In this interview from the Price of Business "Thought Leaders" series, Dr. Chris Stout critiques the current state of effective altruism (EA) and modern philanthropy, arguing that many high‑profile donors use charitable giving as a form of virtue signaling and "goodwill laundering." He begins by linking the collapse of Sam Bankman‑Fried’s FTX and its associated foundation to a broader credibility crisis for EA, noting that large, opaque donations often fail to reach intended recipients. Stout then surveys a range of billionaire donors—Elon Musk, Sheryl Sandberg, Mackenzie Scott, and others—highlighting how their contributions are frequently framed as reputation management rather than genuine impact. He discusses the structural tendency of nonprofits to shift spending toward administrative overhead as they grow, citing his UN experience and data from the Foundation Center on declining giving during recessions. The conversation moves to proposed reforms: greater transparency, the idea of foundations deliberately “sunsetting” themselves (as with the Gates Foundation’s 50‑year plan), and regulatory distribution requirements. Stout celebrates outlier philanthropists like Chuck Feeney, who gave away 4,000 % of his net worth, and references Peter Singer’s moral calculus for donor responsibility. He concludes with practical advice for everyday donors, pointing to resources such as "The Life You Can Save" and urging individuals to align personal budgets with meaningful charitable action.
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Kevin Price, host of the nationally syndicated Price of Business show. The Price of Business is in radio markets coast to coast as well as on the largest web platforms. Our guests include New York Times best selling authors, major media personalities, billionaires and more. Welcome to our series called Thought Leaders where we went out and found some of the most interesting people with the best stories about business, culture, technology and more. Here's another in that ongoing series.
I'm Dr. Chris Stout, founding director of the top ranked nonprofit center for Global Initiatives. I'm also a LinkedIn top voice, best selling author, clinical psychologist, adventurer, startup whisperer and accidental humanitarian. To learn more and connect, please reach out via LinkedIn. Today I want to discuss effective altruism versus virtue washing and Goodwill Laundering the former plague of insouciance as to charitable giving seems to have been replaced with mercenary showboating of billionaires largesse. To me, it's an odd situation that a very public crypto flameout could somehow bring up the topic of effective altruism. Some have opined that effective altruism has now lost much of its appeal and not a trivial amount of its credibility. Based in no small part to Sam Bankman Fried's hijinks with ftx. Nicholas Coolish, writing in the New York Times, reported that sbf, as he often goes by, was a proponent of the effective altruism movement and as a result of his bankruptcy filing, those involved in effective altruism are now asking themselves whether they might have inadvertently helped burnish his reputation. This is especially stinging as SBF was not a vocal supporter of effective altruism. He was a donor. Well, sort of. It turns out he gave funds to groups including the news organizations ProPublica, Vox and Intercept, according to Kulish, and those funds seem to have vaporized along with investors real dollars. Furthermore, in October, SBF's FTX foundation reported that while some monies were donated, it is unclear how much of that money made it to the recipients. Now the nonprofits that were counting on his promised backing are scrambling to replace millions in grant commitments. This kind of thing really flips my switch as I've frequently spoken and written about what William Easterly refers to as the power of the small project. Basically, many non governmental, philanthropic, charitable and non profit organizations that become successful seem to have a similar arc of evolution. That is they bring in as they bring in more funds, budgets start to shift and more dollars start to go to supporting institutional infrastructure and corporate growth and less to the work itself. I spent a year as a special representative working in the United nations and I saw many examples of this. Ditto. When one looks to the history of other comparable organizations, evidence for this may lie in what happened during the last recession. The Foundation center surveyed over 1,000 foundations and found at that time an 8.4% drop in giving, the worst drop adjusted for inflation ever recorded. The logic basic to philanthropy would be that during the times of most need, the most help would be given, not diminished. So this seems proof positive that some foundation administrators are more concerned about the size of their nest eggs than about their philanthropic mission. It's not a big surprise that many advocacy groups call for greater transparency and reforms, but I digress. The moral to this story of immoral shenanigans is that SBF was courting favor while wearing the halo of altruism and a way to gain credibility and acceptance from investors, customers and the world at large. Or so it would seem. The well known philosopher William MacAskill and de facto godfather of the effective altruism movement tweeted, if that goodwill laundered fraud, then I am ashamed. It used to be that nefarious folk atoned for their sins and past villainism by being humbled, sincerely atoning, sans press releases and media events, and sometimes doing things like writing beautiful hymns. Think Amazing Grace. But Benjamin Socus observed that many of the newly rich donors leveraged their donations in order to gain legitimization from their status as philanthropists. It should be no surprise that Elon Musk has become another embarrassing supporter of effective altruism. In a similar vein, my hero Scott Galloway went bananas on his podcast recently about Sheryl Sandberg's $3 million donation to the ACLU earmarked to support their efforts against abortion bans. Galloway's issues were based on two things. First, the timing less than three days after she left Meta, and second, while it was one of the largest donations of its kind, he felt that it seemed a little bit more born from a desire to repair her reputation and considers her donation the mother of all virtue signaling. And he did the math. Cheryl's net worth is one and a half billion dollars and a $3 million donation from her, a as in 0.2% of her net worth is equivalent to the average American family giving $240. While he notes that philanthropy at any amount is a good thing, he also calls out that there's a difference and that when a household gives $240 to a charity, they don't do a press release and start doing press conferences and posing for the camera. That isn't philanthropy and it's quite different from Mackenzie Scott's approach, who's donated $5.8 billion to 500 different groups across the country just last year, she continued giving away her fortune faster than any billionaire ever. Respect Mackenzie. Respect. Philosopher Peter Singer, in his book the life you can save said that for millennia people have said that giving good brings fulfillment. In 2006, Singer wrote an article in New York Times magazine titled what should a billionaire give and what should you? He simply asks what should a billionaire give to charity? What should we non billionaires ostensibly give and how do we calculate the numbers? And of course he lets us know the amounts to be calculated. And basically there is an amount of money that one needs to have for a decent life to pay for a reasonable amount of rent and clothes and food and leisure, etc. If you have more than that, he posited, you should give it away because if you don't need it, someone else does. This past summer I interviewed Singer's partner Charlie Bressler and he discussed Singer's giving scale and I found that a very helpful rule and guide as well. In running a global health nonprofit myself, I have found that spending a fair amount of time cogitating on the supply side of humanitarian work philanthropy. I have previously written on the topic philanthropy for the rest of us and spoken about the Giving Pledge, a popular meme in business literature references Schumpeter's famously attributed philosophy of creative destruction. That got me to thinking what if we applied this concept to philanthropic institutions? That is, what if such organizations made it their goal to spin themselves down completely? Would that be a bad thing? The Gates foundation is a self imposed sunsetting over a 50 year spin down. I was at a TED conference a long time ago and heard Zoe Baird's plans on the then new being the then new president of the Merkel foundation to increase the foundation's amount of spending. Indeed, US regulations require a minimum annual distribution of 5% of their endowment. But paradoxically, this seems to be treated like it's the maximum overhead can be as high as 20%. And I suspect too that many wind up being maxed out. In my research for the Bresler interview, I read a piece in the recent issue of Forbes on America's top givers. It's pretty much what you would expect, billionaires giving billions. And then I read something sort of amazing. Chuck Feeney. He's not a billionaire or even a multi millionaire, but nevertheless he was ranked sixth. He's given away 4,000% of his net worth. 4,000%. The guy and his wife now have $2 million left to live on while having given away $8 billion. Holy smokes Chuck, you are an inspiration. While not everyone can give an annual lump sum donation, everyone can make a difference. If you need some pointers on how to get started, the good people at the Life youe Can Save have provided a number of resources. There's a lot of need in the world. There's a great number of people and ethical organizations that are doing their part to make a difference. What if each of us committed to step up our charitable game? What a wonderful and meaningful difference it could make in the lives of others in 2023 and and beyond. Perhaps we can take a look at our resolutions, our budgets and ourselves and consider if what we are doing is all that we can and should for others. As Jack London wrote, a bone to a dog is not charity. Charity is the bone shared with the dog and when you are just as hungry as the dog, thanks.
