Though many nonprofit organizations have been founded on principles and ideals, they are not immune to common ethics issues.
In his book, “Ethics in Nonprofit Organizations,” Gary M. Grobman lays out a wide variety of scenarios and practice tools for nonprofit boards and staffs to take into account, along with three general ethics issues to keep in mind.
* To justify their tax exemptions and other special benefits, nonprofit organizations must be accountable to the public, funders and the populations they serve. Included in accountability is the concept that organizations exist with the sole purpose to make advancements in their chosen missions. While the battle to stay above water might sometimes test the core values of an organization, a board’s ultimate responsibility is to make sure those values are not compromised.
* Any time organizational resources are directed to the private interests of an individual or individuals with influence over decisions, a conflict of interest could occur. While it might ultimately be appropriate to, for instance, accept a board member’s firm’s offer to provide service at cost, it is important to have procedures in place to address such scenarios. In general, the safest approach is to have an organizational policy that states that board members may not profit from the organization.
* While nonprofits have a legal obligation to accurately disclose fundraising costs on IRS Form 990s, careful thought must be given to further, non-required disclosures. For instance, organizations might be faced with difficult decisions when deciding whether to disclose fundraising costs at the time of solicitation as, in some cases, donors might not give if they knew of such costs.