Friday, August 20, 2010

Response to Nonprofit Quarterly Editorial

This is a response to an editorial published in the Nonprofit Quarterly, "Social Innovation Fund Disclosures Good But Insufficient," which is available here.

Although I was involved in the SIF review process, I’m writing on my own behalf and I don’t speak for the Corporation for National & Community Service (CNCS) or any of the organizations that participated in SIF. I have not discussed this memo with or shown it to anyone else (including CNCS) prior to submission to NPQ.

The editorial states that you are “concerned whether or not SIF can demonstrate that no pre-existing relationships sullied the high profile grantee selection process.” You urge CNCS to release “a list of the names of applicants, the original applications, the review panel’s comments and ratings, and, if they were not assured of confidentiality, the names of the expert reviewers.” In fact, there is no basis at all to question whether “pre-existing relationships sullied” the process, and the release of information you request would undermine the integrity of that process. Now that the grantees have been announced, I do happen to agree that the names of the reviewers should be made public, but without any information about who reviewed which applications and certainly not the specific ratings or written comments any of us made, for reasons I’ll explain.

I’ll begin with my own disclosures. I was one of the 48 external reviewers chosen to review the intermediary grant applications in an early phase of the selection process. I received an honorarium of $700 for well over 75 hours of work. I have professional connections of varying degrees with several of the applicants, all of which I was required to disclose in writing prior to my selection as a reviewer, and I did not see any materials of any kind related to those applicants. One of the applicants that I reviewed and rated highly was named one of the 11 grantees. I also happen to be a lawyer with many years of experience in public ethics law, include actual and potential conflicts of interest. I have never met SIF’s Director, Paul Carttar.

To put things in perspective, consider this quote from of a blog by Adin Miller, “Analysis of Social Innovation Fund Update,” posted on April 23, 2010, and available here. The call to which he refers was a media advisory conference call held by senior SIF staff, including Director Paul Carttar, a press release and audio recording of which were published on SIF’s web site after the call.

“What was amazing about the call was the level of transparency applied to the Social Innovation Fund and the grantmaking process in general. As Mr. Carttar noted, the Corporation has stressed an open and transparent process, which has been carried out throughout the development process for the Social Innovation Fund. While the Corporation won’t release the names of the applicants, its willingness to shed light on the applications received and its upcoming review process must be recognized and applauded. The field of philanthropy, in which grantmakers commonly cloak such information, can learn to adopt similar standards of transparency.”

The primary “fact” upon which you rely to question the integrity of the process is the SIF’s past relationship with one of the applicants:

“One of the 11 grantees of the Fund in 2010, New Profit, is an organization with which the director of the SIF, Paul Carttar, has had close ties. Upon taking on the role at the Fund, he signed a Conflict of Interest waiver due to those ties. This creates circumstances that heighten the need for transparency.”

To the contrary, Mr. Carttar’s disclosure and his recusal from all proceedings related in any way to SIF participants with which he had prior business dealings eliminate any need for the kind of false transparency you advocate. As you acknowledge, Mr. Carttar complied with the federal Ethics in Government Act by filing a written disclosure of all of his prior business relationships with potential SIF participants before he took the job. The waiver letter dated April 5, 2010 is available online here, and it shows why your concerns are unfounded.

First of all, you are mistaken when you say CNCS’s August 9th response “explained for the first time in detail its many-layered process …” In fact, back in April, the waiver letter itself provided a detailed explanation of the process:

“First, applications will be reviewed for compliance with the NOFA submission requirements, including a determination of whether the applicant is an entity eligible for award. The initial review of eligible applications will be conducted by a four member panel to determine an applicant’s ability to select, support and monitor the performance of a portfolio of innovative and effective nonprofit organizations. At this stage of the review (the “blended review”), panelists will apply the rubric in the NOFA, which puts 45% weight on the review of Program Design, 35% on Organizational Capacity, and 20% on Budget. Next, at a first consensus meeting, senior staff at CNCS will review the top applications and evaluate them in light of the goals of the SIF. The results of this meeting will be to confirm the group of approximately 30 applicants that will be sent forward to the “expert review” stage, where panels of two expert reviewers will assess applications based on the same rubric utilized in the blended review process, but will focus more specifically on evaluation plans and potential for replication. The expert review will be followed by a second consensus meeting, at which information from both the blended and expert reviews will be assessed. This meeting will reduce the number of applicants to a final competitive group of approximately 10-15 intermediaries. These top applicants will be packaged for a pre-decision meeting with the senior Corporation official designated by the CEO1 (hereinafter “designated official” or “designated selection official”) to make the selections, which will include executive summaries of proposals, as well as summary information and statistics. After the pre-decision meeting, staff will have clarifying discussions with the applicants, informed by those questions and issues. They will present final proposals for the designated official’s consideration at the final decision meeting.”

The footnote after the phrase “senior Corporation official designated by the CEO” says, “The CEO [i.e., Mr. Carttar] will designate a selection official because his former employer [i.e., New Profit] has submitted a notice of intent to apply.”

You attach no weight either to the content of Mr. Carttar’s disclosure or to the judgment of the ethics official who wrote it, dismissing what you call CNCS’s “baby steps” as amounting to saying, “trust me.” That’s a shame because the explanation is quite informative and undermines your insistence that CNCS can “ensure its own credibility and power” only by disclosing the applications and panel ratings. First, here’s the ethics officer’s “authorization and limited waiver” to Mr. Carttar, which takes a quite different and much better approach:

“You are authorized to participate in matters of general applicability including general policy discussions and decisions concerning the operation of the SIF. This authorization and waiver is limited, however, in that you will recuse yourself from party-specific compliance or eligibility determinations, consensus meetings, discussions, and recommendations, or portions thereof, regarding any former employer or client … This prohibition shall include Monitor Group, New Profit, Inc., New Leaders for New Schools and Teach for All, and Kaboom! You are authorized to attend the two consensus meetings except to the extent described above. If, after these meetings, either your former employer or clients remain under consideration for the final competitive group, you will recuse yourself from the pre-decision meeting with the designated official and the final decision meeting with the designated official.” (The ethics officer made the underlinings.)

Second, the reasons for her decision include:

(1) “The grant application review process will include internal and external reviewers applying established eligibility criteria. These criteria were established in the Notice of Fund Availability developed by the Corporation prior to your appointment; (2) The grant application review process … will be managed by the Office of Grants Policy and Operations in accordance with regular agency procedures; (3) You have agreed to resign from Monitor and from your affiliations with New Profit, Inc., New Leaders for New Schools and Teach for All, and your board membership with Kaboom! (4) you will no longer have financial interests in any of these organizations, and (5) if any organization with whom you have a covered relationship applies for funding, you will recuse yourself from preparation for and participation in the pre-decision …, except to the extent set forth in this Authorization and Limited Waiver.”

When a government employee complies with a widely publicized ethics ruling by quitting his job, relinquishing financial claims and resigning from a prestigious board, and staying out of decisions that would otherwise be his direct responsibility, he’s entitled to the presumption of ethical propriety.

You equate transparency with publishing any and all documents having anything to do with the SIF process, what you call “fully enter[ing] the sunlight.” In your view, if there was a potential conflict of interest at the beginning of the process, anything less than 100% publication of every document later produced by anyone in a nonofficial capacity fails to remove the taint. That’s just irresponsible.

Disclosure and recusal shift the question from “does the government employee have a current or potential conflict?” to “has the government employee complied with the restrictions imposed in the waiver letter?” If he has complied, he has had no involvement of any kind – direct or indirect – with any application submitted by any party from which he has recused himself, including the review or recommendation of that application by government officials or outside experts. None. Public disclosure and recusal completely eliminate the need for further transparency because the government employee has absolutely no opportunity to improperly influence the process with respect to those parties. NPQ’s own disclosures in a related article provide a similar example.

Answering the only remaining question – has the employee complied with the restrictions imposed in the letter? – is the responsibility of specific federal regulators, namely the Office of Grants Policy and Operations and the Office of Government Ethics, as well the CNCS Office of Inspector General. Neither the public nor the media need the documents you request to make sure that Mr. Carttar hasn’t violated the terms of the limited waiver.

The specific documents you want CNCS to release have nothing to do with transparency. You are mistaken when you claim that the ratings and comments of the expert panels are “public records.” Rather, both are exempt from the Freedom of Information Act (FOIA) under the well-established “deliberative process privilege,” as explained by the U.S. Court of Appeals for the D.C. Circuit in Coastal States Gas Corporation v. Department of Energy, 617 F.2d 854 (1980):

“The Deliberative Process Privilege serves to … protect against confusing the issues and misleading the public by dissemination of documents suggesting reasons and rationales for a course of action which were not in fact the ultimate reasons for the agency’s action… The exemption thus covers recommendations, draft documents, proposals, suggestions, and other subjective documents which reflect the personal opinions of the writer rather than the policy of the agency.”
The ratings and comments are precisely the kinds of “predecisional” documents the privilege covers. They reflect the personal and subjective opinions of the reviewers as part of the “give-and-take of the consultative process,” made in an early round of a review process that had many subsequent phases. Their disclosure would surely inhibit candid assessments by reviewers, which were sometimes sharp and even caustic, and after-the-fact analysis in the public domain would convey the false impression of “suggesting reasons and rationales for a course of action which were not in fact the ultimate reasons for the agency’s action.” Confidence in SIF would inevitably be eroded by such a contrived “controversy.”

You then make the gratuitous comment that “according to our sources, even the expert panelists appear not to have understood” the process. Leaving aside your ironic reference to anonymous sources, the statement is completely untrue. In fact, the experts unquestionably understood the process, because the SIF bent over backwards to explain it to us over and over again in multiple web seminars, instructions and phone calls precisely because they wanted to make sure that we applied the same criteria to all applicants in the same way. And I’m not talking about rocket science here, just basic definitions and steps that were sufficiently clear the first time they were explained to us. But the staff insisted that each expert reviewer participate in every redundant forum going over the same material, and we complied because we wanted to make sure the inaugural process succeeded. The process had a lot of detailed parts for the purpose of maintaining tight control, but it was not confusing. If anything, we were too straightjacketed, but it made sense to err on the side of caution and consistency, as your editorial painfully demonstrates. Hopefully, the training process will be streamlined in the future.

You quote an unnamed CNCS “spokesperson” who spoke to the Chronicle of Philanthropy about why CNCS had promised not to make public the names of the unsuccessful applicants or their applications. That’s just sloppy journalism and completely unfair. As required by law, CNCS conducted an open bidding process that included publication in the Federal Register, which invited anyone to submit comments in response to the Notice of Funding Availability (NOFA). Whatever shorthand language the unnamed spokesperson might have used in a separate conversation with the Chronicle about the reasons for not publishing information about intermediaries that weren’t selected, the actual reasons – the official reasons – for deciding not to do so came out of that legally-required public comment process. Taking public comments seriously is one hallmark of government transparency, whether or not you happen to agree with the public.

Nor is there anything “confounding” about why unsuccessful applicants might not want their submissions disclosed. As a World Bank employee stated in the New York Times on August 16, 2010, “the private sector talks about failure freely and candidly,” while the nonprofit world “has to worry about donors who don’t want to be associated with failure and beneficiaries who may not benefit from admissions of failure.”

Given all of the above, you have no basis to lampoon CNCS’s careful, conscientious and open process as a “restricted access, need to know, hush-hush operation.” It is easy to talk about the virtues of transparency without accepting any of the attendant responsibilities. Unlimited transparency can interfere with thorough and deliberate decision-making, particularly when raw information never intended for public dissemination becomes fodder for sensational and one-sided cheap shots and second-guessing in the guise of serious analysis. SIF ran a painstakingly open process for selecting intermediary grantees, and it followed its rules to a fault, subject to review by numerous oversight agencies. It has promised to provide additional information soon, but it is right to draw the line at releasing more than a thousand pages of unofficial and subjective documents prepared by private experts expressing their personal opinions which may or may not have shaped the final official decisions. No one should care whether I and my colleagues gave applicant X a 2 instead of a 3 on question Y.

There is not the tiniest bit of evidence that “pre-existing relationships sullied the high profile grantee selection process,” or even the appearance of such. If NPQ wants to serve the public interest, rather than its own prurient interest in obtaining as much blog fodder as possible, it should undertake a substantive analysis of the SIF information will release about the actual basis for the final decisions made.

It is also too easy to be cynical about government and to wrap oneself in the mantle of “transparency,” but baseless cynicism does not serve the public interest. This is a case where CNCS has established a well-designed program with extensive input from the social sector, and it has been appropriately transparent within any reasonable definition of the term. The publication of peripheral documents would force CNCS to divert its small staff and budget to responding to endless second-guessing, rather than insuring that the important and extremely challenging work of SIF continues productively. That might be a desirable outcome for NPQ, bloggers and SIF critics who want to continue fighting battles decided long ago, but it would not be good for the social sector or the people who need the ultimate SIF grantees to make their proven innovations available nationwide.

Steve Goldberg

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