ETHICS

1. ETHICS Nonprofit Management Beth Gazley Indiana University School of Public & Environmental Affairs

3. Today’s objectives • What are ethics? Why are ethics important for nonprofits? • Core values of nonprofits • How to walk the talk? • Develop core values for your nonprofit

4. Professional ethics in NPM • Moral standards, principles, rules of conduct • Core values that define the sector • A reflection of the sector’s religious roots • An expectation that is both self-imposed and externally imposed • An underlying element in a mission statement • No single standard…

5. …but one goal: • And lots of potential secondary benefits: • Quicker decisions • More consistent decisions • Common understanding of org’s value frameworks • Publicly defensible decisions public trust

6. The “social contract” perspective • Some professions (medicine, law, social work, nonprofit fundraising, financial accounting) enjoy certain professional privileges: • control over training, standards of conduct, hiring qualifications for members of their profession • In return, the public expects these professions to develop their own codes of conduct or standards of moral behavior. This lessons the burden on the public to regulate these professions.

7. The “social contract” perspective • Nonprofit sector fits this mold because it is largely self-regulated • The nonprofit “social contract” is the privilege of tax exemption and the right to solicit tax-deductible gifts in exchange for accountability to the public • The price of distrust: Where there is a public perception that this social contract has failed is where we see the most concern about, and public regulation of nonprofits.

8. “Market failure” and “contract failure” • Willing to put the public good and the welfare of others above their own private interests • “Non-distribution constraint” (Hansmann, 1987) • Volunteering: “vote with their feet”

9. “Whenever any nonprofit is found to have abused its trusted position, the reputation of trustworthy nonprofits also suffers.” (Weisbrod, 1988, p.13)

10. Ethical standards are different than legalstandards

11. Does the nonprofit sector have core values? Thom Jeavons: Honesty, accountability, openness/ transparency, service, charity (“caring”) Independent Sector: Commitment beyond self, commitment beyond the law, respect for the worth and dignity of individuals, tolerance, diversity and social justice, accountability to the public, commitment to the public good, responsible stewardship of resources.

12. Organizations may also define additional core values aligned with their own particular mission: Examples: • Respect for life, healthy behavior, prevention, primum non nocere(medicine, pro-life, animal welfare) • Confidentiality, self-sacrifice(medical care, counseling, social work, emergency response) • Informed consent(research) • Obedience, self-sacrifice, courage (law enforcement, national defense) • Sustainable living, ecological balance(environmental management, forestry) • Human dignity(developmental disabilities, geriatric services) • Many religion-based codes of conduct….

13. When ethical frameworks collide • “Public morality vs. private morality” • Professional ethics • Personal ethics • Religious, spiritual ethics • Cultural, social ethics • Organizational ethics • Political ethics

14. Implementing core values in a nonprofit organization

15. Demonstrating “integrity” • Consistency between mission, program priorities and performance • Do spending decisions serve the mission? • Consistency in written materials, messages • Do communications accurately relay the purpose and achievements of the organization?

16. Demonstrating “openness” • Content: What organizational documents (bylaws, board membership, strategic plan, IRS forms) do stakeholders have access to? • Access: How are they made available? (website? By request? Or proactively?) • Timing: How and when are organizational activities and goals communicated to stakeholders?

17. Demonstrating “accountability” • Organization is “answerable” to stakeholders, particularly the public • Are there opportunities for all stakeholders to participate in governance and planning activities? • How does the organization handle media inquiries? Public criticism? • Is organization pro-active or reactive in addressing internal problems? • Does organization have whistleblower policy?

18. Demonstrating “service” • Organization is service-oriented • Does organization provide training and professional development to employees to support a service mission? • Can organization demonstrate that it is serving the public good? • Does organization make it easy for clients to obtain services?

19. Demonstrating “charity” • Organizations dependent on the generosity of others should display generosity to those they serve • Does organization provide services in a more caring and personal way than a for-profit agency would? • Are organizational goals aimed at building a more caring society? • How are employees treated? Volunteers???

20. Core values can be addressed: • Through the actions and behavior of organizational leaders • In bylaws • In written board policies regarding conflicts of interest and how to avoid them • Through organizational systems and structures • As mission statement is created • As personnel policies are created • As standards for client service are created • In fundraising practices • In financial reporting practices

21. Identifying core values in a mission statementMother Hubbard’s Cupboard Food PantryBloomington INhttp://mhcfoodpantry.org/

22. Implementing core values in personnel policies Examples: Support for employee training and development “Family friendly” policies for employees Policies or programs that support diversity and cultural awareness Support for “pay equity” and a fair living wage

23. Implementing core values in standards for client service Examples: Policies for fair treatment of clients Clients understand how decisions are made Client service is oriented toward self-sufficiency and self-determination rather than dependency Clients are treated with dignity and respect

24. Implementing core values in fundraising Examples: Donor Bill of Rights Internal codes of conduct Professional codes of conduct (e.g., Association of Fundraising Professionals)

25. Implementing core values in financial reporting Examples: Annual audits Making audits easily available to public Application of GAAP (even when not required) Transparency

26. Black, White, or Gray: How are Your Fundraising Ethics? Is this advice from this Guidestar blogger SUFFICIENT to give a board and staff guidance on practicing successful ethics? https://trust.guidestar.org/blog/2014/04/18/black-white-or-gray-how-are-your-fundraising-ethics/

27. Ethical decisions: How do you decide? • The “smell” test, “Mom” test, “front page headline” test • Consistency with organizational values • Consistency with internal policies • Consistency with professional policies • Consistency with legal framework

28. Good questions to ask yourself • Who is affected? How are they affected? • What are the core values on which my agency depends? • What are the alternatives? • What is the price of doing nothing? What is the price of acting? • Reciprocity: Would I want this done to myself? • Equity: Will it work for everyone?

29. Other voices “The way we think about charity is dead wrong” https://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong

30. You decide… • Example: a food bank produces a fundraising letter based on stories of families in need. The stories are composites of stories of many people, put together for maximum effect. The pictures are not photos of actual clients, but were purchased from a photo bank. • What are the ethics of this practice? Do you agree?

31. You decide… • Example: A group devoted to peace and social justice employs recent college graduates to raise money door-to-door. The canvassers are paid low wages with no benefits. • What are the ethics of this practice? Do you agree?

32. You decide… • Example: At a conference, the keynote speaker is a medical ethicist who displays photos of prisoner abuse at Abu Ghraib, Iraq to illustrate an important point about whistleblowing. • What are the possible perspectives on whether it’s ethical to use these photos?

33. You decide… • Example: You give money to a US Senate candidate, who loses the election and then goes on to lead a nonprofit organization. Soon after, you start receiving gift solicitations from the nonprofit. • What are the possible perspectives on whether it’s ethical to use a donor’s name in this way?

34. Conclusion:Creating an ethical climate • Organizational ethics is holistic • An ethical climate has systems in place at all organizational levels to address ethical dilemmas and provide guidance to staff • Organizational ethics is a process • Ethical decisions are rarely black and white, and values will often conflict. A system is required for resolving dilemmas, and the decision making process will often have value in itself • People in ethical climates “walk the talk” • Ethical climates follow through; “ethics” is more than a statement on a piece of paper

35. Team discussion • According to what values will you operate? • How will they be reflected in your mission statement? • How will you implement those values in daily organizational practice? • In client services? • In personnel management? • In fundraising? • In financial management?

36. Resource: Code of ethics for nonprofits National Council of Nonprofits • https://www.councilofnonprofits.org/tools-resources/code-of-ethics-nonprofits Association of Fundraising Professionals • https://www.afpnet.org/Ethics/?&navItemNumber=503 Independent Sector • https://www.independentsector.org/programs/principles-for-good-governance-and-ethical-practice/