ETHICS IN ACTION

1. ETHICS IN ACTION March 2009 Dianne Lister, LL.B., CFRE Chair, Ethics Committee Association of Fundraising Professionals

2. What is Ethical Fundraising & Why Is There A Code? • NSFR – June 21, 1960 • Founders: Benjamin Sklar, William Simms & Harry Rosen • Code of Ethics & Representation of the Fundraising Profession • Three C’s for the Profession • Curriculum, Credential and Code

3. Goal of the Code • Goal is education, not sanctions • Workplace principles and standards • Avoidance of government regulation

4. Effective Ethics Codes • Those subject to the Code must feel “ownership” of it • Leaders must be models of adherence to the Code • The Code must govern behavior on a daily basis • One’s colleagues must refer to the code when assessing personal performance • Those subject to the Code must be disciplined based on the Code • Everyone subject to the Code must be willing to help enforce the Code by reporting violations to the enforcement body – the Ethics Committee

5. Role of AFP Ethics Committee • Educate members, other professionals, and the public about the Code and Standards • Educate members about ethical issues within the profession • Encourage compliance with the Code • Receive and respond to queries and complaints concerning the Code and practices within the profession and sector

6. Role of AFP Ethics Committee • Maintain confidentiality about queries, complaints and hearings • Effect resolution through education and persuasion whenever possible • Sustain acute awareness of the implications of committee action on members, complainants, philanthropy, AFP, the profession and the public • Provide fair and responsible hearing – due process – to both complainant and individual alleged to be in violation of the Code

7. Role of AFP Ethics Committee • Render judgment based on facts presented • Apply sanctions fairly and consistently based on board approved policy enforcement precedents • Function as resource to AFP and its members, and to the public in matters of ethical behavior • Develop and recommend standards that address evolving issues affecting ethics within the field

8. Role of AFP Ethics Committee • Recommend candidates for consideration as members of the committee • Act as complainant when necessary • Act as role models for adherence to the Code • Maintain as much independence within AFP as necessary for objectivity

9. Enforcement Process • Anyone (member or non-member) may lodge an ethics query for guidance about a proposed practice, transaction, or behavior relating to the Code • Anyone may file a complaint alleging possible violation of the Code; Ethics Committee may also act as complainant • Committee must have jurisdiction to proceed – alleged violator must be a member of AFP • Member may not escape jurisdiction by resigning • Complainant must agree to cooperate during the enforcement process

10. Enforcement Process • Valid complaint generates notice to member and commencement of investigation • During investigation member may agree to resolve issues underlying complaint without a formal hearing • If misconduct is sufficiently severe or habitual, matter presented to full committee to determine if formal hearing is warranted • Judge advocate and hearing panel appointed from committee, volunteers (may include former committee members, directors, other AFP members)

11. Enforcement Process • Hearing purposes: (1) determine if a violation of the Code has occurred; (2) if so, appropriate sanction • Hearing is quasi-judicial (witnesses, evidence, counsel) • All proceedings are closed (confidential) • Decision of the hearing panel may be appealed to Executive Committee of AFP board • No hearing on appeal; review of record of proceedings and respondent’s appeal document

12. Enforcement Process - Sanctions • Reprimand – formal written “rebuke” • Censure – “a more serious (written) rebuke” including prohibition on holding any AFP office (chapter or association) for one year • Suspension – exclusion from membership for a stated period which may include specified conditions • Revocation of membership – permanent expulsion from AFP and revocation of AFP-sponsored certification; includes written notification to all AFP members and publication in Advancing Philanthropy and Chronicle of Philanthropy

13. Enforcement Process • Ethics is a matter for consideration during the course of even the most “routine” transactions • Just because it’s “legal” doesn’t mean it’s ethical • Sometimes none of the choices is “wrong” – you must just choose the one that is most right

14. Enforcement Process • The Code and formal procedures for enforcement are located online at: www.afpnet.org/ethics/ • Complaint forms and filing procedures also online • Questions?

15. Changes to the Code • Code of Ethics amended in 2007 to allow for-profit organizations to fall under the Code’s standards • Will allow for greater promulgation and use of the Code throughout the profession

16. Ethical Aspects of Fundraising • Selected Standards • Standard #3: Members shall effectively disclose all potential and actual conflicts of interest; such disclosure does not imply ethical impropriety

17. Ethical Aspects of Fundraising • Standard #3: Ethical Behavior • Disclosing any formal relationship you have with a donor • Establishing in advance the extent to which your employer will permit you to engage in outside consulting • Refusing to accept appointment as executor or personal representative of a donor’s estate

18. Ethical Aspects of Fundraising • Standard #3: Unethical Behavior • Failing to report to your employer that you are the beneficiary of a donor’s estate plan • Holding an interest in a vendor that provides services to your employer without reporting your interest to your employer

19. Ethical Aspects of Fundraising • Selected Standards • Standard #4: Members shall not exploit any relationship with a donor, prospect, volunteer or employee for the benefit of the member or the member’s organization

20. Ethical Aspects of Fundraising • Standard #4: Ethical Behavior • Encouraging a donor or prospect to seek independent professional advice when the donor is considering including your organization in the donor’s estate plan • Encouraging a donor or prospect to inform family members of an intent to include your organization in the donor’s gift plans

21. Ethical Aspects of Fundraising • Standard #4: Unethical Behavior • Influencing a donor or prospect so that the member may personally benefit • Manipulating a donor or prospect who is vulnerable because of age, handicap, illness or emotional or physical impairment or dependence so as to benefit you or your organization.

22. Ethical Aspects of Fundraising • Standard #4: Unethical Behavior • Accepting a gift of more than token (i.e., $10) value from donor who became known to you as a consequence of your current or past employment • Failing to provide regular (at least annual) information concerning the status and procedure to change or cancel automatic or pre-authorized funds transfer programs

23. Ethical Aspects of Fundraising • Selected Standards • Standard #18: Members shall adhere to the principle that all donor and prospect information created by, or on behalf of, an organization is the property of that organization and shall not be transferred or utilized except on behalf of that organization

24. Ethical Aspects of Fundraising • Standard #18: Ethical Behavior • You never in any way or form remove information from the possession of your employer without their express permission • You refuse to provide a board member with a list of donors to your organization unless there is a clear and present need for such disclosure

25. Ethical Aspects of Fundraising • Selected Standards • Standard #21: Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees

26. Ethical Aspects of Fundraising • Selected Standards • Standard #21 (con’t): Business members must refrain from receiving compensation from third parties derived from products or services for a client without disclosing that third-party compensation to the client (for example, volume rebates from vendors to business members).

27. Ethical Aspects of Fundraising • Standard #21: Ethical Behavior • Members shall accept salaried compensation or a fee for service arrangement

28. Ethical Aspects of Fundraising • Standard #12: Unethical Behavior • Accepting percentage-based compensation because an organization lacks sufficient budget, with the expectation that such will be converted to salary or fee when funds are available • Accepting a compensation package in which a part is salary or fee and the balance is made up of a percentage of the funds raised

29. Ethical Aspects of Fundraising • Selected Standards • Standard #22: Members may accept performance-based compensation, such as bonuses, provided such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of charitable contributions raised

30. Ethical Aspects of Fundraising • Standard #22: Ethical Behavior • Including in the criteria consideration of non-financial indicators of productivity, such as: • An increase in the number of contributors • An increase in the number of volunteers • An increase in the number of gift renewals and • An increase in the number of prospects

31. Ethical Aspects of Fundraising • Standard #22: Unethical Behavior • Accepting a bonus plan that includes in its criteria a percentage of the funds raised

32. CASE STUDY 1 • You are the Director of Development of a private school. A widower wants to make a substantial gift to the organization, but his daughter asks the organization not to accept the gift because of potential hardship for another daughter.

33. CASE STUDY 1 A. What should you do? • Keep silent about the daughter’s request and accept the gift. • Decline the gift. • Request permission from the daughter to inform the widower of her request. • Accept the gift and encourage the daughter to talk with her father.

34. CASE STUDY 1 B. Suppose the daughter asked you to postpone accepting the gift until she can talk with her father. Would it be ethical to decline her request? • Yes • No • It depends • Don’t know

35. CASE STUDY 1 C. Suppose the widower resides in a nursing home, and you know he is lonely and in failing health. Would it be ethical to comply with the daughter’s request to reject the gift? • Yes • No • It depends • Don’t know

36. CASE STUDY 2 • Suppose an elderly major donor has bought you a gold ring as a thank-you gift for helping arrange a planned gift of $1 million to your organization • You know the donor, and know that the donor would probably be offended if you turned down the gift. According to the AFP Code, what should you do?

37. CASE STUDY 2 • Thank the donor and explain that the AFP Code forbids accepting gifts from donors • Thank the donor and explain that AFP Code requires that all gifts must be disclosed to the CEO, the board, and you may not be able to accept. • Accept the gift. • Use your best judgement. The Code is silent on the subject. • Other (specify)

38. CASE STUDY 3 • You are the Vice-President for Advancement and Alumni Affairs of a small college. After many months of careful cultivation, you succeed in obtaining a pledge from a famous alumnus for the largest gift in the college’s history.

39. CASE STUDY 3 • The only catch is, the alumnus insists that the college put his name on a building that was named for a previous donor (now deceased) as a condition of the alumnus’ gift. You try to persuade the new donor to change his/her mind but the donor is insistent.

40. CASE STUDY 3 Should you refuse the gift? • Yes • No • It depends • Don’t know

41. CASE STUDY 3 • Suppose the new donor agrees to a proposal to name the building jointly for both donors. Would this arrangement be permissible under the “donor consent” standard of the AFP Code? • Yes • No • It depends • Don’t know

42. CASE STUDY 3 • Suppose the College President and the Board of Trustees vote to rename the building for the new donor. Should you resign? • Yes • No • It depends • Don’t know

43. THANK YOU, Dianne Lister, LL.B., CFRE Vice-President External Relations & Advancement Trent University, Canada diannelister@trentu.ca 705-748-1011 ext. 7207