Will the Charity Commission's statutory inquiry into Effective Ventures UK (EVF) result in significant regulatory action by 12/2025?
resolved May 22

Background here.

For the purposes of this question, significant regulatory action includes, but is not necessarily limited to:

  • The issuance of a public Official Warning (the existence of a report is not sufficient, the term "Official Warning" must be used in a statement or report by the CC);

  • Involuntary removal of, or appointment of, an EVF trustee (voluntary resignation or appointments do not count);

  • Disqualification of an EVF trustee from serving as a charity trustee or senior manager for a period of time (this does include "voluntary" undertakings not to serve in these roles);

  • Appointment of an Interim Manager for any length of time;

  • Most other temporary protective powers, if they exceed 3 months' duration and are not clearly minor in scope;

  • Almost all permanent protective powers; and

  • An order directing the winding up of EVF UK's affairs.

See this document for more information about the CC's regulatory powers, and ask if this description is unclear on what I consider to be a "significant" regulatory action. I do not intend to defer resolving the market pending any appeals outside the CC.

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If EVF's FTX money gets clawed back, might that trigger the protective action from the charity commission? Might that be why this market is higher than the other EVF one?

predicted NO
  • Disqualification of an EVF trustee from serving as a charity trustee or senior manager for a period of time (this does include "voluntary" undertakings not to serve in these roles);

If Will/Nick decide to permanently leave the board due to their relationship with FTXFF but not explicitly at the recommendation of the CC how will this market resolve?

I think that some of these actions are plausible but they may not be causally downstream of CC actions and may be done for other reasons related to dealing with the FTX fallout and increased scrutiny from journalists.
Or they are downstream of predicted CC actions but aren't influenced by the CC in a very legible way.

@Jason you don't need to give concrete resolution criteria if you don't have them but classifying some borderline examples would be helpful for me.

@CalebParikh The starting point is that "voluntary resignation or appointments do not count." That we think the CC ahem, encouraged a resignation does not matter. There are too many reasons to resign that are not "because the CC was going to make me."

The sentence about voluntary undertakings not to serve "as a charity trustee or senior manager for a period of time" refers to commitments not to serve in those roles in the entire UK charity sector. I've seen such commitments in CC reports -- I assume the CC accepts resignation and a commitment as equivalent to a disqualification from serving in those roles in the UK charity sector. And there's no other clear reason for someone to make that commitment.

If someone agreed to resign and committed to never be on the EVF board again . . I think that is a YES if and only if the commitment is explicitly mentioned in the CC report. Only then would I be satisfied of enough nexus to threat it like the previous paragraph.

@samb Are you going to do one for Nick, or do you think the two are so linked that is duplicative?

predicted NO

@Jason No strong opinion on the linkage. I don't think I'll do one for Nick though

Added 1k liquidity. Does anyone have solid base rates?

predicted NO

@ThomasKwa Base rates look very high based on a skim of some of these published reports https://www.gov.uk/government/collections/inquiry-reports-charity-commission

@samb I haven't encountered a single published report that doesn't seem like it would qualify

predicted NO

@samb But I caveat that I didn't read super closely

@samb There's a comment on EA Forum saying only around half of statutory inquiries result in public reports. And I'd imagine significant regulatory action makes a public report much more likely.

So the base rate could be anywhere between 50-100%, probably closer to 50%. I'm inclined to update downwards by ~1 bit because the CC says there is "no indication of wrongdoing by the trustees at this time", and another independent ~0.4 bits because CEA seems cautious and professional. This leaves me at 27%+. I'm not confident enough to trade, having no domain knowledge.

Someone should count up the (number of regulatory actions)/(number of inquiries) or find a better source, and trade on this.

@ThomasKwa That thread included my very quick reading of a sample of public reports, the significant majority of which resulted in significant regulatory action. There is some data on the number of statutory inquiries there too, but you can only guess at a percentage because the reports are only published back a few years and there's no way to link when an inquiry was opened vs when reported.

I guesstimated a 35 pct base rate but adjusted by own probability upward a bit, mainly because I think the CC will apply tougher standards to a larger charity.

predicted YES

@ThomasKwa I'm not sure about updating downwards just because of outward appearances (this was partially the problem that resulted in EAs trusting SBF/FTX). CEA has historically had quite a poor reputation among EAs even, because it had quite poor operations (though this has seemingly improved).

I think the main risk is associated with the second bullet point in that press release: "the governance and administration of the charity by the trustees, including relationships between the charity’s trustees and its funders and the identification and management of conflicts of interest and / or loyalty".

Everything we know about EA orgs is that they have pretty significant conflict of interest (COI) issues. Now, I doubt the Charity Commission are going to write up a report on polyamory within EA (though I'm sure at least some COI diligence steps will have been skipped when (ex-)partners of grant applicants have made funding decisions, simply because N is large).

But, as mentioned on the EA Forum post: "some EVF UK board members had links to FTX’s philanthropy; most notably, UK board member Nick Beckstead ran the FTX Foundation, and UK board member Will MacAskill served as an unpaid advisor to the Foundation". Now I don't know what the CC would think of this (it seems like a problem for the FTX Foundation rather than EVF) but this relationship is going to get a lot of scrutiny: CEA seems to have been the second-largest donee of the FTX Foundation, receiving at least $13,940,000 (I expect it's more since this is from publicly reported figures, and I wouldn't be surprised if money came via FTX subsidiaries as well as through the Foundation).

Also, CEA basically incubated FTX — so the flow of resources did originally flow the other way. It wasn't just that SBF worked at CEA, others working there actively helped with recruiting for FTX by recommending EAs go off and take interviews with them. The fact that 80k is part of the EVF cluster of orgs makes this even more messy (since they publicised SBF and gave career advice). It's not a good look that some of the people who took these EA-recommended FTX jobs lost their life savings by investing it all on the platform; will the CC take this sort of thing into account? I'm not sure, but it doesn't seem like a good look for EVF trustees to have had a role in shepherding a lot of this process.

Also, the largest recipient of FTX Foundation grants was Longview Philanthropy, which also has Will MacAskill as an advisor. This kind of thing could alert the Commission about loyalty issues, right? Obviously the interests of EVF are basically the same as the interests of Longview, so this specific example is maybe uninteresting. But this is just me looking at the most obvious, public data — the fact that it's immediately questionable is evidence that COI concerns probably weren't taken seriously in private either.

(Aside: this is unsurprising, but it really would be nice if EA depended less on a tiny group of high profile people — it's a bit freaky to me how centralised all the decision-making is, even though it looks like there's a healthy and diverse ecosystem of orgs).

I basically think the COI nightmare is unignorable (and is yet another instance of a risk that's been continuously highlighted but ignored). It seems pretty plausible that they'd remove at least one trustee, or even appoint an interim manager to fix the extensive COI issues.

@Jason would this count as significant regulatory action?:

the inquiry issued a section 76(3)(f) order to restrict payments made from the charity’s bank account.

This was in response to transfers made by a charity's chair without proper consultation or COI management (One Community Organisation inquiry)

@berealistic Close call, but not in this case. The order was withdrawn after a year or so. The applicable criteria is "Most other temporary protective powers, if they exceed 3 months' duration and are not clearly minor in scope." I'm going to call that particular temp protective power clearly minor in scope because it only restricted transfers to insiders AND allowed them with CC approval.

predicted YES

@Jason thanks for the clarification!

Pasting this, from the Charity Commission's guide on conflicts of interest, for people's convenience:

What is a conflict of interest? (legal requirement)

A conflict of interest is any situation in which a trustee’s personal interests or loyalties could, or could be seen to, prevent the trustee from making a decision only in the best interests of the charity.

Also, in addition to the likelihood of this question, I'd be interested in hearing thoughts on what EA-aligned folk should do in the face of possible regulatory action.

@berealistic I think there's an excellent chance MacAskill and Beckstead go, but by market definition that's only a significant regulatory action if not "voluntary" or if there is commitment not to serve as a charity trustee or senior manager for a period of time.

The many-hatted nature of many senior EA leaders' role complicates all of this. Much of what these folks did was not in their capacity as a board member or agent of EVF. So we'd mainly be looking at whether their actions were disloyal to EVF. It's not obvious to me how being pro-SBF would be disloyal to EVF without more; EVF had an interest in keeping its megadonor happy and maximally wealthy.

Much ink has been spilled on the EA Forum as to whether EVF's board should go and whether broader structural reforms are warranted, and opinions are mixed.

@Jason Okay yeah, agreed. I expect the trustees will all be cooperative during the inquiry too, which will help EVF avoid significant regulatory action.

I guess the CC could determine that there was a serious lack of due diligence (or of trustees not acting on known information) but I doubt they'd go that far.

predicted YES

This definitely seems too low on liquidity - knowing about the true level of risk for this seems like it would be very helpful for both EVF and the EA community broadly.

The removal of trustees and appointment of interim managers at EVF would be pretty big deal, right? As well as being a bad look, changes in how EVF is able to operate would probably have significant downstream consequences for EA as a whole.

predicted YES

Ah nice, thanks @MatthewvanderMerwe!

@berealistic or someone else: Can someone point me to a resource explaining how much liquidity a market "should" have to function in a reasonably effective way?

predicted YES

@Jason I'm not sure about any resources, but this has plenty now I think (since it takes a lot of mana to move the market price a lot). Just needs more traders and activity I think?

I don't trade in my own markets where there is any subjectivity involved, but the current 19 percent chance seems significantly too low to me.