A Lesson for Nonprofits: The Rise and Fall of Elizabeth Holmes and Theranos
If you have listened to enough episodes of the Fundraising HayDay podcast, you’ll know my cohost Kimberly and I are fascinated by grant fraud. Don’t get me wrong. We hate that it ever happens. It is more like we are floored by the things that individuals and organizations try to get away with, especially when you consider all that they put at risk.
During a break at one of my grant management workshops, a student asked me if I had ever read the book, Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. I had not, so he shared that it was an in-depth look at one of Silicon Valley’s biggest scandals. I added it to my TBR list. (That’s “To Be Read” for the acronym challenged.) Shortly thereafter I was flipping through movie choices on an airplane and saw the documentary, The Inventor: Out for Blood in Silicon Valley. Assuming it was the same story, I took a watch. And then I immediately started reading the book.
Holy cow! I mean, what else do you say about a story involving lies, fraud, intimidation, misrepresentation, threats, and greed, seemingly at the hands of two individuals running a billion-dollar biotech startup company? The whole time I was watching, I could not help but draw parallels to life between this business and substandard, unethical operations found in some nonprofits and government agencies.
In a nutshell, Elizabeth Holmes dreamt up a simpler, cheaper, and less invasive means to draw blood for testing of a whole host of diseases. At the age of 19 she dropped out of Stanford, created her company (later named Theranos), built an impressive board of directors (including Henry Kissinger, James Mattis, and Sam Nunn, to name a few), became the youngest female billionaire with a $9 billion company (including $400 million in venture capital), and had a partnership with Walgreens to implement the use of her device (the Edison), all without even a working prototype. She kept that last part to herself.
Have I mentioned this is a fascinating case study? Take a listen to Episode 1: A Lesson for Nonprofits of Season 3 of the Fundraising HayDay podcast where I draw some parallels to the nonprofit world including:
- The desire to do good and help others does not outweigh the nefarious means you take to reach that end goal.
- Not every great idea turns into a reality, just like not every project is fundable through grants. Contrary to popular belief, there is not a grant for everything.
- Honesty is ALWAYS the best policy. Get caught in a lie and funders will wonder what else you are lying about. This also hurts future funding possibilities.
- Create a grant team that questions, listens, and makes practical decisions all with the ability to dream about bigger and better programs.
- Recruit leaders to your board and organization who can balance vision with practicality and be open to ideas and information from educated employees.
- The age-old adage is true: if it sounds too good to be true, it probably is.
So many individuals get into the nonprofit and grant field to help others. It is a cause in which I totally relate. When you are entrusted with money from individual donors, corporate sponsorships, foundation awards, federal grants, and the like, you are now in charge of someone else’s money. And that means you are required to treat it with care, follow an agreed upon set of rules, and not use it for personal game or notoriety.
Elizabeth Holmes must have dropped out of Stanford before taking classes on ethics, because her investors were donating to a cause that was broken and flawed from the start as she continued to over promise and under deliver. She landed on the cover of Forbes in 2014, but after her trial, she’ll most likely land herself in jail. If you can’t get enough of that Silicon Valley gone bad stuff, watch the documentary, read the book, or even listen to the podcast, The Dropout.
Throughout Season 3 on the Fundraising HayDay Podcast we will be talking about ethics and how they play out in real world situations. We may sing occasionally and talk about pie, but we take the good stewardship of grants and donor dollars very seriously, and we hope you do too.
DH Leonard Consulting & Grant Writing Services, LLC is so excited to be season 3 sponsors for Fundraising HayDay, a podcast about grants and such. Catch up on season 1 & 2 and stay up to date on the new season here.
Don’t let grants stress you out, check out the helpful grant writing services our team has to offer here.