Here comes another turn in the ongoing saga of embattled CIT Group: billionaire investor and corporate rattler Carl Icahn, a CIT bondholder, sent a letter to the company’s board of directors today offering a $6 billion loan. According to the AP, Icahn said his loan would save the company $150 million in fees while criticizing CIT’s board for its restructuring bid, calling it a deal that favored large bondholders at the expense of small investors – and undervaluing the company.

Icahn’s proposal comes just days after CIT offered bondholders a debt swap – current debt for debt that matures at a later date as well as some stock. It also comes on the heels of last week’s announcement that CEO Jeffrey Peek would step down by the end of this year – an announcement that arrived one month after CIT said it was extending Peek’s contract until 2010.

For the past few years, Kiva, the person-to-person microlending site, has been held up as something of a poster child for social entrepreneurship. The site lets users choose an entrepreneur in a developing country and make a loan to them. This ability to personally help someone escape poverty has obvious appeal. The site has caught the eye of celebrities like Oprah Winfrey and New York Times columnist Nicholas D. Kristof with predictable results: explosive growth for Kiva. The organization has also drawn praise for being a model of Web 2.0 thinking. Kiva has built APIs so that anyone can create a mashup with its data. And it has cultivated user interaction through such sites as kivafriends.org.

Recently, though, a bit of the shine has come off. This summer the organization announced that it would allow users to make loans to borrowers in the United States. This policy change led to the formation of "Unhappy Kiva Lenders", a group of users who claimed that adding U.S. borrowers to a platform that was launched to focus on alleviating poverty in the developing world "undermined the very core" of what made Kiva special. (Of course, all lending is voluntary, so someone who doesn't want to loan to a U.S. borrower doesn't have to.)

And in just the past few weeks, the nonprofit and social entrepreneurship blogosphere has lit up with debate over what some have called Kiva's misleading marketing. In short, a Kiva user does not make a loan to a specific borrower but to a microfinance institution, which actually makes and administers the loan. In general, the borrowers posted on Kiva's site have already received their loans before their profiles are even featured. And repayments to Kiva users are not tied directly to repayments made by specific borrowers.

The twin controversies have served to illuminate several issues that all social entrepreneurs must wrestle with:

1. Truth in advertising: Kiva's practice of advertising a chance to help specific borrowers while sending funds into a general microfinance pool mirrors the standard practice among child sponsorship, alternative gift ("Give a cow"), and disaster-relief charities. They create what is essentially an illusion of person-to-person connection. Some are more transparent about it than others — and Kiva has now taken steps to make its processes more clear — but they do it for an obvious reason: people are more likely to give. This isn't just a supposition; it's been proven by psychologists and behavioral economists. Why not just make the person-to-person connection real? Because it would limit an organization's ability to be effective, and in some cases could do actual harm. So, as a social entrepreneur, where will you draw the line between a marketing campaign that is likely to appeal to donors or customers versus one that accurately explains your product, service, or operating model?
2. Truth in impact: The questions surrounding Kiva's and many other social entrepreneurs' advertising goes beyond the illusion of a donor connection. Kiva, for instance, persistently refers to the borrowers on its site as "entrepreneurs" and uses the tag line, "Loans that change lives." The reason that Kiva's inclusion of U.S. borrowers has struck a nerve with some is the feeling that neither tag applies when you're talking about U.S. recipients. But it's not just a question for and about the US: relatively few microfinance borrowers in developing countries invest long term in a business, and the impact of loans is typically positive but quite small — certainly not "life-changing." The same marketing-versus-reality question applies when we're talking about any number of socially conscious products: hybrid-vehicle gas mileage, carbon offsets, dolphin-safe tuna, and so on. In most cases, the actual positive social impact of any of them is relatively unknown. How will you manage the tension between what you hope is true about your product and what is actually proven?
3. Transparency and social media: One of the remarkable things about both Kiva controversies is that they occurred only because of Kiva's openness. Its support for kivafriends.org has helped build a platform for unhappy Kiva lenders. The proof points that shattered the person-to-person illusion were possible only because of Kiva's largely unique sharing of raw data. It remains to be seen whether the goodwill Kiva accumulated via these strategies will help it weather a storm of bad PR, or if this transparent approach ultimately hurts Kiva because the perceived gap between what users thought of Kiva and actual practice is all the greater. Any organization that pledges itself to transparency and user conversations without full commitment is likely to find those tools turned against it.

How committed are you to transparency and user engagement, and are you prepared to have public conversations about fundamental flaws in your organization?

Timothy Ogden is an executive partner at Sona Partners, and the editor in chief of Philanthropy Action, an online journal for high net worth donors.

For years HR executives have implored their colleagues to become more business savvy. The mantra has been, "if you want a seat at the strategic table, you have to speak the language of business."

Some HR departments have embraced that call to action. One large company we know identified business acumen as the second of four critical traits for its HR professionals. Other HR teams, however, have been less attuned to the problem — like our Fortune 500 client whose HR managers didn't know what the company's financial goals were and didn't even know who to ask to find out.

Where does the blame rest? Let's look at some of the factors.

Avoidance. We found that some HR folks would rather not learn about the numbers. They want to focus on the people issues in their company. But almost everything in HR intersects with numbers in some way: budgets, compensation, insurance benefits. If an HR manager doesn't understand the numbers around those issues, they probably aren't doing their job very well. Here, the blame is on the HR folks.

Perception. Is it really true that most human resource professionals can't speak the language of business? Or is that simply an outdated perception? We've found that the problem is not universal; we've worked with many HR folks who understand the financial statements and key metrics of their companies and are champions of furthering financial literacy in the organization. Here, the blame is on the business side, not them.

Assumptions. When clients tell us that they don't ask everyone in the organization to listen to their earnings call, because they won't understand it, then we know there are assumptions being made about how smart people are. Here, we put the blame on the C-Suite. It is part of their job to help change expectations and assumptions within the company.

Trust. Sharing financial data with employees means that you trust them to use the information appropriately. In recent years we've had several companies call us to train their employees, but say that they are reluctant to use their own financial statements as the teaching tool. How can you teach your employees about financial statements, and then tell them, sorry, you can't see ours? That sends the wrong message.

We know that HR professionals can become financially intelligent and, in the process, set a great example for the rest of their organization.

Do you work in HR or on the business side? How do you see this issue?

Weekend drama: Formula 1, NFL, Sunday talk shows? Forget it: this weekend, the drama was in the econoblogsphere — where the new book SuperFreakonomics inspired a mass freak-out. Freakonomists Steven D. Levitt and Stephen J. Dubner's chapter on climate change met furious charges of irresponsible journalism and deliberate contrarianism from economists, climate scientists, and journalists alike.

I think there's a deeper one. The real problem with the Freakonomics school of thought is this: it's economics 1.0 applied to the entire natural, social, and political world. But what today's world demands is a more relevant, accurate, and better-informed economics: economics 2.0.

The challenge today's economists face isn't applying the same old thinking — models, assumptions, and logic — everywhere: it is building fundamental better thinking in the first place.

And that's the problem with Freakonomics school of thought. It's interesting, and it's cute. But it's built on assumptions that are already perhaps obsolete, and need deep revision. So can it really help us build a better world?

As I wrote last week, one of the fundamental problems with econ is this: "because it seeks to describe an ideal world, much of it has little relevance in terms of helping build a better one." Take, for example, the famous observation in the first Freakonomics book that legalizing abortion led to a decrease in crime a generation later. What policy recommendations should we infer from this "relationship"? Should we strive to (ahem) minimize birth rates among the poor? Or should we shift to a Philip K Dickian precrime model, because we now "know" that children of poor mothers are likelier to be criminals? It's a slippery slope, which leads ineluctably to criminalization or eugenics.

I enjoyed Freakonomics, as I enjoyed the fifty or so imitators that followed. Yet, they are to economics what Friends is to culture. And ultimately, they represent the trivialization of a great system of thought. Instead of improving that system of thought, they apply already questionable assumptions to what are socially the lowest-value uses.

Those assumptions are what demand reinvention — not broader application. Economics needs fundamental reinvention — not trivialization. That's going to take a new era of geeking out, getting philosophical, and re-examining the basic assumptions on which econ is founded. Freaking out is fun, but getting constructive is where the future of economics lies.