Lessons being learned - in near-real time

I'm not trying to be coy, here. I have a real question.

What would you do?

Suppose you agreed with an idea and supported folks who came up with it to try to put their vision into action. You joined a nonprofit board to try to make the idea real. The idea and the organization got some traction, even though the operations and execution of the organization weren't very good. Then some really stupid things were done by those running the organization.[1], [2], [3], [4]. Mea culpas were offered, apologies made. However, the truth is the organization exists in public trust and relies on public faith, good will, and credibility and these have been damaged - fatally in the eyes of some, less so in the eyes of others.

What do you do? Fire the offenders, finish unfinished business, and pull the plug on the entity, hoping that the ideas will take form elsewhere and be better, even successfully, managed? I might call this the "one strike and your out, put faith in the creative destruction of social entreprenuerism, and move on" approach.

Or

Take steps to fix the organization, remediate the mistakes (and those who made them), invest in the slow, painstaking work of rebuilding public trust, credibility, and faith, and see if the idea can not only stick, but can overcome these early, enormous pratfalls? This might be called the "we all make mistakes, an organization is more than a single person, finish what you started and eat humble pie all the way home" approach.

Or

...no doubt there are other approaches. Everyone thoughtful that I have spoken to about this has seen the many sides of the many issues, so there must be other approaches to dealing with this. A friend pointed me to the Whole Foods version of this - which shows that the SEC and FTC have their own views about how to deal (or not) with this.

Suggestions are welcome (Please use comment form. Please do not comment anonymously - at least use a creative pseudonym. Please refrain from name calling, accusations, or language that you would not use with your grandmother or your small child. Management reserves the right to refuse service to patrons who don't move the discussion forward in a productive way.)

I know I am opening myself up to more attacks and vitriol by bringing this up. But, as I've experienced directly in the last few days, there are many people out there who care deeply about key principles of integrity, public trust, fair and respectful discourse, and learning collectively how to navigate the bounds and lines of known publics and anonymous communities, online and offline public trust, and creating transparent and accountable behaviors that also respect people's privacy. I hope to learn something from asking this question - it has real, practical, and immediate application for me. It probably does for you too, if you read this blog.

Full disclosure: I am a board member of GiveWell and The Clear Fund. My other professional affiliations are online here and here.

[1] http://mssv.net/wiki/index.php/Givewell
[2] http://philanthropy.com/giveandtake/article/424/givewells-self-promotion
[3] http://blog.givewell.net/?p=211
[4] comments at http://philanthropy.blogspot.com/2007/12/2007-buzzword-10-philanthropy-20.html

34 comments:

Holden Caulfield said...

Lucy,

You already know what is the right thing to do. Responsibility number five in this list says you must ensure adherence to legal standards and ethical norms. You have written in MetaTalk that fraud is fraud. Number ten calls on you to assess the performance of the chief executive. I think you can do that easily. Number two calls on you to select the chief executive. If Holden doesn't resign you need to fire him and hire a new chief executive or resign yourself.

Good luck,

"Mr Caulfield"

++++++++++++++++++++++++++++++++

Ten Basic Responsibilities of Nonprofit Boards
Richard T. Ingram
BoardSource, formerly the National Center for Nonprofit Boards

1. Determine the organization's mission and purpose. It is the board's responsibility to create and review a statement of mission and purpose that articulates the organization's goals, means, and primary constituents served.
2. Select the chief executive. Boards must reach consensus on the chief executive's responsibilities and undertake a careful search to find the most qualified individual for the position.
3. Provide proper financial oversight. The board must assist in developing the annual budget and ensuring that proper financial controls are in place.
4. Ensure adequate resources. One of the board's foremost responsibilities is to provide adequate resources for the organization to fulfill its mission.
5. Ensure legal and ethical integrity and maintain accountability. The board is ultimately responsible for ensuring adherence to legal standards and ethical norms.
6. Ensure effective organizational planning. Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan's goals.
7. Recruit and orient new board members and assess board performance. All boards have a responsibility to articulate prerequisites for candidates, orient new members, and periodically and comprehensively evaluate its own performance.
8. Enhance the organization's public standing. The board should clearly articulate the organization's mission, accomplishments, and goals to the public and garner support from the community.
9. Determine, monitor, and strengthen the organization's programs and services. The board's responsibility is to determine which programs are consistent with the organization's mission and to monitor their effectiveness.
10. Support the chief executive and assess his or her performance. The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization.

Ward Stradlater said...

Hi Lucy,

If some of the ideas Karnofsky and Hassenfeld brought to GiveWell are truly revolutionary - as has been repeatedly asserted - the ideas can survive on their own merits. There is no reason I can think of that the current GiveWell board shouldn't exercise their power of oversight, terminate GiveWell's association with K + H immediately, and continue the mission for which the board was originally constituted and for which its members continue to demonstrate passion.

Nothing K and H did was illegal; that's a red herring. GiveWell's mission is all about transparency as the enabling force of ethical behavior in philanthropy. Therefore, it makes no sense for GiveWell to employ or continue to associate with employees who used deceptive, non-transparent practices to conceal their motives and accomplish dubious ends. To do so would be against everything GiveWell claims to stand for.

What would I do if I were GiveWell's board? I'd fire them, then I'd contact GiveWell's sources of support to discover whether or not I still enjoyed that support. If so, I would forge ahead with the original mission in mind, brighter for the removal of some tarnish. If not, I would throw in the towel and trust that some more upstanding organization would pick up the fallen torch.

Anonymous said...

Lucy,

FourCheeseMac here, from the Metafilter thread.

That's a well written overview of the possibilities and the contradictions here. But I agree with "Mr Caufield" above. The one act of expiation that counts involves Holden Karnofsky losing his job, or being suspended and returned in a greatly reduced capacity in the future. I realize he is a founding partner and a huge part of GiveWell, which may make his bad judgments here fatal for the project.

I need to point out that Elie was involved in some of these shenanigans. What does the board plan to do or say about that? His involvement is well documented, and I do think this predisposes rational minds toward option one; roll this puppy up and pick up a new project that carries the idea forward with better (or better educated) people at the helm.

Holden and Elie will be fine. They can always go back to Wall St., though actually, this conduct would have cost them Wall St. jobs, in any firm I know, and it may be hard for them to get back in with this over their heads.

I guess they could join the Peace Corps and actually do something good and learn, on the ground, about how philanthropy meets accountability.

You've been articulate and thick-skinned throughout this. So far, you've stood out as the most impressive representative to speak out from within the organization. Good luck to you. 4cheeseMac

Miko said...

The idea and the organization got some traction, even though the operations and execution of the organization weren't very good.

I guess the point at which I realized that would have been the point at which I would have felt compelled to resign from the board. Life is too short, and well-run organizations in need of good leadership too plentiful, to ally with a project about which one has such reservations.

But if this did unfold while I was on watch, I think I would go into the next board meeting arguing for #1. Not so much for reasons of irreparable harm to the name, which could be revived if other key success factors were in place, but because the project itself really needs to be re-envisioned from the ground up, if anything like this model is to go forward. I wouldn't see a reason for that re-envisioned organization, with a modified or changed model, to be identified with this early, sort of uncooked attempt. If present personnel stay on, it will take quite a bit of time for them to undertake appropriate professional development activities and solicit helpful counsel. From the board point of view, I'd suggest that a board education program with a hired, reputable consultant would be worthwhile. Attention to governance, record-keeping, the respective roles of boards and CEOs, fiduciary responsibility, and other topics are definitely needed, based on the available audio of the one meeting and on the minute-keeping. Board meetings need to be more frequent than twice a year, especially in an organization that has established a fast-moving culture. In other words, if you don't disband, you have an enormous project on your hands. My evaluation would be that it would be better chalked up as an interesting experiment and an excellent learning experience for all concerned. Everyone involved might find that a new combination of project, personnel, and leadership would allow their ideas to better develop.

Certainly, grants promised need to be made. I hope that goes without saying, since presumably the grant money is still there, and we know the targets have been chosen.

Ward Stradlater said...

Also, on the topic of anonymity:

Not everyone shares your commitment to transparency. (In fact, at the moment it is not clear that anyone shares the professed commitment to transparency, but that's a side point.)

If you still don't understand why people might wish to be helpful and yet still remain anonymous, ask Holden Karnofsky whether he wishes that certain of his recent Internet activities could remain anonymous, with regard to the implications for his future career. I don't know what he'll say, but I bet I know what he thinks on this topic.

Not everyone has a Harvard degree, a few hundred thou in the bank, and a powerful, well-connected charitable board - lawyers, accountants, captains of industry - to back them up. Folks like us - Leona's "little people" - are well aware that even just a little negative attention from folks like you - a phone call to our employer, maybe, or some other way of using social capital that you know about but we don't - could crush the little hopes and dreams of our miserable little lives with great speed and finality.

We think GiveWell and the issues it raises are important, and we are flattered and pleased that you have chosen to listen to us. But your class of people terrifies us because we know you have all the wealth, all the connections, all the power; and at the end of the day, if we know anything at all, we know that what you say, goes.

If you truly want to dialog with us, stop asking for our real names; leave us the one pitiful shield we have against your terrible wrath.

JL Ollenquist said...

I'm going to try genuinely to put myself in your position here. The main stumbling blocks are my never having served on a board and adamantly NOT believing in the frankly repellent approach or methodology of GiveWell, but still. . . .

If I believe that this organization has the potential to do good and a realistic chance of recovering, in time, I wouldn't scrap it -- at least not until I had given reforms the old college try for several months.

As for personnel issues, especially since the two malefactors, particular the chief executive, are the founders of the organization and therefore their personal identities are entangled with the organizational identity, that complicates things. It might be impossible for either of them to "settle" for a subordinate, non-public role at GiveWell and watch someone else take charge of "their" baby. It might take longer to restore trust (assuming that's possible) if these knuckleheads remain on staff in ANY capacity. However, because both of them, during the last year, have undoubtedly developed some relevant knowledge and skills that could be useful to the organization in future and because, after all, they invented the joint, I'd offer to keep them on in entry-level, supervised positions -- perhaps part-time, unpaid volunteer positions until they proved and improved their ability to contribute, which is just what GiveWell's FAQ states that it considers reasonable expectations for its employees. Or perhaps their time with GiveWell should entitle them to modest entry-level salaries commensurate with other employees of that rank. If they can't accept such a demotion, well, then I'd say, "here's your hat, and there's the door, pal."

There is no way that I would allow Holden Karnofsky or Elie Hassenfeld to remain in his current position of (clearly overwhelming) responsibility, and if the rest of the board allowed them to stay, I'd resign my membership immediately. As the Ingram responsibilities helpfully posted above, indicate, it's the duty of board members to ensure that the chief executive of is someone qualified -- in terms of expertise, job performance and moral/ethical stature -- and you, Lucy, cannot possibly still believe Holden Karnofsky has those qualifications. Can you? I am still reeling at the idea that board members considered him qualified to be executive director even before this debacle, and that nobody on the board stepped up during the past six months to stop his habitual pattern of presenting a combative, arrogant image of your organization to the world at large.

So that's my best guess at what I would do if I were in your place.

Anonymous said...

I would tell the two that it is time for them to sever their relationships with Givewell. If they or the board balked, I would resign myself.

Givewell could come out of this stronger than ever in a year or two under new leadership. The fired whiz kids will move to Silicone Valley and make millions and maybe try to do good again in another venue.

Good luck, you obviously care about doing the right thing.

Samuel L. Clemens said...

An honest question: what is there to salvage?

Reading their material, GiveWell's staff seem distinctly unqualified to review charities with global reach for operational efficiency. The CEO repeatedly admits that they were guessing.

GiveWell's research "experts" have been shown to have flawed ethics and, I would say, allusions of grandeur. That's a serious issue for professional researchers.

Their hobby was looking into charities, and after reading a few financial statements they are masters of performance analysis? Pass go, collect $66000. Bring on Career Russian Ruolette Round 2.

Given the likelihood that funding will be impacted by the negative publicity, I don't see a viable business here. I would be interested in reading why if you feel there is.

I'd also note that anonymity has a long history in public discourse. And we're not actually anonymous at all since you're able to track IP address that identify us far better than optional handles. The internet is a commons not a courthouse.

Kelly Mullen said...

I have to echo Holden Caulfield here; "If Holden doesn't resign you need to fire him and hire a new chief executive or resign yourself." To be the head of an NPO set up to provide, among other things, "transparency" and to misrepresent yourself and lie is akin to a Sheriff who ran on a get tough on drugs platform kicking back with friends and smoking a few joints. It's a minor infraction that becomes major in context.

It's very harsh but if GiveWell is to have any chance at redeeming itself I think Holden can not be leading it. I wish Holden no ill will and I do hope he learns from this and comes back with the skill set to make him a leader. Sadly I am not sure GiveWell can survive even if Holden is removed.

I would also like to give you something to think about vis a vis the Internet aspect of all this. Holden lied and misrepresented himself via the Internet on a number of occasions. The Internet can speed up the flow of information, whether fact or rumor, but the ethical considerations of human action should not change. Had Holden met me on an flight and told me GiveWell was great and some of the competitors in the space sucked and had he not told he was a principle in GiveWell he would have been wrong. He would have been wrong to do it at a party or via the Podunk News editorial page. Lying and misrepresentation is just wrong, regardless of the medium.

Lucy, should you like to converse more I have contacted you via LinkedIn.

B said...

I would also suggest that the position that Holden holds (no pun intended) is too much too soon for him.

I've been the ED of a NPO (1 million budget annually) for 7 years, prior to that I spent nearly 20 years as either a program coordinator or Assistant Director for the same NPO.

The skills necessary to deal with programs, donors, funders, media, the public, the auditors, the clients, and partner NPO's does not come overnight, it takes time and mentorship.

The suggestion above to move these individuals to a mid-level position is interesting, but I suspect not practical given a limited budget, I'm guessing that you can't afford an experienced ED AND these two in AD positions.

The damage here is huge, and probably can't be overcome at this point. I suspect that your best hope is to hire an experienced NPO ED and see if he/she can further what may have been a good idea in the hands of someone with more maturity, experience, and better judgement.

I wish you the best in this, and commend you for what seems to be an honest effort to resolve this.

Bob

ericb said...

In that spirit, the best thing, in my opinion, that Holden did is to challenge the field of giving to share information more publicly so we can learn from one another. I hope it happens.

Information on such giving and its "impact | effectivness, etc." is already available.

I dismiss Holden, etc. as yet another "pretender" and believe in these folk:

"There are organizations out there which are doing very well with their methods of measuring effectiveness and impact, as well as providing pro bono strategic counseling and advice to those non-profits to which they give funds.

For example, there's The Bridgespan Group (affiliated with Bain & Company, Inc.) and New Profit, Inc. (affiliated with The Monitor Group).

There are also junior consultants from Bain & Company, The Monitor Group, The Parthenon Group, L.E.K. Consulting, and Katzenbach Partners have a volunteer organization, Inspire who provide pro-bono strategic analysis and support to non-profits.

The Monitor Institute in collaboration with New Profit and Fast Company Magazine has "created one of the most comprehensive and rigorous assessment processes for evaluating the performance of nonprofit organizations in the U.S." [cite]

They have used this evaluation process each year since 2004 in selecting The Fast Company/Monitor Group Social Capitalist Awards.

DN said...

In having a character capable of repeatedly committing fraud (as defined by you Ms. Bernholz in your comments on this) yet putting himself forward as the director of a philanthropic organization and worthy of handling and directing other peoples' donations Holden essentially lied on his resumé. Through his actions he has also caused GiveWell to have lied on its own resumé to the donating public. You should treat him as any CEO or Executive Director, or virtually any employee of any organization would be treated, were they to have presented a false diploma or other false credentials on their resumé.

Were Holden a high schooler in charge of a high school charity and who acted this way he might be deserving of extraordinary clemency and no more punishment than a slap on the wrist. As an adult at an age that he would be trusted as responsible for having his own children he should be treated the way any philanthropic organization official or employee who commits fraud should be.

Basti said...

I honestly don't get all the outrage.

Ok, what Holden (and possibly Elie) did wasn't great but hey, they didn't misappropriate funds or molest children or did I miss anything? They made some controversial (but good) points while disguising their real identity. As said before that was neiter smart nor does it hold up to their on standards of transparency. On the other hands they finally admitted the mistake, apologized and invited everyone to comment on their behaviour. That should also be taken into account when judging their "case".

Either way for me it would be much more important what they have accomplished so far and what could be expected of them in the future. Besides being the first to start to evaluate npos in a meaningful way they also started to stir up a nice little discussion in the scene by writing by far the best non-profit-blog I have read so far. It would be a stupid idea to kick them out instead of benefiting not only from the experience they made during the last year but also from their enthusiasm and their innovative ideas.

Finally Holden mentioned on the blog that he will become the most hatered person in the npo-sector. Well, it seems that he was quite fast in succeeding (and through different means than planed). Nevertheless that should be taken into account when reading through all this comments. Some people where probably already waiting to get back on him and are now trying to make big deal out of some stupid comments. Usually I don't quote the bible but "If any one of you is without sin, let him be the first to throw a stone... " came to my mind. Damn, we are talking about some stupid comments in the internet!

Gerry said...

As to what to do, JL is pretty right on, but the real question is about what was learned.

What does this tell you about the dynamics of the emerging social spaces online? More and more we realize it isn't just playing around, you leave a permanent trace. More and more it connects to the real world and real relationships. There are rules even for sock puppets.

The board also should be doing some soul searching about why they didn't have the necessary guidance and controls. Relationships matter, particularly in both the online and offline spaces involved here. The business world tends towards transactional, but even there best practices are to build relationships. Those relationships may have transactional value and corporations may try to monetize them. That's someplace where non-profits are ahead, in really caring, not just creating an image.

There may just be other possibilities. I've suggested to Phil that if Holden would also consent we could conduct an on-line cleansing of sorts. We have to create other models of healing that go beyond the cut and run processes being suggested here.

It saddens me that the calls for no mercy come from the sector that is supposed to value relationships. Makes you wonder.

Gerry

Dave said...

Is GiveWell best served by having it's 2 employees learning the nonprofit business (to analyze, let alone to run) on the fly? From looking into givewell, and it's founders it seems like they have a lot of enthusiam, and probably analytical experience from their past jobs -- but it doesn't seem like they have nonprofit experience, or experience running an organization. This makes it seem like they're probably good candidates for employees of givewell, doing givewell's work of analyzing effectivness of nonprofits, but not as good candidates for running other aspects of givewell's business.

Them in charge is certainly a great learning experience for them, but it can only slow down the rate that givewell ramps up in it's own effectivity -- this seems like this should be something givewell looks at every year as well -- are they being effective in their own task?

Lucy Bernholz said...

Thank you all.

Jeff T said...

Gerry expresses dismay over the lack of "mercy" and "healing" from a section that's supposed to value relationships. That's an admirable sentiment, and one that we should always keep in mind.

However, it can also be a dangerous standard in governing a charitable organization.

As a lawyer & professor in this sector for over a decade, I've had the occasion to see a number of unfortunate incidents involving nonprofit management. It's part of the job, really--people don't tend to call you when things are going well. And one of the things I've seen again and again is a feeling that one of the core characteristics of being charitable is to alleviate the suffering of someone whose actions have severely harmed the organization.

The president rigged an investigation and lied under oath? Well, the poor dear won't do that again now that he's gotten a tonguelashing from the board. The founder embezzled company funds to buy his girlfriend presents? But he's said he's sorry, and after all the turmoil there's no way he would do this again.

But after a while, when the dust has settled and good feelings take the place of bad memories, they do it again. And everyone is shocked, shocked that something like this could have occurred.

Does this necessarily mean that Holden will return to sham PR if he's let go with a warning or a nominal demotion? Of course not, but then again, he might, because the board will have sent a message that they deem him to be too important to dismiss. For someone who has already indulged a messianic persona, that's a seed quite likely to bear bitter fruit.

Givewell has another reason to take serious action. The group has held itself forth as a model of accountability to the charitable world. People are watching to see what it does. The message of a slap on the wrist is that accountability is just an empty word. It's disclosure without consequences; you can do anything you want as long as you cry in public when you're caught.

When considering the metaphor of healing, it's important to remember that healing is not always a pleasant experience. In the Gorgias--a dialogue on philosophical rhetoric and social justice--Plato distinguishes between healing as it is and how we want it. In real life a doctor cuts and cauterizes and gives us drugs that taste bad; what people want is warm feelings and candy. A polity that chooses the latter over the former will no doubt continue to have problems, because true healing has not taken place.

dw said...

Option 1 is the easy route. A lot of other people have suggested things to do down that road, and I really don't have anything to add there. Wrapping up Givewell is an honorable thing to do, especially since there's been a fairly severe violation of trust in the very area where Givewell is supposed to function -- the Internet.

But since no one else is talking about it, let's discuss Option 2. I've been knocking a few ideas around in the MetaFilter thread the last few days that are related to this, so here's the summary:

1. First off, if you're keeping Holden and Elie, then move them out of the spotlight, change the charity's name, and get someone with experience and credibility in the NPO sector to be the face and voice of the organization. And while you're at it, get some more "adult supervision" on your board. Find people who AREN'T friends of Holden but believe in the idea and can represent independent voices of the NFP sector as well as the places you'll need to raise money from. In other words, build a strong board.

2. Holden and Elie don't appear to have any ground-level experience working with NPOs, and they really do seem lost about all these metrics. So... let me quote straight from my post:

'I'd love to see him get a Peace Corps assignment. But that's a lot of time in "exile." Maybe what's better is if he can find something in NYC itself, a local health clinic or kid's center, where he can work for a year pro bono. Givewell still pays his salary, but half time he's doing whatever the local NPO needs him to do -- take out the trash, work on the charity's 990, hang with the clients. Holden and Elie both really need time on the ground understanding the frustrations and rewards of the organizations they want to help. When they do, they'll better be able to understand what it is they're trying to revolutionize.'

3. While I'm quoting myself: "I would suggest they get a real PR/marketing person to prevent crap like this from ever happening again, but that board is filled with PR people -- surely they should know better. OTOH, they're PR people -- they probably don't."

4. I'm not kidding about changing the name. The Givewell in Oz didn't sound too happy about sharing their name.

5. But the most important thing to me, honestly, is that you all need a plan. You need to figure out what you're trying to accomplish, how you're going to accomplish it, what your timeline is, and what resources you'll need to accomplish it. This is called a "business plan." I find it ironic that for a group that's talked so heavily about bringing "business prinicples" into the NFP sector that you'll all still playing it by ear. Have you done one analysis of what metrics are already available? Here's one more quote from me:

"If they want to do this right, they should start with listing the questions they feel best explain whether an NPO is "effective" or not, identifying which metrics are available to them, see which metrics can answer these questions, and then try to identify metrics that could answer these partially answered (or unanswered) questions. It sounds like they're starting with naming metrics without even asking the questions."

Option 2 is a messy, messy way out. It says that you screwed up royally and need to wipe the slate. OTOH, it also says that you think the ideas are still sound, and what's needed here is solid leadership and a few years of circumspection. And the good news is that you'll have two Harvard grads with financial experience who will be able to spend all their time doing the grunt work needed to understand how your foundation can help instead of astroturfing blogs. :)

Let me pull in one more thing I said on the thread:

"If I were a donor, I'd be asking GiveWell three things:
1. What's your plan for increasing donations while keeping overhead at a minimum?

2. What is the ultimate role for GiveWell -- a watchdog/recommender for charitable giving, or a charity? Because you can't do both simultaneously effectively.

3. Are you going to get people with long-term experience running NPOs/NGOs on your board within the next six months?"

If you think Option 2 is viable, you need to answer these questions (on top of the what-to-do-with-Holden question).

No, it's not like, to paraphrase Florida State wide receiver Peter Warrick, Holden shot the president. But this is a PR nightmare, borne by inexperience and a lack of oversight. Astroturfing, using someone else's e-mail account to spam, that's all really bad in the web world. It's just about a fatal PR wound on the Internet.

I don't envy your position, Lucy. This is a difficult place to be. I hope that you all can come to a solution that doesn't sully the ideas Holden and Elie so much that they can never be taken up credibly again.

If you need to contact me, my website link is in my profile, and my e-mail is in there. I'm a real person, working in higher ed.

DN said...

JL's suggestion sounds like an appropriate punishment combined with a measure of clemency that would not seem excessive to me.

Samuel L. Clemens said...

I am casually familiar with the operations of, but unbiased about and unaffiliated with, one of the organizations GiveWell claims to have reviewed for operational efficiency. GiveWell's published review of that organization consists of a narrative by someone unqualified to judge the international operations and somewhat controversial medical approach central to that charity, the grant application response, and republishing the organizations existing documentation which is available elsewhere.

However, what I find most telling is that said charity has an annual budget around 29 million dollars and operations in at least 6 countries. The CEO of that organization, an active participant with over 20 years of non-profit experience and extensive subject area training, has a smaller salary than either Mr Karnofsky or Mr Hassenfeld.

source: http://charityreports.bbb.org/Public/Report.aspx?CharityID=886

For someone seeking to guarantee my donation is well used, I fail to see anything uniquely valuable in the analysis of operational efficiency on GiveWell.net. Considering Givewell & ClearFund's own notable inefficiency, it is no surprise that they are unable to review other organizations for operational efficiency.

I hope the board will address how GiveWell intends to carry out its mission of judging operational efficiency without subject area expertise. That is a key issue to determining whether there is a future for GiveWell and Clear Fund as currently constituted.

Alex Reynolds said...

Fire the offenders, finish unfinished business, and pull the plug on the entity, hoping that the ideas will take form elsewhere and be better, even successfully, managed?

GiveWell is pretty much dead to any donor who does a rudimentary Google search. That sad fact is down to the actions of its two founders, and not anyone else.

Regardless of what else you do to resolve this, you need to ask for their resignations. If they decline, you must fire them.

GiveWell is a name also used by an Australian nonprofit, which itself also evaluates other charities. So this has hurt that organization as well.

If core ideals of GiveWell (USA) are as important as its proponents say, then those ideals could live on in another nonprofit, run by competent, experienced people.

You'd run the risk of being accused of burying the past by "changing names", but this could be assuaged by hiring competent, experienced staff, and having a board that meets often enough to overlook the activities of those staff.

Britt said...

If you believe in an idea and an organization, and you have accepted a seat on the board-- ie, the responsibility to look out for the best interests of the organization-- I think it is important to remember that your loyalty and responsibility is to the organization, and not with any individual(s). You need to do what's best for the organization, even if you feel bad about it because the organization is the brainchild of a particular individual(s).

It seems to me that this is an issue of trust. A person who has shown that he thinks that good ends justify dishonest means-- that it's acceptable to lie about his identity so that his biased opinions will appear to be unbiased-- is someone who puts his passion above his integrity. That passion may mean the person has redeeming qualities, which I don't doubt Holden and Elie have-- but I would argue that such a person should not be trusted with control and management of any organization, let alone one which asks other people to trust their charitable donations to its good judgment.

Maybe if firing or demoting Holden and Elie is too hard to handle, they could instead be hired as consultants? There could be a trustworthy, competent individual at the helm, and if they don't want to be subordinates, they could be advisors, spending a couple hours a week sharing their hedge-fund expertise and their creative ideas to mix with the philanthropic experience and expertise of the new director. That way you could tap their strengths and what they have to offer, without extending them the trust that they've shown they don't deserve right now.

(I think there is significant value in the "new, fresh" look, shaking things up, etc-- but from what I've seen, GiveWell has gone way too far in that direction, and could benefit from a strong infusion of real-world non-profit experience. There is more strength in combining diverse worldviews than in being dominated by one. Besides, putting a respected expert at the helm of GiveWell-- one who is open to Holden and Elie's ideas but can put them in the context of the history and reality of non-profit organizations-- would go a long way towards distancing GiveWell from the bad feelings from this incident, I suspect.)

Michael Hoffman said...

I'm not so sure that nothing illegal happened here. Misrepresentation leading to the receipt of property is fraud. You ought to consider whether retaining someone who has engaged in admitted pattern of deceptive misconduct fulfills your fiduciary duty to the charity as a director. You may be exposing yourself to liability if there are further breaches of trust that you could have foreseen.

Miko said...

It saddens me that the calls for no mercy come from the sector that is supposed to value relationships. Makes you wonder.

That is because this is also the sector which is acutely aware that our work depends on the strength of our reputations and our demonstrated histories of honesty and success. Each incident like this raises concern in the public mind about the trustworthiness of the nonprofit world. We can't afford to overlook or minimize actions that impugn professional ethics.

Gerry said...

Jeff T, I agree completely that "mercy" and "healing" cannot mean forgoing necessary corrective steps.

A lot has been made of the immaturity of those involved here, but I don't think that is primarily connected to age. Many people are never held to account for their behavior and when they do finally get pulled up short, the size of the hole they left is enormous. Think Conrad Black at Hollinger or the gang at Enron and its accountants, or a certain world leader who shall remain nameless.

The adults have to step in sooner. When did board members start to have reservations? Did they listen to voices of caution at the start? Did they get mentoring when it was needed? Whenever something like this happens, you have to ask where are all the adults?

Emily G said...

What would disturb me as a board member (not that I've ever been one...) is that the need to engage in deceptive PR practices would seem to indicate a lack of faith on the part of the leaders in their mission. If one believes that the mission is valuable, just, and appealing, then deceptive PR isn't necessary. The leadership of a nonprofit should have enough faith in their mission to believe that they can bring attention to their cause and persuade people of its worth without having to manufacture buzz. The actions seem impatient at the least and desperate at worst. I wouldn't want a mission I believed in being carried out by people who didn't believe they could attract sufficient attention to it by executing it well.

This is made all the more complicated, as noted by many above, by GiveWell's mission centering on transparency. Good nonprofits live their missions.

So no matter how you rate the actions on a scale of trivial to misguided to malicious to evil, I would question the effectiveness of the leadership.

I don't think you have to fold the organization. I do think it needs better managers - one's more focused on running it well and less on creating a mouthpiece for an idea.

One side note: I'm not sure I agree with the continual calling for more experienced evaluators to lead GiveWell. For starters, I think GiveWell has sought to a fill the very real vaccuum left by the failure of so many experienced evaluators (foundations) to share how and why they make decisions and make a compelling case for their methods of deciding. There are literally 100s of others who could step in and Holden, from what I can gather, would be grateful. I think, too, that we ought to recognize that philanthropy has a somewhat democratic character - donors mostly aren't experienced evaluators, they're just people with some money to give. The result is a system that empowers people less experienced in nonprofits to make choices. Being transparent and public about one's decisions - thereby opening one's self up to criticism from the experienced and unexperienced alike - offers the opportunity to learn in the face of one's own inexperience and lack of knowledge. Those are values who should encourage in all donors and most especially in those who lack experience.

Ann said...

To forgive may well be divine, but it doesn't mean "be a sucker." While touting transparency and honesty, he violated all the tenets.

This wasn't just falling into a single moment's temptation. He repeatedly practiced deception on multiple blogs and websites; made a very disingenuous attempt to pay Metafilter as damage control; and bashed worthy organizations while promoting Givewell.

A moment's weakness can and should be forgiven, as long as the offender shows a serious attempt to learn from it. But repeated deception and confessing only after he was caught suggest that this is somebody who needs a very serious lesson indeed.

The Board may well decide to forgive, which is a far easier decision. After all, that means not having to say "We made a grave mistake in hiring this person," but rather "Gee, our person made an oopsie."

Certainly that is its prerogative, but as a nonprofit executive and a donor, I have to say that I would never collaborate with or give to an organization that doesn't treat this as a firing-level offense.

danhon said...

I'm Adrian Hon's (mssv.net) brother and came across this post via a reference in the Chronicle of Philanthropy.

I took a quick look at GiveWell's site and was struck by the sentence on GiveWell's mission:

"In charity, as in everything else,
good intentions are nice - but not enough."

It's on GiveWell's homepage.

GiveWell's founders, to me, may well have had good intentions, but in this case those intentions have shown themselves to not be enough.

On GiveWell's page on its people,

"GiveWell was started by donors, looking to accomplish as much good as possible with our donations. Our staff, Board, and supporters share a commitment to complete openness in our decision-making, to help others with their decisions and create better dialogue on the difficult question of where to give."

there's a commitment to complete openness in GiveWell's decision making "to help others with their decisions."

Karnosfky's behaviour - call it immature, ill-advised, a one-off mistake, or whatever you want - has demonstrated that, in that instance, he didn't uphold GiveWell's stated values. I don't think GiveWell can continue with either Karnosfky or Hassenfeld in an executive position.

GiveWell may be able to continue without its founders - its ideas and mission are valid - and probably should, but in the great scheme of things, its demise won't result in the extinction of the mission and ideas it sought to uphold since other organisations share similar aims.

Mike Everett-Lane said...

Speaking for one of the organizations that was back-handedly disparaged, I think at the very least a formal apology from Mr. Karnofsky is due to us directly, especially as we had been in correspondence privately. You might also strongly encourage him to apologize to Charity Navigator, Heifer International, and anyone else whose reputation was anonymously, but not disinterestedly, besmirched.

-- Mike Everett-Lane, DonorsChoose.org

dersins said...

Whenever something like this happens, you have to ask where are all the adults?

With all due respect, this is something you would expect to have to ask about an organization founded and staffed by high school students, not 26-year-old Harvard graduates with a background in financial services.

Naive and inexperience as Holden Karnofsky may be in the nonprofit world, he is an adult, and needs to face the adult consequences of his actions.

Apologies (in both senses of the world) on his behalf should not be based on the assumption that he was a child who needed a babysitter.

Jeff Doyle said...

If I were in Holden's shoes, I like to think that I would already have offered my resignation to the board. At which point, the board would have the option (but not the obligation) to keep them on in some lesser capacity. This sort of shakeup is pretty frequent in the private sector: entrepreneurs often turn out not to have the skills required for top-level positions. They frequently go away mad when offered a demotion, but sometimes they stay and make real contributions. The question for the board, it seems to me, is whether you would hire them for any such position knowing what you do now?

Amit said...

GiveWell is essentially like a Silicon Valley startup — two young kids, trying to do something different, not caring so much about what other people do, and offending plenty. I don't see startups succeeding without their founders, and I don't think GiveWell can really exist without them. So either get rid of the whole thing (a shame given the interesting questions they raise) or keep the founders, but don't expect much if you try to keep the organization without the people & personalities that created it.

You Never Know said...

Forgive and forget. His crime was getting caught.

I also work for a non-profit (albeit not one that is in the business of transparency, which is why this whole thing has been blown out of proportion). I have personally done this exact same thing many times. I have written letters to the editor from fake names that are very complimentary of my organization. I have blogged in response to my own anonymous blog comments. I have called in when my CEO was on the radio to offer praise and throw out softball questions that he knocked out of the park.

I, like Holden, have simply tried to do my job: get the word out about my organization and try to build our brand.

The only thing that makes me better than him is that I did not get caught.

Forgive him and forget it. He’s a fool for getting caught, but he should just be slapped on the hand for sloppy guerilla marketing, not thrown in the Dumpster with Phil Cubeta at www.GiftHub.org.

Philanthropy is such a great mask to make us all feel better than our own pasts and deeper urges. But honestly, though the tactics may not be readily admitted from the church podium by the priest who practices them to get members to fill the pews on Sunday, is it really such an awful thing? Or is it more awful that we live in a world in which fools are willing to trust what they see in print — particularly the glowing digital variety that is shot across the Internet?

How is it that Wikipedia has quickly become the #1 return on many Google searches? Because fools abound, and the world is full of marketers with an understanding of how to turn the milk into cheese.

Perhaps we should direct our anger more at the culture and community in which we live, where the only real definition of integrity is consistent deception (i.e. “don’t get caught, Holden”).

Indeed, I have confessed my crimes in public, but also anonymously so that I do not face the same problems that Holden faces. Why would I lay my own head down on the chopping block? I am a dubious liar for the cause of the greater good, but no fool.

I do not pretend to be better than my friends in traditional advertising because I market a charity and they market Kraft Macaroni (among other things). I realize that my job has nothing to do with my own personal nobility, but merely the greater goal of infusing my organization’s own gravitational pull into our donor’s own theories of wealth redistribution.

Holden did a silly thing a bit too often, and likely deserves some light smacking around. I realize that this might seem to be a big deal, but at the end of the day, think about your core market: donors. The average GiveWell user is totally unaware of this debate.

Let Holden continue to do his good work.

DN said...

Forgive and forget. His crime was getting caught.

No, this is an unethical thing to do whether or not you're caught. And also - someone who has committed the same kind of fraud insisting that the rest of us need to forgive Holden is ridiculous. Of course you regard this as a forgivable no-consequences form of dishonesty. I would be surprised if you actually consider any kind of dishonesty to be truly unethical.

...at the end of the day, think about your core market: donors. The average GiveWell user is totally unaware of this debate.

What we're saying is that they should be aware of this. I understand that it would get in the way of you forgiving yourself, but do you really think that the donors to your own organization should remain unaware of your actions? Is your reasoning something like "They just wouldn't get it, they don't understand what it takes to build a brand"?

It continues to blow my mind what this is revealing about the culture and understanding of ethics within philanthropy. Many of you are working really hard to convince yourselves that everyone acts the same and has the same low standards that you do. Well, we don't all, so stop using that fantasy as an excuse.

You need to face the fact that it's your values in particular that are allowing you to behave the way you do and stop pretending that other people behaving unethically in the rest of the world is some kind of tacit permission for you to defraud people.