Bernholz on Marketplace

Lucy Bernholz, the author of the amazing blog Philanthropy 2173 (go there to find out what it means) was on the NPR show Marketplace giving her unparalleled, big picture views of the field of philanthropy.

There are some people who follow philanthropy, but there are only a few, led I think by Lucy, who understand it well enough, from top to bottom, online and on land, to tell us what it all means.  You can see her philanthropy buzzwords here and her predicted philanthropic trends here — and listen to her on Marketplace here.

Putting Philanthropy in Perspective

Peter Levine, the director of CIRCLE, a research group now based at Tufts University that focuses on youth and civic engagement, does a brilliant job of putting philanthropy and government aid for disasters like Hurricans Gustav and Katrina in perspective on his blog.  Peter writes:

“When Hurricane Gustav set its sights on New Orleans, the national political campaigns and parties instinctively started to raise money for NOLA charities. They were following the example set after Katrina, when the private sector contributed at least $6.5 billion. (And that doesn’t count the market value of volunteer time.) For comparison: the storm did an estimated $150 billion in damage; and the federal government has spent about $120.5 billion on relief. So the total value of Katrina philanthropy equals about 5% of federal funding” [Please note that I removed links to research reports that are on Peter's blog that you can access directly from his site.]

The myth that philanthropy can or should replace government funding is starkly laid bare with this analysis.

GiveWell Behaving Badly

Oh, to be anointed and dethroned in such quick order!

On December 19th, the New York Times gushingly, glowingly lauded the efforts of two young “hedge fund veterans” (can you really be 26 and a business veteran?) who created GiveWell a grantmaking organization with an interesting premise. GiveWell is intended to do two things fundamentally different, hopefully better, than has been done in philanthropy before: 1) to be transparent about why it has chosen certain causes to give to, and 2) to share these criteria with other potential funders. Their intention was to go beyond 990s and other financial metrics and get to the heart of results in certain, specific issue areas. Admirable, if a bit exhausting for the potential grantees. But, if it were to take off, the advantage to selected nonprofits who wouldn’t have to go through due diligence one funder at a time was clear. I was not familiar with the organization until the article in the Times, although I have to admit that my first reaction was, “Holy cow these guys are self-righteous and heavy handed!” As only twenty-somethings can be, they had it all figured out, of course we can bring transparency to philanthropy and then we’ll go viral and be the Facebook of philanthropy! But then hubris raised it’s ugly head.

It turns out that the CEO, Holden Karnofsky, was caught in the act of astroturfing, pretending to be a user to promote GiveWell’s services. He posted a heartfelt apology on his blog here. The board decided this week to demote Karnofsky from CEO to program officer and require he complete a training program.

The crime of the century? No. It’s not like he was raising money for his family in Nigeria that needs TO GET OUT RIGHT NOW OR RISK GREAT HARM TO THEIR CHILDREN. And certainly there are a host of other CEOs of businesses, such as Whole Foods, who have been caught red handed doing the same thing and recovered. But this is different for several reasons:

1. Trust and transparency are at the heart of GiveWell’s mission. Karnofsky laid waste to both with his actions.

2. Nonprofits should be held to the highest possible ethical standards, particularly for causes like GiveWell that portend to advise others, since the very existence as tax exempt entities rests on our public purpose and trustworthiness.

Lucy Bernholz, a board member of GiveWell, was her typically smart, pithy, transparent self in writing about the incident on her blog and asking readers what actions the organizations should take in light of Karnofsky’s transgression. I don’t envy Lucy’s position but I do disagree with the board’s ultimate decision to demote Karnofsky and send him to training. I think that a breach of public trust of this magnitude for an organization with transparency and accountability at its core is irredeemable. I can certainly understand that the board was facing a repentant young man who genuinely wants to make the world a better place to live, but our community has to have the very ethical highest standards, not Wall Street or even Main Street standards, but the highest possible standards that put our efforts above reproach — because our trustworthiness is our greatest asset, but once squandered, is almost impossible to recover. If your organization doesn’t have written ethical standards get them, now, today from Board Source or your local nonprofit support organization or National Council of Nonprofit Agency( NCNA) member. Really, download them now, right now, there is no excuse for not having written policies regarding ethical behavior for your organization, and intentionally misleading readers, donors, bloggers, funders, whether online or on land, is an unacceptable, fire-able offense whether you’re the CEO or a summer intern.

For more years than I’d like to admit, I have been calling on nonprofit organizations to become self-determining and proactive about self-assessment. I have pleaded with organizations to raise their ethical standards, measure their own results in rigorous and thoughtful ways before the regulators, watchdogs and hand wringers do it for us. We have largely failed to do this, to take self-assessment seriously enough, to measure our results rigorously and energetically enough, to punish our own transgressors quickly and strongly enough.

As a startup, GiveWell will be hardpressed to survive this imbroglio, and frankly, I’m not sure that they should survive. Transparent philanthropy’s time has come, whether GiveWell survives or not.