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  Right vs. Right Potpourri

Canadian FundRaiserOften, the choice comes down to right vs right

By virtue of their missions, nonprofits are often held to an even higher (some might argue, a different) standard of ethical performance than for-profit corporations. While the overwhelming majority of nonprofit leaders, both staff and volunteers, are persons of unimpeachable integrity, on occasion these good people make bad choices simply because they are unprepared to deal with the ethical complexities of their actions.

Over the years, I’ve observed what I’ve come to call the “seven ethical dilemmas of fundraising”. These dilemmas are not obstacles to raising money, but they are issues about which all nonprofit leaders, governing boards, fundraisers and donors need to be aware.

#1: Tainted money – This concerns conflict between an organization’s mission and the source of the contributed funds. For example, Mothers Against Drunk Driving would not accept money from Anheuser-Busch, because the company derives profits from the sale of alcohol. But an art museum or a historical society may have no issues with a gift from the same benefactor. An organization’s mission always needs to be top-of-mind with its board and fundraising staff and never compromised.

#2: Compensation – Nearly all associations of fundraisers and fundraising consultants have prohibitions in their codes of ethics against paying finder’s fees and against fundraisers working on a commission basis. Nonetheless, the practice can be found, especially in small organizations that see this approach as “risk-free”. Compensation for fundraisers and fundraising consultants should never be connected to the amount of funds raised. In the spirit of philanthropy, fundraisers are motivated by advancing the mission of their organizations, not by earning a percentage of funds raised.

Guard personal information

#3: Privacy – Organizations should neither obtain nor retain nonessential and highly personal information about donors in their paper or electronic files. Also, care must be taken to ensure that development staff members do not take information about donors with them when they change jobs. Nonprofits need to be methodical stewards of personal information in an era where privacy concerns rightly run rampant.

#4: Stewardship – Nonprofits must assure the public that the funds the organization raises are indeed being used for the purposes for which they were given. Nonprofits must honour the spirit as well as the letter of donor intentions.

#5: Honesty and full disclosure – Nonprofits must give people enough information to make informed giving decisions, not “sugarcoat” their organization’s stories to make them more attractive to a wider array of donors. Honesty with donors is the essential foundation of healthy benefactor relations.

#6: Conflicts of interest – Nonprofit organizations that do business with members of their governing boards must ensure that such transactions are completely transparent and are subject to the same rules (eg, bidding process) as all other transactions. Other areas with potential for concern include fundraisers acting as executors for estates of their benefactors.

#7: The appearance of impropriety – There are many things that fundraisers can do that are legal, but are unethical, such as benefitting personally from a benefactor’s estate gift, bequest or outright gift. The profession views such behaviour negatively.

Seldom see right vs wrong

Awareness of the existence of these dilemmas can be the most important step in avoiding unethical behavior. There are some ethical situations when choices are clear-cut – when there is either a right or a wrong decision that can be made. However, there is an ethical dilemma inherent in choosing between two rights.

Using tainted money as an example: a school can benefit from a gift of $1 million to upgrade its technology, but the prospective benefactor is a convicted felon. Is the nature of the felony relevant? If the person has served a sentence and is rehabilitated, does that matter?

Nonprofit institutions need to determine the values that are important to them (eg, honesty, integrity, fairness, loyalty, compliance with the law, accountability, etc). Whatever values they choose must be regarded as fundamental, but none of them is absolute. Ethical dilemmas will arise when the organization has to make a decision between two or more competing institutional values.

Making sound ethical decisions typically involves seeking counsel and perspective from other people prior to making such a decision. Practising "Lone Ranger" ethics can be dangerous.

This presentation was given by Tim Burchill, Executive Director, the Hendrickson Institute for Ethical Leadership, St. Mary’s University of Minnesota, to the International Fundraising Conference of the Association of Fundraising Professionals; for further information: 507/452-4430.

Canadian FundRaiser
Canadian FundRaiserSince 1991, the Canadian FundRaiser™ newsletter has been updating nonprofit managers twice-monthly on news, trends, tips and analysis of developments in the fields of fundraising and nonprofit management.

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