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December 21, 2007

2 Young Hedge-Fund Veterans Stir Up the World of Philanthropy

by Stephanie Strom, International Herald Tribune, France - Karnofsky and Hassenfeld, both 26, are the founders and sole employees of GiveWell, which studies charities in particular fields and ranks them on their effectiveness.

Comments (1)

Having worked in the non-profit sector for years, I understand how difficult it can be to both raise money and prove how effective you are. The trouble with the stink that GiveWell raises is that anyone can manipulate numbers, be they financials or program outcomes, to skew data in a program's favor. And though government or federal funding comes with significant reporting strings attached to combat this very issue, the money that is often awarded comes at a huge price to an organization: the need for a full time staff person to collect, track and report on the data so the monthly or quarterly checks keeps coming in. This is precisely why many charities do not pursue federal or state funding (plus in today's world it's far more competitive a funding field than it was 8 years ago) and why many have nothing more than anecdotal accounts to prove their effectiveness.

What seems to be at stake here is transparency. While GiveWell claims that any charity can achieve a high score on Charity Navigator, I think it's a stab in the wrong direction. I'm also troubled by the fact that GiveWell's approach was so aggressive that only half of those charities that they approached provided information on their processes. Transparency and a genuine desire to understand a charity's workings will get any potential donor a lot farther than asking questions without volunteering one's own intentions. Relationships between donors and charities are like any other relationship - they are a two way street. They must be cultivated over time and with the same respect we would give to any serious business partner or friend. If something doesn't feel right to you, it probably isn't.

I'm glad that organizations exist that really question the validity of charities and the services they provide, but ultimately, it's the donor's responsibility to jump in, roll up their sleeves and see for themselves.

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