From serving clients to raising funds to managing staff, running a nonprofit can be difficult even before factoring in ethics and conflict-of-interest issues.
In “Ethics in Nonprofit Organizations,” Gary M. Grobman provides scenarios and in-depth cases for managers and board members to learn from, along with six tips to keep in mind when trying to put strong ethics to practice. Those tips include:
Avoiding all gray areas and any actions that could be perceived as a conflict of interest is a means of holding one and one’s organization to high ethical standards.
When in doubt, ask a simple question: “How would I feel if my family and friends read about this on the front page of the daily newspaper?”
Pursue salary surveys published by state associations (and other independent studies) that represent nonprofits and determine whether any organizational salaries are unreasonable by comparison.
Even if a board member offers to provide a product or service at cost, organizations should receive at least three bids for anything worth $1,000 or more. In general, business relationships with the organization should be made “at arm’s length.”
Organization managers and board members might consider adopting a formal conflict-of-interest policy. A model policy is available on the IRS’ Form 1023.
To prevent a few organizations from sullying the reputation of the entire sector, nonprofits managers should support efforts to improve disclosure and accountability, including cooperating with expanded enforcement of laws governing the sector.