Ethics and Philanthropy

Partnership for Philanthropic Planning San Antonio presentation on ethics in early 2013, which inspired me to write
I took this during an excellent presentation on ethical dilemmas hosted by the Partnership for Philanthropic Planning, San Antonio in 2013.

The economic challenges of recent years, the increase in the overall number of nonprofit organizations, the increased involvement of professional advisors in philanthropic decision-making, and the continued scrutiny of nonprofit organizations in terms of their worthiness for donations requires our sector to demonstrate more fully the merits of our financial accounting, our commitments to diversity and equity, and the ethical management of charitable donations.

A few years ago, the National Council of Nonprofits shared the following statement about the situation we face continually.

“The greatest threat to the not-for-profit sector is the betrayal of public trust, the disappointment of public confidence. Virtually all knowledgeable observers of the not-for-profit scene believe that an overwhelming proportion of not-for-profits are honorably run … that admirable context, however, does not provide much protection to the sector when a sequence of highly publicized disgraceful not-for-profit misdeeds occurs.”

– Joel Fleishman, Scholar, Author, Professor of Law and Public Policy, and Director of the Heyman Center on Ethics, Public Policy and the Professions, Duke University

Those outside the nonprofit fundraising profession are often ignorant of the ethical standards to which our sector adheres. For instance, I am asked surprisingly often if I will tackle a nonprofit fundraising project and be paid a percentage of the total funds raised. But the fact is, doing so could inspire fundraisers to focus on personal gain rather than on the good of the nonprofit’s mission and funding needs. It also puts the burden of success or failure on the fundraiser or fundraising team, rather than on the nonprofit asking for donations. That is a joint responsibility!

Candid notes in, “Where can I learn about ethics in fundraising?”:

“Successfully raising funds and donations from private institutions, government or individuals requires a certain amount of experience and skill, not the least of which is a firm understanding, and a consistent practice of, raising funds in a responsible ethical manner.

GuideStar, a division of Candid, is a favorite resource for information about nonprofit organizations and nonprofit funding institutions like foundations. I frequently check to see if the nonprofits with which I work and volunteer are present on GuideStar, and if they have taken the time to complete their respective free profiles (board member list, budgetary information, tax returns and the like). “GuideStar Nonprofit Profiles help the sector take a leap forward from data and information about charities to powerful knowledge and insight to help us make informed decisions.”

One nice thing about securing an official Seal from GuideStar is that it costs your organization nothing. The process of completing your profile fully is not about how much money your nonprofit raises, how large you are and the like. It is about how professionally you operate and how transparent you are to the public. Nonprofits large and small may equally secure the gold and platinum seals. And once you do, I urge nonprofits to post those seals on their websites as a badge denoting ethical behavior.

“There is evidence that taking time to update can be a good investment—independent research has linked having a Seal to a 53 percent increase in contributions. If your organization already has a GuideStar profile, then yes, you can and should earn a Seal of Transparency. Earning a Bronze Seal takes less than five minutes.”

As an aside, I do not rank nonprofits myself using charity rating platforms. Those ranking systems operate with formulas determined by others. They seek to determine how effective and efficient nonprofits are through their own lens. If you follow them strictly, then you are simply letting someone else’s standards influence your decision making. Rating platforms can be a good general guide, but nothing beats reviewing a tax return on GuideStar.

The Better Business Bureau (BBB) Wise Giving Alliance reports regularly on donor trust. Putting yourself in the shoes of donors is a wise exercise when considering how your nonprofit presents itself online and how it interacts with donors.

“Our findings show that almost half of adult Americans (47%) are unclear about what “charity impact” means. While it has become a common assumption that donors seek highly impactful organizations, our survey results show that this is an incomplete picture. Also, while individual donors care about immediate results and volume of programs, they attribute higher importance to long-term results and depth. These results are based on an electronic survey of more than 2,100 adults across the United States and more than 1,000 adults in Canada conducted during December 2020.”

You might also enjoy reading a more informal discussion about ethical behavior in my popular article, “Cowboy Ethics: Ten Principles to Live By.” I continue to think having a nonprofit plenary speech or two during conferences about nonprofit ethics through the lens of “Cowboy Ethics” would be both enjoyable and enlightening.

I have also found that some nonprofit professional associations encourage people to join and pay an annual fee that involves having members sign a statement of ethical behavior. I have on several occasions heard nonprofit fundraisers say they believe they must join in order to be considered ethical in the eyes of the public, and to make a firm statement that they adhere to ethical standards.

After several decades in the field, this seems manipulative. Fees to join these groups can be expensive, and that is tough on the budgets of independent professionals, startups and smaller nonprofits. And if members sign the statement, there is no guarantee they actually read and absorb the information contained in it. They would seem to have purchased “good ethics,” which of course is not possible.

But there are other ways to demonstrate ethical behavior as noted in this article and elsewhere on Carolyn’s Nonprofit Blog. Why not create a special page on your website outlining your nonprofit’s commitment to transparency and to ethical behavior when it comes to how it operates and manages donors, and private donor information? Why not secure the GuideStar Seal and affix it to your website? These are just a few of the ways you can gain credibility while not allying yourself strictly with one nonprofit support organization or another.

I am also an advocate for a full ethics and ethical dilemma “chapter” in the CFRE examination for nonprofit fundraising certification, along with other more contemporary updates to the exam. We need all nonprofit fundraisers to be fully aware of ethical challenges and to learn how to cope with them appropriately.

In closing …

“If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing.”

– Henry Kravis, American businessman (b. 1944)

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