# Updated: Statement from the GiveWell Board of Directors

On Monday, Elie Hassenfeld communicated to the board that he posted a comment on December 31, 2007 related to GiveWell that was not under his own name. The comment was made under the name Talia and is linked here. In response to the actions by Mr. Hassenfeld which were inconsistent with GiveWell’s core values of transparency and honesty, the board has decided to impose a financial penalty of $5000. We have updated our ‘Statement from the GiveWell Board of Directors’ to reflect this situation (please note the addition of paragraph 5). We believe that Mr. Hassenfeld’s previous commitment to the goals of GiveWell demonstrates that he can continue to make a positive contribution to the work of the organization in the future in his current role as a program officer. ### Comments • What about Elie’s other “astroturf” postings at websites (from December 10 – 15) where he doesn’t indicate his affiliation with GiveWell? Same behavior as Holden? Same response? Has Elie been “demoted” beyond the$5,000 financial punishment?

• FourCheeseMac on January 11, 2008 at 11:03 pm said:

Not impressed, at all. But then again, Givewell is toast, so this is kicking a dead horse. No one who does even a modicum of research will ever trust this organization again, let alone give money to it.

Good.

• “On Monday, Elie communicated to the board that he posted a comment on December 31, 2007 related to GiveWell that was not under his own name.

The comment was made under the name Talia and is linked here. In response to the actions by Elie which were inconsistent with GiveWell’s core values of transparency and honesty, the board has decided to impose a financial penalty of $5000. We have updated our ‘Statement from the GiveWell Board of Directors’ to reflect this situation (please note the addition of paragraph 5). We believe that Elie’s previous commitment to the goals of GiveWell demonstrates that he can continue to make a positive contribution to the work of the organization in the future in his current role as a program officer.” What about Elie’s other “astroturf” postings at websites (from December 10 – 15) where he doesn’t indicate his affiliation with GiveWell? Same behavior as Holden? Same response by the Board? Has Elie been “demoted” beyond the$5,000 financial punishment?*

• Drip … drip … drip.

• ericb – In response to your question about the “other astroturf postings” by Mr. Hassenfeld, I recommend that you listen to the tape of the board meeting where this is addressed. It is loacted here, with the specific discussion beginning at minute 33. There has been no further punishment beyond that which was noted in our statement.

• bdaponte on January 14, 2008 at 4:12 pm said:

Thank you, GiveWell, for giving me another example of ethics lapses in non-profit management for my class in Program Evaluation. When I first heard of the arrogance of the directors of this organization– that they could look at “outcomes” and determine which charities were worthy of funding– I was appalled. My students in Program Evaluation know that outcomes do not tell the whole story.

In my opinion, the directors should be dismissed for their ethics lapses and the organization should really re-evaluate what the organization’s goals are and how the organization might achieve these goals without having unintended negative consequences. Further, the breadth of experiences of the board should be broadened. If the organization is to survive (and I’m not sure it should), but it should evolve so it is not so dependent on its “founders.”

• Crystal on January 14, 2008 at 5:07 pm said:

The idea of transparency and open dialogue using audio posts and blogs is a great idea, and a practice that should have been adopted by funders long ago. However, we don’t need Holden, or Give Well to do this. Evaluation, outcomes, metrics, etc. are something ALL funders have been trying to take a hard look at for decades- but it’s not that easy.

What Holden and Elie did for philanthropy was really great- they showed funders that modern technology like blogging can be a good way to open up the conversation with others interesting in creating social change. But that is the extent of what Give Well gave us, IMHO. Their evaluation methodology is highly questionable.

How about resigning and working as program evaluators for their favorite charities? Oh, that’s right, the pay is only half of what they pay themselves now and you need some experience….

• bdaponte:
When I first heard of the arrogance of the directors of this organization– that they could look at “outcomes” and determine which charities were worthy of funding– I was appalled. My students in Program Evaluation know that outcomes do not tell the whole story.

How do you think we should evaluate which chartities we should donate to?

• Crystal:

Their evaluation methodology is highly questionable.

If you think there are specific places where our analysis could be improved, let us know. Also you can comment about each cause on our main website.

• Erich Riesenberg on January 15, 2008 at 7:30 am said:

Hello Bob –

Congratulations, your comment is the VERY FIRST from anyone affiliated with Givewell to respond to the many, many criticisms of your research methodology! It is long overdue, and I doubt it will be a productive exercise, based on Givewell’s unwillingness to discuss, but what the heck!

Here, Holden libels two well known nonprofits, stating: An example that jumps to mind is organizations like AmeriCares and Direct Relief International, which distribute medical supplies to areas in need, but (perhaps in pursuit of a high Straw Ratio) appear to do zero tracking of what happens to the supplies once they arrive (even though they are often arriving in extremely dangerous, disorganized areas). http://blog.givewell.org/?p=19

When asked how he reached this conclusion, he states: All I can tell you without looking into it further is that the people investigating these orgs (not me or Elie) asked for documentation and specifics on how supplies are being used, and were generally told this info was not available. They were also sent Straw Ratio data, repeatedly, in response to their requests for evidence of effectiveness.

So, Holden has no idea how he reached his conclusion, but he is quite comfortable with it. My guess is these two groups spend very little on administrative overhead, so Holden concludes they do not know what they are doing. In fact, with Direct Relief, they ship high value items to clinics, which requires little administrative support in relation to the value of the shipments. Direct Relief has provided detailed, monthly reports of shipments, and to claim it does not even track its shipments is mind numbingly ingorant.

So, in a cute little twist, Holden misuses the so called straw ratio to reach conclusions about charity effectiveness, something he otherwise rails against, apparently under a variety of false identities, no less.

Another case would be here, with Givewell’s analysis of Interplast. Givewell’s analysis reaches a very different conclusiont than Interplast, and rather than inquire about it, Holden deftly concludes: Maybe, in this huge discrepancy, you see a fascinating field of knowledge to be explored – all the intricate details of how one classifies “overhead.” I see more evidence that there is no method for calculating this number that is agreed-upon, reliable, stable, or non-arbitrary – to say nothing of meaningful. http://blog.givewell.org/?p=207

Givewell won’t even look into glaring errors in its own analysis, I definitely would not trust them to locate any unique insights. Donors can do better on our own. I do think the pitiful data dump analyses provided by Givewell should be the story here.

Cheers, Erich

• MoonOverJackson on January 15, 2008 at 4:25 pm said:

How do we know you are telling the truth? Once a liar, always a liar.

• Erich Riesenberg, thanks for posting. I think that your assessment that there have been no responses to the criticism of our methodology from anyone at GiveWell doesnt reflect the various conversations which have occured on this blog where both Holden and Elie have engaged in dialogue about how best to tackle these problems and improve the way that we evaluate charities, including a back-and-forth conversation with you about the use of the administrative expenses / total expenses ratio.

I want to make it clear that one of the core values of GiveWell is a dialogue with the public (and amongst the public) about how best to figure out which charity is best to donate to. The reason why we believe strongly in that value is because it is through that dialogue that we will best achieve our goal of having the most impact with our charitible donation. Conversations about how our methodology can be improved is essential to this work, and I encourage everyone to continue commenting about our work.

To respond more generally to you points about Holden’s comments on Interplast, AmeriCares, and Direct Relief International: The core question we are trying to answer is which organizations make the most impact with the resources that we give them. Certain measures like the administrative expense / total expenses have been focused on by certain charity evaluators and while that information may be useful, exclusively used, it doesn’t address how big an impact I have on my cause (saving lives, improving incomes, etc) for each dollar I donate. In order to figure this out we ask organizations to provide us information that will inform our understanding on this question. Those that simply provide the administration costs / total costs number do not sufficiently address that question.

For more information and thoughts on the use of this ratio, I recommend checking out the series on the ‘straw ratio’ here

• Erich Riesenberg on January 16, 2008 at 8:32 am said:

See Bob, your response is typical of Givewell. Do you have any accounting experience, of any sort at all? Because both Holden and Elie babble on both on Givewell and various blogs about how hiring good people and buying good computer systems increases the so called straw ratios. If you, or they, had even a basic knowledge of accounting, you would know that is a stupid, stupid, stupid comment.

As an aside, the only people to question whether these ratios should be used in isolation are folks like Givewell. Charity Navigator does a much better job explaining their limitations than Givewell, which makes Givewell’s constant criticism of CN dishonest.

In any case, as I suggested, you failed to engage in any sort of discussion. My first question to Holden, and then to you, is why libel Americares and Direct Relief? You still have not made any attempt to explain, much less justify the libel that they ship supplies into the nether.

Regarding Interplast, I simply pointed out one glaring error in Givewell’s so called analysis. If you actually read the analysis, Givewell’s calculation of cost per surgery and trip did did not match those provided by Interplast, so Givewell imputed a plug figure which they, for some unexplained reason, decided to assume came from administrative and fundraising expenses. When I pointed out that conjuring up these plug figures caused a large deviation from Interplast’s own figures, Holden said it was not worth figuring out the cause of the discrepancy.

There are two basic problems with Givewell’s methodology of anaylsis. First, Holden and Elie have no experience in any of the fields being studied, so Givewell resorts to data dumps. The second is the data dumps are not very good.

Have a great day!

• Holewell on January 16, 2008 at 9:33 am said:

Bob,

Since I started taking those pills and injectables you gave me, my cock has grown 13 feet as evaluated in full erection, and a truly amazing 11 feet 6 inches in it’s, hardly ever seen, flacid state.

And the best part is that now all the easy women have evaluated that i give better than give well.

Guess I won’t be seeing you at the gloryhole no more.

Later,

• Holehurts on January 16, 2008 at 9:48 am said:

I’d hoped not to have to comment any more here after the Board of Directors stated that they

LIKE THE TASTE OF ASS

but I feel I am obligated to point out that in certain states ass-eating is not only charitable but actually efficient too.

• In related news: Facebook Generation: 10 Tech Revolutionaries — Conribute Magazine profiles those redefining the power and face of philanthropy.

• brokenlink on January 17, 2008 at 1:34 pm said:

Hey – your ‘Official Statement of the Clear Fund Board of Directors’ link (http://givewell.net/files/ClearFund/Meeting%202008%2001%2003/Meeting%202008%2001%2003%20Official%20Statement.doc) on http://givewell.net/node/143 is a a broken link.

Might want to do something about that.

• Sharon on January 17, 2008 at 5:13 pm said:

Erich says: “Because both Holden and Elie babble on both on Givewell and various blogs about how hiring good people and buying good computer systems increases the so called straw ratios. If you, or they, had even a basic knowledge of accounting, you would know that is a stupid, stupid, stupid comment.”

As an admitted non-accountant, I sincerely don’t know why that’s stupid. My initial reaction is that buying supplies and paying salaries would potentially be classified as an administrative expense, not a programmatic expense, and so would appear to increase overhead and negatively affect the ratio of program expenses to administrative expenses.

On the tax return (from which these ratios are derived), charity expenses are classified as either “program services,” “management and general,” or “fundraising.” It seems to me that one tax preparer might classify those supplies as administrative. These expenses are then grouped into a single total and reported on line 13, page 1 of the tax return. And another might say “we use those computers for program-related documents and record-keeping, so they’re really a programmatic expense” and classify it that way. This is grouped and reported on line 14 of the charity’s tax return. To derive the ratios, you put Line 13 or Line 14 in the numerator and the total expenses (Line 17) in the denominator. In which case, two organizations having the same expenses would have different ratios.

This, as I understand it, is the biggest criticism of the ratios: beyond identifying outright fraud, they aren’t differentiating charities’ effectiveness so much as the savvy of their tax preparers.

Is the thing that made Givewell’s comments “stupid stupid stupid” that accounting principles suggest that computers are assets/equipment, not expenses, and they would be reported difererently? Okay, then pick marketing. Or membership dues. Or reference materials. Or staff training. I would guess that there are lots of expenses that can potentially be categorized in multiple ways to have the same (misleading) affect on the program/administrative expense ratio. I think the point is still valid.

But as I said, I’m not an accountant. Is there some other accounting principle I’m missing?

• Erich Riesenberg on January 17, 2008 at 7:39 pm said:

Sharon, your comment is sensible, and the kind Givewell could legitimately be making, instead of its wild eyed criticism, that fundraising and administrative expenses should be outright ignored.

Different groups can classify expenses in different ways. That is a problem. However, that is not the complaint made by Givewell. Givewell states categorically, both here and anonymously on blogs throughout the internet, that hiring good people and buying computers increases overhead (which apparently means administrative and fundraising expenses). That is nonsense. Nonprofits hire people and install computer systems that are used for program purposes, and those costs should definitely be allocated as a program expense.

Here is a nice look at how the expenses are categorized in real life. http://www.biz.uiowa.edu/accounting/papers/workingpapers/02-07.pdf

My guess, before Givewell imploded, was that its persistent criticism of groups like Charity Navigator was an attempt to get attention. Now that we all know how much effort went into that, despite all the publicity Givewell had already received, that increases my confidence as to the reason for its hackish criticism.

The most awful aspect of Givewell’s criticism is when it would state fundraising expenses should be ignored. There are telemarketers which set up nonprofits and pay themselves 75%+ of donations. They need to be shut down, and the fundraising expense ratio is a great, simple tool for that.

These ratios should be a place to start asking questions, as anyone who uses them should understand.

The problem with a blog is that comments have to be repeated with each thread. Commenting here is largely a waste of time.

So, good luck, to anyone who cares about improving the nonprofit sector.