

Why is the Good Food Institute holding on to tainted money from disgraced “effective altruism” philanthropist Sam Bankman-Fried?

The recent downfall of Silicon Valley darling Sam Bankman Fried, along with the financial collapse of his crypto exchange company FTX, is shining a light of the disgraced founder’s philanthropic activity while raising ethical questions about the recipients of his tainted donations.

Bankman-Fried was a proponent of “effective altruism”, a little-known, pseudo philosophy similar to utilitarianism that has taken hold of a significant portion of the vegan / animal welfare / “alt protein” world in recent years.

For example, the Center for Effective Vegan Advocacy says it’s committed to the principles of effective altruism, which seems rather self-serving; after all, who is for ineffective vegan advocacy? You can also find, “The Strongest Argument for Veganism” according to the Effective Altruism Foundation, as if these ideas were just discovered.

Donors can give to a collective called “EA Funds” (EA = effective altruism) to benefit animal welfare causes, including the Good Food Institute (GFI, the nonprofit arm of the cell-cultured meat aka “alt-protein” industry) along with other proponents of biotech meat such as the Modern Agriculture Foundation.

The Open Philanthropy Project (also started by a tech founder) is a massive source of effective altruism funding including to “farm animal welfare” and “alternatives to animal products”, and is a major funder to GFI, most recently for $10 million.

The vegan movement seems inextricably linked to effective altruism.

Enter Sam Bankman-Fried.

As part of his pledge to give away large portions of his wealth in service of effective altruism, Bankman-Fried siphoned off millions of dollars from his now bankrupt company FTX.

One recipient of Bankman-Fried’s generosity was the Good Food Institute, which received $250,000 in 2021, as part of the “FTX Climate Program”. This media story mentions two grants, which GFI did confirm to me it received from the FTX Foundation, but declined to disclose the amount of the second grant in 2022, explaining via email that they “cannot disclose donor (or donation amount) information without their explicit consent”. This seems odd given that the FTX Foundation is now defunct so who would even give consent?

The FTX grantor sings GFI’s praises on a website that is still active: ‍“GFI acts as a general hub to accelerate the adoption of animal alternatives through research, policy proposals, community initiatives, and advocating for fair competition through policy.”

As part of the recent FTX bankruptcy proceedings, legal questions are now being raised about nonprofit recipients having to return all donations, given how the source of those gifts is likely part of the billions of dollars lost by customers. After all, the money wasn’t Bankman-Fried’s to donate; it was supposed to go into crypto.

Some nonprofits are already taking proactive steps to do the right thing.

FTX (under new management) has been approached by numerous recipients of the donations who want to return the money. The company is urging others to do the same; those who don’t could be sued in bankruptcy court and required to return the money, with interest.

According to one account, the Alignment Research Center announced it will return its $1.25 million grant from the FTX Foundation. They correctly noted that the money “morally (if not legally) belongs to FTX customers or creditors.” Similarly, ProPublica, the nonprofit media outlet, said it would return the $1.6 million it received from Bankman-Fried’s family foundation.

In contrast, GFI has so far not offered to return the money it received from its two grants, explaining that the funds are already spent and that GFI is probably not legally obligated to return the ill-gotten gains anyway.

Sheila Voss, VP of communications at GFI, clarified that earlier statement, telling me via email: “Given ongoing investigations, last year GFI’s board set aside an equivalent amount to the gifts received from FTX while we monitor legal developments.”

Even if GFI and other nonprofits are not obligated to return the money legally, they certainly are morally. It also makes financial sense to do so. Why wait until a court orders you to pay it all back with interest?

And budgets are always malleable, especially for an organization of GFI’s size. According to Animal Charity Evaluators, which conducts deep dives into animal welfare organizations, GFI’s revenue topped $40 million in 2021, the same year as the $250,000 donation. And the organization is projecting an astonishing $50 million in revenue for 2023. (These numbers are multiple times the budget of most other animal welfare organizations and other nonprofits doing similar work.)

The Open Philanthropy Project (already giving GFI millions of dollars) is now offering to make up losses for recipients of the FTX “Future Fund”. GFI must have plenty of other donors to turn to in addition to Open Philanthropy to make up any shortfall.

Recipient non-profits such as GFI should return any FTX money, if for no other reason than to distance themselves and their missions from the multiple criminal charges that Bankman-Fried is accused of:

• wire fraud
• conspiracy to commit wire fraud
• conspiracy to commit commodities fraud
• conspiracy to commit securities fraud
• conspiracy to commit money laundering
• conspiracy to defraud the Federal Election Commission and commit campaign finance violations.

As the U.S. Attorney’s office explained: “The charges in the Indictment arise from an alleged wide-ranging scheme by the defendant to misappropriate billions of dollars of customer funds deposited with FTX, the international cryptocurrency exchange founded by the defendant, and mislead investors and lenders”.

The U.S. Attorney also noted, “this was not a case of mismanagement or poor oversight, but of intentional fraud, plain and simple.” Why hold on to money gifted from someone so far removed from any ethical principles?

It’s ironic that GFI, an organization so concerned with saving the world from the harms of climate change caused by conventional meat production, appears to have no moral problem holding on to money that belonged to people other than the donor, a man who is now facing federal prison time.

All recipients of Bankman-Fried’s tainted money should immediately distance themselves from this scandal by returning any ill-gotten gains, or else risk having their own ethical compass questioned.