Sorry if this is a stupid question; I originally wanted to ask on ACX, but the open thread has exploded and now my web browser freezes when I go there.
If I understand it correctly, several EA charities are currently in serious financial problems, because FTX promised to give them tons of money and then… didn’t.
Could this be avoided if we simply started following a common-sense rule: “Do not spend the money you do not have yet”? Like, if tomorrow some FTX2 comes and says: “Hey, why don’t you do X, I will give you billion dollars”, just tell them: “Sure, I will start working on X as soon as the billion dollars appear in my bank account. Until then, we can discuss plans, but I am not spending any of my money, nor doing anything huge and irreversible.”
I understand that this is not always simple. For example, if a project requires doing something every year, for 10 years, and someone promises to give you billion dollars each year, and the first year they actually give you the first billion, then you may start doing things and get yourself in a situation where if the second year you suddenly don’t get a cent, you may be in a big problem. (Though a possible solution is to always think about the possibility, estimate the cost of shutdown of the operation, and leave that money aside from the first billion.)
Really, my impression is that regardless of whether FTX are the bad guys (though I suppose they probably are), the problem is spending the money you don’t have, which seems like an avoidable mistake. Am I completely wrong here? If yes, could someone please ELI5?
Sorry if this is a stupid question; I originally wanted to ask on ACX, but the open thread has exploded and now my web browser freezes when I go there.
If I understand it correctly, several EA charities are currently in serious financial problems, because FTX promised to give them tons of money and then… didn’t.
Could this be avoided if we simply started following a common-sense rule: “Do not spend the money you do not have yet”? Like, if tomorrow some FTX2 comes and says: “Hey, why don’t you do X, I will give you billion dollars”, just tell them: “Sure, I will start working on X as soon as the billion dollars appear in my bank account. Until then, we can discuss plans, but I am not spending any of my money, nor doing anything huge and irreversible.”
I understand that this is not always simple. For example, if a project requires doing something every year, for 10 years, and someone promises to give you billion dollars each year, and the first year they actually give you the first billion, then you may start doing things and get yourself in a situation where if the second year you suddenly don’t get a cent, you may be in a big problem. (Though a possible solution is to always think about the possibility, estimate the cost of shutdown of the operation, and leave that money aside from the first billion.)
Really, my impression is that regardless of whether FTX are the bad guys (though I suppose they probably are), the problem is spending the money you don’t have, which seems like an avoidable mistake. Am I completely wrong here? If yes, could someone please ELI5?