Lucy asks for an opinion...

Lucy Bernholz is on the board of GiveWell, subject to a recent firestorm (or maybe a small birthday candlestorm), and has asked for some advice. Never one to shrink away from offering free advice,

As I watched this all unfold, I kept thinking that it is so appropriate to the organization-- openness means you get to see both the good and the bad. And more irritatingly for the board and staff, everyone gets to comment on it.

I also kept thinking about how far worse happens, but would never make it to the light of day in traditional organizations.

So how does one decide between the options you present? I suggest a few criteria:

1. The magnitude of the offense. It is easy to imagine yourself a saint on the net and hold people to your saintly expectations. How bad is the offense?
   
2. The quality of the idea. People tend to join start up boards because they believe in the idea behind the organization or the founder or better yet, both. So is the belief in the idea strong enough to wade in there when you no longer have confidence in the person?
3. Rehabilitation. Some of us believe in locking up the criminals and throwing away the key. Others believe in rehabilitation. Seems like your own beliefs are a pretty big driver. The other angle of this is whether you believe the staff in question can be rehabilitated.
4. Personal energy. Do you have the energy to clean up the mess?
5. The rest of the board. No matter what decision you personally make, if you are the only one for rehabilitation or shutting the place down, then there is not much chance of a positive outcome.

That a guy in his mid-twenties got a little rambunctious after seeing his picture in the New York Times and started to believe his the whole "quit a hedge fund" marketing storyline is not a very big deal to me personally. So for me the magnitude of the offense is small. [Edit: This is not a defense of what was done or a suggestion that it is any way acceptable. I am a big believer there needs to be clear consequences for dishonest actions.]

The quality of the idea is extraordinary, IMHO. No one has done openness and transparency well or modeled it for others. You guys are doing a great job. Unfortunately, you are doing such a good job we get to see the bad as well.

I'm a big believer in rehabilitation. The antics really have me believing the whole ex-hedge fund storyline (I have a low opinion of the ethics of most big money players). But I don't know the man, so I'm not sure of the rehab-ability. But from what I've seen from afar, I would rehabilitate and brace myself for the next 1 or 2 of these and then watch some really extraordinary accomplishments roll out. Too often in the nonprofit sector, IMHO, we discount the high driven, high-performance, outcome oriented crowd because their methods and culture are so different ... and with social responsibility so sexy, lets take advantage of the 10 years we have these guys before they look around and see their peers all driving BMWs into the driveways of their 4 bedroom suburban houses and go out an make a couple million before they have to retire (OK, that was a little cynical).

If this was my only board, I would invest the energy. If I was on more than one, I wouldn't have the energy required and would hope other board members stepped up. An alternative might be to recruit a few additional quality people to the board since the idea is good, but the organization clearly can't be a personality driven creature.

So basically, were I on the board, appropriate sanctions and controls would be put in place and an opportunity to reform offered as long as the whole board stepped up and devoted the hours it was going to take, but that is just me.

PS Know that among the vitriol you have folks out here that are about as supportive as it gets. Keep up the good work :)

Quotes from the public

This whole GiveWell thing is killing me. But it provides such good blog fodder. So I think I'm going to do a series of quotes out of the morass because people are fascinating.

Come on, people. In business this can be dismissed as sleazy shenanigans, but in charity this should not be dismissed.

This comment literally made me laugh out loud. Charities, especially private foundations, IMHO exhibit some of the most sleazy shenanigans ever conceived by corporations . This specific example so doesn't even rate among executive compensation, employing foundations as conduits of money to friends and business associates, etc. If we want to clean house, lets start with something important and systemic.

But it should make Independent Sector shake in its boots. If this represents the popular opinion of charities, then some really ugly stuff could come out of congress in the name of charity accountability.

Luckily, rich and powerful people use foundations so I suspect the lobbyists at work on this issue are far better than the ones 501-c-3 public charities alone could muster. (OK, I might be a little cynical)

Givewell: Tested by their own values

The Givewell firestorm (actually more of a small birthday candle) continues.

My reaction: Givewell is Naive, Inspired and Arrogant. But that does not detract from what they are trying to accomplish. Transparency is not the same as Saint Hood. I've seen private foundations and major nonprofits do FAR more unethical things than trying to generate publicity under false pretenses.

Heck, I wish all the MetaFilter busy-bodies that keep emailing me and posting comments to this blog would turn their attention to the far more egregious behavior in the sector. But since their attention span isn't long enough to do investigation, they need intermediaries to queue up issues or folks like Holden to do stupid human tricks.

For the record: I already know Holden is pissing people off and exhibits poor social skills... now I can add exhibits poor judgment to the list. But that doesn't take away from the fact GiveWell is doing something valuable.

Which brings me to the point. Givewell is starting to feel the impact of its own principles. The Metafilter candle storm is what happens when you open up your operations to the masses. It will make the Givewell staff make better decisions in the future.

Hopefully the next candle storm can happen in an online community with a bit more civility and a bit more background knowledge... rather than just mindlessly spanking Givewell, the community will leverage Givewell's openness to make it better.

PS Sentiments like this piss me off: "My sincere hope is that GiveWell is irrevocably tarnished by this behavior." Check the Metafilter thread for 100s of examples. Why wouldn't someone think that my sincere hope is that GiveWell is irrevocably transformed by the reaction to this behavior and turns into an organization I'd be willing to support.

PPS I kinda like the soap opera aspect of this whole thing. I sincerely hope that after spanking Holden the board can look at this episode as evidence that the idea behind the organization is solid. Then everyone can go out and have a beer and a laugh.

Google.org uses open RFP process

Google.org announced a $10M grant program via a Request for Proposals (RFP) process.

We realize that this type of open call for proposals is not the usual model for investment, but we wanted to use a process that was open to new ideas and new entrants.

They are exclusively focusing on entrepreneurs and companies... they already made some grants to nonprofits.

Does this suggest that unique, entrepreneurial innovation doesn't happen in the nonprofit sector? Is t true that only the biggest, best-reputation nonprofits should be invested in? Did they think that there wouldn't be any interesting folks popping up in an RFP for nonprofits?

I'm a firm believer that nonprofit funding is biased to funding winners, not innovators. Something like the Netsquared investment process (kind of an RFP) creates space for those small innovators to emerge. Interestingly enough, however, the Netsquared winner was a bigger, more established organization... not a scrappy start up.