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Silicon Valley Business Ethics Cases

Nonprofit Fundraising

In the Name of the Good

Ian is Founder and CEO of a non-profit organization that helps low-income high school students prepare for higher education. He founded the organization shortly after college, and it is currently on the cusp of a major breakthrough. But like many nonprofits, the funding necessary to fuel that growth is lacking. Ian's organization is applying to a research foundation that could promise millions of dollars in funding. However, before Ian can apply, the foundation requires a formal evaluation of the group's organizational success, which must be conducted by a third party.

The foundation requires one of the following experiments:

1) Randomized control experiment: This type of experiment is the most scientifically valid because it allows the greatest reliability of statistical estimates of treatment effects. In the case of Ian's organization, half of a group of eligible students would be randomly selected to do the college prep program while the other half not do the program but would still be tracked. If Ian selects this method, his group would receive significantly more funding because the method is more "scientifically valid.” On the other hand, this poses an ethical dilemma because it would involve actively withholding services from half of the eligible students who would otherwise be selected.

2) Quasi experiment: This type of experiment is an observation-based study that measures the causal impact of an intervention on a target population.  It does not require random assignment of students into treatment and control groups. All the students at a partner school would be admitted to the program, and the experiment results and statistics would be compared to historical averages of the school district, mitigating the ethical concerns raises in the randomized control experiment. However, if Ian selects this option, there will be less funding available for the program, negatively affecting the number of students that the program can reach in the future.

What should Ian do?

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