An explosive discovery related to a local philanthropy organization, GiveWell, has caused ripples through the progressive giving realm. Apparently, one of the founders, Holden Karnofsky, disguised himself on several websites to help drive people to GiveWell.net by posting questions asking where to find charity evaluation services while also providing an answer directing all fellow readers back to GiveWell.net. He did this without ever signifying that he was, well, co-founder and Executive Director of GiveWell.

All of this leads to some interesting questions about the ever-changing dynamics of progressive philanthropy such as:

• If transparency is increasingly the key ethical element for a charitable organization, then what happens when an organization is exposed of deceptive practices? What practical repercussions should be expected?

In the past, dishonesty and poor management practices were tracked by the now-grandfathers of accountability such as the Better Business Bureau and the IRS. Now, with whole organizations going online and pajama-managers on the rise, who is watching whom and to what end?

• Because GiveWell was started and currently managed by ex-hedge fund professionals (read: private sector), are we just seeing some of the growing pains as people increasingly bridge careers between the two?

As one poster commented, “If Holden were pumping stocks, selling penis enlargement nostrums, or promoting Hot Women Looking To Meet You Tonite, I’d chalk it up to more of the same and not give it a second thought but he’s the founder of a charitable foundation that makes bold claims about honesty and transparency.”

Ok, so dicey practices in the private sector get a roll of the eyes and a knowing look but honesty is the only way to play in charitable organizations. For the sake of argument, the lines between the two are getting blurred and folks on either side of the line just can’t think straight. Think: social entrepreneurs, social enterprise, blended value and triple bottom lines, just to name a few. You get two gold stars if you can successfully identify the difference between them and how each relates to the nonprofit and private sector.

To be fair, there is ongoing debate on what the meaning of each is, exactly. So if we don’t know what it is, can we really know where the lines are?

• With the growing power of online marketing and ever-clever strategies, what are the acceptable boundaries and how can one find existing rules to avoid an embarrassing faceplant in front of more savvy internet communities?

For instance, being a relative blogging newbie I had never heard of the terms “astroturfing” and “sock puppet” before this incident though, admittedly, we all know somewhere deep inside that hiding one’s identity to promote oneself for personal gain is a bit shifty. Rules of the game are difficult to navigate when nobody really tells you what they are. And considering the rapid expansion of online communication lines, I’m sure the rules are in flux as well.

The online community has been swift and fierce in its judgement. In response, GiveWell has posted a mea culpa. Through it all, the critique continues. And in the process, I’m still trying to process these events and understand what the real consequences of GiveWell’s actions will be.

What are your thoughts on this? How will this affect creative philanthropy and the progress of innovation within charities?