GiveWell's Holden Karnofsky, left, and Elie Hassenfeld say they're humbled and chastened. | Photograph by Olugbenro Ogunsemore

When the Giving Gets Tough

A nonprofit startup set itself up as a watchdog — then showed how easy it is to lose your own credibility.

Holden Karnofsky and Elie Hassenfeld were psyched. On December 20, their startup, GiveWell, scored a media hat trick, appearing in The New York Times and The Wall Street Journal, and on CNBC's Power Lunch. In a sign of the times, GiveWell was a nonprofit. Karnofsky and Hassenfeld, both 26, quit hedge-fund jobs last year and started a foundation with $325,000 from themselves and their friends. Their mission was to gather and disseminate exhaustive data on the effectiveness of charities.

GiveWell had found an important niche. American charitable donations reached nearly $300 billion in 2006, and charity is a classic long tail: 75% of that tally comes from individual donors. Unfortunately, most of it is dumb money. Large foundations have professionals who evaluate potential grantees, but their research is generally proprietary. Online resources such as GuideStar and Charity Navigator provide public ratings of nonprofits based on their IRS Form 990s but are skimpy on strategy or program details.

Hassenfeld and Karnofsky stormed the sedate corridors of giant foundations with brand names such as Gates and Hewlett and Ford, grilled big charities about their operations, and blogged about crashing philanthropy's "old boys' club." Tom Belford, coeditor of the Agitator, a blog that covers nonprofit marketing, wrote in a grudgingly admiring post: "GiveWell's audacity is breathtaking," calling Karnofsky "a 26-year-old punk, who doesn't know what he doesn't know."

Unfortunately, one thing Karnofsky and Hassenfeld didn't know was when to quit. Two weeks after their media debut, they were caught "astroturfing"—promoting GiveWell by using fake online handles and others' email addresses. GiveWell had championed authenticity and accountability, just what the sector and the giving public needed. Then, as board member Lucy Bernholz put it, "we fell on our face."

Bernholz, president of Blueprint Research & Design, a philanthropic-strategy consultancy, is one expert who has proposed a "social-capital market" in which donations can flow to the most effective organizations. But markets thrive on information—scarce in the nonprofit world, which has no P&L statements, no Standard & Poor's, no Yelp.com. "I have talked to so many people who say, 'We're going to create the Morningstar of the nonprofit sector,'" says Phil Buchanan of the Center for Effective Philanthropy, a consultancy for large foundations. "But the philanthropic road is littered with the carcasses of people who thought [applying business practices to nonprofits] was going to be easy."

It hasn't been easy for Karnofsky and Hassenfeld. GiveWell chose specific causes—to begin with, disease in Africa and education in New York—and offered a carrot: Nonprofits were invited to apply for a $25,000 grant. In exchange, the groups laid bare their operations. The two sought specifics relentlessly. On the cause of clean water in Africa, Hassenfeld says, he would ask, "Do you dig wells? Do you provide water purification tablets— and where, exactly, and how much of each?" All data were posted online with GiveWell's recommendations.

In a show of the transparency it hoped for from other organizations, GiveWell also blogged about its own internal processes. In a Christmas-morning post, after a marathon board session, Karnofsky noted, "People get tired and cranky," airing a knock-down debate over the organization's choice of grantees.

Just a week later, Karnofsky posted an abashed apology on the blog. He'd been caught posting questions and answers complimentary to GiveWell under misleading handles on several Web sites, including MetaFilter, and sending promotional emails to bloggers using another GiveWell employee's name and email address. Hassenfeld, too, had touted the group under a girlfriend's name. The board responded swiftly, demoting Karnofsky from executive director to program officer, and fining Hassenfeld $5,000.

"We need to hold ourselves to a very high standard of honesty, and what I did was wrong," Karnofsky told Fast Company in his first interview since the kerfuffle. At the time, he claimed a lack of sleep had led to his "lapse in judgment," an excuse that helped fuel a vicious pile-on in MetaFilter's comment threads, as did his offer to buy forgiveness by making a "donation" to MetaFilter. One commenter wrote, "It's nice to believe a couple of spoiled kids would chuck the Cristal and Lexus set and give their all for charity....But you just made it a lot harder to believe."

The worst thing about the GiveWell debacle is that it put at risk a service that's sorely needed in the nonprofit world. Credibility is hard to gain and easy to lose, and restoring it will be GiveWell's big challenge—tough for an organization aspiring to be an evaluator. As it starts a round of fund-raising this quarter, it's doing what it can to signal its commitment to accountability: Donor preferences will now help determine the causes it investigates. On a conference call with Fast Company, board member Tim Ogden said, "Like any nonprofit organization, our goal is not one of perpetuation of GiveWell. It's to alter a fundamental problem that we believe affects a lot of people." But Karnofsky, with a flash of the zeal that got him attention and then into trouble, interrupted. "At least I believe that GiveWell continues to have something unique to offer this problem," he said. "I believe that what we have to offer is going to be what's focused on rather than the mistakes we've made."

GiveWell's Holden Karnofsky, left, and Elie Hassenfeld say they're humbled and chastened. | Photograph by Olugbenro Ogunsemore

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  • Jay Tatum

    Well said. And you are still welcome to sit in my garden and just. . .do whatever you like or don't do anything at all. If I have learned one thing about living at the beach this past year it is that there is a lot to be said without ever speaking a word. J.

  • Mark Zorro

    Jay, the garden comment is about sitting back and looking at the audience. Today it is mainly comedians and politicians who do this and I am neither. For either group, content is king, but content is like beauty, it exists in the eye of the beholder. Comedians and politicians know how to pull in the wisdom of the crowds and leave them feeling wiser as if the audience had actually heard the truth. Where I have personally failed is to sit still and watch the show without comment, how hard could that possibly be? – to simply shut up and do what millions of lurkers do everyday plus maybe a handful of monks in Buddhist monasteries who have denied themselves cell phones. I don’t understand what a “puff piece” means unless it has something to do with Native Indians and the one thing I do know from history is that it is the blowers of the peace pipe eventually who seem to get torn into figurative peaces. This is not about “Give Peace a Chance” – it’s about what ordinary people do to those who sing “Give Peace a Chance”. If “puff piece” means “journalistic integrity” then say so. But then also stand up for journalists. Instead of pointing the gun at shooting the messenger, separate the professional from the content and support the professional. How can the content improve if we don’t elevate the professional, but we don’t, we shoot at the writer because we think content is king and that IMHO is a recipe for rapidly getting down to the lowest common denominator. What is king today is our own given ability to think and write. We think we are helping create a better world, but we are worse than Shylock, when we want our pound of content meat carved up the way we like it. There is nothing wrong when the truth hurts, it’s how one learns when the truth hurts that makes all the difference. I would love to read more blogs by the best journalists out there, but today there is no audience for the sacred but a humungous audience for the profane, and so we are no different to that which existed in a Roman coliseum around Nero’s time, for we neither demonstrate excellence, nor do we really achieve anything with our collective attacks. Yet we all want to improve journalistic integrity, and if we do want that, then stand up for it. Stop the heckling from the cheap seats and get onto the stage and show everyone how it is done. As for me, in a world like this, today I want to do what smart folks in old people’s homes have always done, for they sit in their seat and stare out at the garden. That is at least one place where there isn’t a shocking comedian or an inspiring politician and it is not a waste of time to develop a taste for seeing what’s good in your own backyard. So my comment Jay, addresses my own failure to shut up. Instead of writing more content, I need to be MORE CONTENT – contentment not resentment needs to be my clarion call – because sometimes you learn more by just sitting back with your mouth zipped tightly shut. If it wasn’t for George Carlin dying and the Schneider family recently signing on, I would have accomplished this, but it is always good to try once again where one has personally failed and in the accompanying lurking I can see what it is I need to learn, and maybe even, whether I am even looking in the right place, at the right professionals for the right purpose......M.

  • Jay Tatum

    Regrettably, I find myself disappointing those seeking some kind of intellectual stimulation with "smoke," or "puff," or whatever the appropriate terminology may be, although BS works for me. I'm not sure that the content of the article is nearly as stimulating as the comments from the peanut gallery of observers, readers, and responders. "Frankly, my dear, I don't give a damn!" seems hopelessly lost when the focus is on the article and not an individual or collective response. I could high brow this thing and take the moral high ground on the slippery-slope of rationality or I could plunge henceforth into the emotional abyss this kind of corporate terrorism provokes from me. Personally, rather than taking these two numb-skulls out for a good thrashing, I think the appropriate response would be to sentence them to non-profit-watch-doggery for five years, not to rehabilitate them but to introduce them to those who spend a life time of service to others. Cheap grace, for sure, but a more appropriate disciplinary action.
    And isn't it interesting that Mr. Zorro would like to go to the garden, Mr. Gardner? Hmmm. I wonder whether it could be the Inagodadavida music playing in the background I'm hearing or my own careless provocation with the messiness of the human condition that sees this forum as an opportunity to engage in meaningful conversation, if only from a distance, as we compare notes on what matters to us. Sorry to see you leave, Mr. Gardner. This could be so much more fun at so many levels. And Mr. Zorro, you are welcome in my garden at any time. J

  • Mark Zorro

    Ray "Puff" is what smokers, hip-hop and fat people do. The discussions today are triggered by things like other people's Reverends, and there is no shortage of places for those discussions. I can't remember the last time I had a life changing experience deeply engaged in any intellectual or media related discussion. Writers that either smoke (positive) or even write puff pieces (negative) do so usually from a distance, so it is then the people who turn up here who swallow all the club second hand smoke (didn't do Andy Kaufman any good either), and it is therefore the collective "we" who always do the inhaling and exhaling. This, however, is also the 21st Century, so today we can learn fundamental truths just by sitting in a garden and watching a snail move. I hope the snails won't mind, for who knows what world they live in when they stuck in their individual shells, but if Einstein discovered major stuff thinking in unusual ways, I guess I will keep on giving it one more try, but this time only in my garden......M.

  • Ray Gardner

    Okay, let's see.
    We have two pompous, arrogant, and dishonest young men who sought to perpetuate their own lust for power - presumably by policing other people's good intentions - which only magnifies their own hypocrisy.

    And Fast Company does a puff-piece on them.

    This says what about this site and their magazine?

    I've only been coming here a short time, but since I find myself repeatedly exasperated with the quality and content of this site and the magazine, I suppose I'm on the way out.
    I keep coming back hoping to see a discussion to really get into, but instead. . .

  • Jay Tatum

    Wow! What Mark Zorro said. That's my kind of comment. I appreciate the dedication our public servants accept as their burden to bear and I grieve those whose ambition is compromised by their expedience. Things are never what they seem and I suspect that there is a great deal more to this story than a couple of good-guys gone bad. It's that Response of the Organism to the Toxic Environment thing I get hung up on. The Mark of Zorro on this article speaks to me so pungently that I just need to paraphrase his words about disease - If one is looking for it, one will find it.
    I still wonder whether the article would get the same response if the writer was looking for the health of these young men's quest at GiveWell.

  • Mark Zorro

    Alex I don't want to shoot the messenger. I only paid attention to these couple of cyberherpies featured in this article because I followed your links to the metafilter wiki, otherwise I wouldn't give these turgidstans a blink in a moments worth of daily eyelid movement. I support what your comments say because I believe that the real juice of interaction exists below the line in interactive dance with what appears above the line. In this comment itself I've sprayed out enough of my own negative labels to win a "latrine of the year" contest, and so while I also value a toothgrit watchdog or well-intended fierce activism, and the creation of community labels such as "astroturfing and sock puppeting", I also want to value standing behind the journalist, the teacher and the public servant. Yet I don't think the path to higher quality media is going to come from how we label negative people or how we segment diseased social behaviour. If we focus too much on life as a disease, even more of life begins to look like a disease. We cease to focus on anything remotely healthy, we don't even bother tabulating all the healthy things we do, the ones that are really worth labelling, because IMHO we can learn far more from a labels like that. We end up like the medical practice today, watching a "Patch Adams" movie and wondering where the medical world lost the plot while they were prescribing their social medication. No one on our planet has ever achieved anything by focusing on the removal of hypocrisy and that is because hypocrisy is invariably impossible to remove. In that regard the intelligence of daily house-cleaning is always way more powerful than any social agenda or improvement program this world can invent or conjure; and that's what made me realize that I cannot make my life about cleaning other people's houses. People generally focus on how much they have bled rather than how much they have read including the writer of this piece. We all do that in lockstep stereotypical fashion and label generation is proof IMHO that we are being hormonally active in our honourable impulse to protect the world from other hormones. It is honourable to stand up and fight for something we strongly value, that is why IMHO mankind has invented its extreme child prodigy, culminating often in a social collective called "war". Ultimately when all of this compounded result ends in this big bang because thats what the collective habit of trying to clean other people's houses becomes in its final expression. Our well intended focuses therefore often leads us to the biggest hypocrisy of all where we all become friends again, (call it norming, storming, norming if you want) where at a national level we become a league or a united nations and as a human family we engage in reparations, the ultimate hypocrisy of global atomic institutionalism and activism - to repair that which we united together to inadvertently "improve", defend or destroy. Yet we don't just do that on the national scale, we do it on the playground as well, and my best friends were often the ones where our value arguments became full blooded fist fights, or at least at my school where I had plenty of spectators to urge me and my opponent on. We are therefore tribal as our environment allows us to be, but we also live in an increasingly digital age of mechanical computers, where technology doesn't fight, it simply processes and so I realized from this that process trumps tribalism. So why do I write this, because I don't want to rag, even remotely, on the shortcomings of this writer, I want this writer to be on our side, I want to move out of our vertical identity siloes and acknowledge smart people on the horizontal, and then we can start looking at the kind of scum that media think that we need to be aware of (and allow pondscum to live in harmony with the intelligence floating in the rest of the horizontal). An undue attraction and attention towards scumbags, does not really uplift the quality of my own life in any significant way, as does watching the profile of the next nutcase on the next voyeuristic media special. So today I realize that I cannot prevent a world that is continuously daily conditioned to view life as a disease or as a product to buy, but I sure can start exploring what a healthy world looks like by looking at my own self, and for me to do that Alex, I need to read metafilter wiki that describes to me what healthy human behaviour also looks like, and that is because my friend, I am tired of labels that just add to my internalized memory that there is something extremely problematic with the world. I want to find a way to stop the label machine manufacturing away in my own head, so that I can ultimately be free to look at my developing world from a far healthier perspective; where I acknowledge Alex as Alex and Anya as Anya without pretending that I have anything remotely in common with both or that we are friends or blood-brothers or oxygen-sisters of a common cause. I simply want to remove the unnecessary boundary above the line and below the line that I have continuously created in my own head, where I improve the quality of my own listening by noticing the quality in other people's voice, as well learning to silence my own voice in the accompanied learning. I know that when I can walk through this world in a silent manner, I will have witnessed the first sign of my own intelligence, and to do that I have to learn to think differently and I guess here came the real positive coming from all of this spiel today. I talk too much, and from now on I will leave it to all you guys to do the talking and maybe, just maybe your collective voices might figure it out, for maybe at last, today I have discovered the only label that should have mattered all along, what it means to "be" than to "have" freedom......M.

  • Anya Kamenetz

    Mark Hayden is right to point out the local examples like DonorEdge which do a good job at exactly the task GiveWell was attempting. The mission of the National Center on Charitable Statistics is different. Rather than collect details on programs and measurable outcomes, they disseminate numbers on on expenditures, revenue, donations, stats on the numbers of nonprofits, hours spent volunteering. It is like the difference between annual revenues for McDonalds vs. information on the nutritional content and environmental impact of the burgers sold.

  • Alex Reynolds

    Frankly, this poorly researched piece reads almost like an advertisement for GiveWell. The crime is not only astroturfing, but that their founders Karnofsky and Hassenfeld used the same false identities to raise doubts of financial improriety in other not-for-profit fundraising organizations. A much better summary of what Givewell was up to is available at the MetaFilter Wiki [1].

    [1] http://mssv.net/wiki/index.php...

  • Mark Hayden

    I think GiveWell's heart is the right place, but the mission is best suited where there are local eyes to verify the nonprofits. Most philanthropists give their money locally to help their community and causes and hold Board seats on more then one charitable organization. In Houston, the Greater Houston Community Foundation set up DonorHouston.org, a free, comprehensive online resource designed to make the connection between funders, donors and nonprofits easier, more strategic and user-friendly. The DonorHouston system is comprised of more than 100 indicators and data fields focused on four categories of information: general information, management and governance, financial history and program performance. Kansas City has a very similar site called DonorEdge.org. Both are managed by each city's community foundation, so there is pressure by each foundation's board and management teams to ensure that the data is properly managed.