Philanthropy makes the work of nonprofits possible. Trust makes philanthropy possible. Ethics makes trust possible and the ethical cycle continues around and around.
Robbe Healey, past chair of the Association of Fundraising Professionals (AFP) and fundraising consultant Roberto Soto-Acosta discussed ethical dilemmas facing fundraising and worked through scenarios during a session at the recent AFP international fundraising conference in Boston.
Donors are demanding accountability and transparency, Healey said. A lack of trust of organizations is a top reason why prospective donors do not give. In addition to appeasing donors, proper ethics are a part of sound administration and good stewardship, according to Healey.
Conflicts between competing priorities and questions under an array of different lights add challenges to ethical practices. Healey and Soto-Acosta ran through seven common dilemmas organizations face.
1. Tainted money refers to a conflict between an organization’s mission and the source of funding, according to Soto-Acosta. An organization focused on combating drunk driving would (probably) not accept a donation from a liquor distributor, for instance. A healthy-living organization might similarly find a conflict should it be offered funding from a fast-food chain;
2. Compensation. The compensation of fundraisers or consultants should never be tied to a percentage of funds raised, Soto-Acosta said. To make income on a percentage of funds raised opens the doors for corruption and other motivators. Bonuses are not a dilemma provided that they are not tied directly to money raised, Soto-Acosta said;
3. Donors’ personal information should remain with an organization, not a fundraiser. Fundraisers’ responsibility to donors is to not share information, Soto-Acosta said. Having a written policy is advisable. Lists should consist only of donors who have permitted their inclusion on the list;
4. Even the appearance of impropriety can be a concern, Healey said. Healey works with seniors, with facility inhabitants serving as both donor and client. The fact that her organization has private information on seniors is a risk, she said, and information cannot be shared. A smart fundraiser in such a situation should work to become acquainted with every member of the community, as opposed to those on those living in larger units;
5. Proper stewardship including assurance that donors’ funding will be used in accordance to their wishes is vital. A request to return funding is unusual among individual donors, but it important to quickly disclose when funds are not able to be used for their intended purpose, Healey said. Donors are often understanding of unforeseen changes provided that organizations are upfront about them;
6. Honesty and transparency with donors is a key to a healthy relationship. Promote careful decision making among donors by providing complete and accurate information; and,
7. Conflicts of interest. Business transactions between board members and the organization, for instance, should be addressed openly and undergo the same rules and regulations as other business transactions, according to Healey. Potential conflicts should be brought to light immediately and acknowledgments and recusals should be reflected in board minutes.
Healey advised that ethics be considered in even the most routine transactions and reminded attendees that just because an act isn’t illegal, does not mean that it is smart or ethical. Fundraisers should be organization’s top promoter of ethical behavior and the promotion of policies such as a code of ethics, conflict-of-interest policy and a donor bill of rights are advisable.
Toward the end of the session, Healey and Soto-Acosta ran through two potential scenarios:
A. A prominent donor calls just prior to April 15 and says that a tax advisor has recommended making another donation. The donor offers to send a $100,000 check and has asked for an acknowledgment dated prior to Dec. 31.
Letting the donor know that accepting a donation under these terms is not acceptable is important, and involving the CEO is recommended. Should the CEO side with the donor, the fundraiser could seek assistance elsewhere, either with the CFO or an ally on staff.
B. A fundraiser develops a strong relationship with an older couple, but then leaves to join another organization. Several months later, the older couple calls and says that they would like to revoke their original trust at the prior organization to benefit the fundraiser’s current nonprofit. The issue is, at its core, a matter of intellectual property, Healey said. The offer should be rejected as it violates standards. There is nothing inherently wrong, however, with accepting a gift from the couple provided they do not revoke the gift to the prior institution.
