After Controversy, Charity-Evaluation Group Rethinks Its Own Operations

On a single December day two years ago, the nonprofit group GiveWell scored television and newspaper attention that would be the envy of most charity leaders.

Articles about the organization appeared in The New York Times and The Wall Street Journal, and its founders were interviewed on CNBC about their quest to identify the most effective charities.

But less than two weeks later, the organization was grappling with a public-relations nightmare. Its founders, Holden Karnofsky and Elie Hassenfeld, had been promoting the group in Internet postings using aliases, prompting anger among observers and leading some nonprofit officials to question whether the group had a future.

A year and a half later, GiveWell not only is still around but also has slowly attracted more support and expanded its reach.

Among its successes: winning a $100,000 grant from the William and Flora Hewlett Foundation; getting coverage in the book The Life You Can Save, by Peter Singer, a Princeton University professor; and attracting $250,000 from an anonymous donor who earmarked the money for an antipoverty group of GiveWell’s choice.

The group recently doubled its staff to four people.

GiveWell has grown beyond the 2007 controversy, says Robert Ottenhoff, president of GuideStar, a nonprofit group based in Williamsburg, Va., that provides online financial and other information on nonprofit groups. “They’ve been very transparent about it and acknowledged the mistakes they’ve made,” he says.

Mr. Ottenhoff’s organization is discussing possible ways it might work with GiveWell.

Simplifying the Process

The group generated early buzz for its tough scrutiny of charities and the open way in which it operates. GiveWell posts recordings of board meeting on its Web site and explains how it picks its top charities, which receive money through a grant-making arm called the Clear Fund.

Its approach to identifying the strongest charities has evolved since 2007.

Mr. Karnofsky, a 28-year-old former hedge-fund employee who started GiveWell with Mr. Hassenfeld when they had trouble finding information to direct their own charitable giving, says the group has tried to simplify its review process and make it less burdensome for nonprofit groups. (See this article from the Chronicle archive for more on GiveWell.)

For its report this year on international charities, GiveWell conducted preliminary research based on scholarly papers and publicly available information and then approached the ones it found most promising. In the past, it had invited hundreds of charities to apply for money. GiveWell has also started investigating whether a nonprofit group’s work introduces unintended consequences and if more money really would help it reach more people.

Charity leaders who have worked with GiveWell say they appreciate the group’s attempts to rate charities beyond simple financial measures and the outside stamp of approval it can provide.

“They’ve grown and sort of evolved themselves over the last few years and, in some cases, are asking more pointed questions; they are digging deeper,” says Karl Hofmann, president of Population Services International, which GiveWell has recommended in each of the past two years.

Good Groups Left Behind

To date, GiveWell has considered more than 500 organizations, given a top rating to four, and “recommended” another four. Those high standards lead even supporters to say that GiveWell may be leaving out good groups, particularly those that cannot take the time, or don’t have the processes in place, to produce and furnish the sorts of data the group requires.

“It’s both a good thing and a bad thing,” says Jacob Harold, who oversees grants to improve philanthropy at Hewlett, of GiveWell’s high bar. “Probably some of those organizations about which they say they don’t have enough information to analyze are doing really good work.”

Indeed, some charity leaders who have been left out say they wish GiveWell had a more straightforward way of approaching and evaluating charities.

While GiveWell’s fund-raising was relatively strong last year — it brought in $750,000, $190,000 of which went to cover its operations — the group’s reports have yet to influence large numbers of donors.

This year, the Clear Fund will give about $350,000 to nonprofit groups identified by GiveWell, including the $250,000 gift for a group that seeks to help people in Africa get out of poverty.

Mr. Karnofsky says that packaging and publicizing the research, in hopes of reaching more people, will be GiveWell’s main priority for the remainder of the year.

He and GiveWell’s three other employees will also be conducting research to determine which antipoverty group to award the donation GiveWell received. They will be contacting charities and soliciting applications via their Web site, which receives about 5,000 visitors each month.

In 2010, GiveWell plans to explore a new cause, perhaps climate change or disease research.

Maturing Leadership

The board of GiveWell has slowly eased up on the oversight it imposed after the 2007 self-promotion controversy.

Demoted from executive director to program officer in early 2008, Mr. Karnofsky was promoted last week to co-executive director, along with Mr. Hassenfeld, who had served as program officer since GiveWell’s inception. The two requested that they share the title.

Trustees decided the two had met requirements put in place after the controversy, including working with mentors from outside the organization.

Timothy Ogden, a board member and editor in chief of the online publication Philanthropy Action, first reviewed all the group’s communications but no longer reads each blog post before it appears on the GiveWell Web site, although he still reviews and approves news-media requests.

The changes, and GiveWell’s frank discussions of the incidents on its Web site and in meetings with donors, appear to have been enough to satisfy supporters. No donors pulled their gifts in response to the incidents, says Mr. Karnofsky.

Mr. Harold of the Hewlett foundation says his foundation is now discussing whether to offer GiveWell more money.

Mr. Karnofsky was often accused of being “brash” and “arrogant” before he was outed on the Web site MetaFilter for posing as a donor seeking information about charities and then promoting GiveWell without identifying his affiliation. He says he thinks the board reached a “reasonable balance” between oversight and muzzling.

He adds: “I think I’ve matured and also gotten more supervision.”

GiveWell’s maturation has taken place as more players have started to explore ways to evaluate charities beyond simple financial measures. Mr. Karnofsky says he is excited by the growing interest in charity evaluation and ratings but does not yet see another group taking GiveWell’s place.

If a group started doing the same work — and better — he says he would be pleased. “We’re going to serve whatever role we can usefully serve, and if that’s no role, we won’t be upset about shutting down our doors,” he says.