Mischief, Scandal and Bad Behavior Ethics in the Nonprofit Sector

1. Mischief, Scandal and Bad Behavior Ethics in the Nonprofit Sector

2. John A. Scola, CFRE • Served for 35 years in the nonprofit sector in Texas, Utah, California and Arizona • Named AFP Greater Arizona Chapter’s “Outstanding Fundraising Executive” in 2002 • Former Board Member of International Catholic Stewardship Council • Coached youth sports for over 26 years • No felony convictions

3. Personal Choices • Good or Bad • Right or Wrong • Ethical or Unethical

4. Warm Up

5. Respond at: http://pollev.com/jscola013ORTEXT: jscola013 to 22333

8. Tender morsels of free-range chicken with wheat crust, served with pomme frites and a sweetened tomato reduction

10. Foundation

11. What is Ethics? Ethics involves learning what is right and wrong, good from evil, proper from improper --- and then doing the right thing.

12. Ethical decision-making can be complicated by: • Obeying laws • Knowing the right course of action but being tempted to take a different action • Making decisions where there is no clear good or evil, right or wrong, but rather a struggle to determine which is the best choice between competing options

13. When a fundraising action is illegal, the fact that it’s unethical becomes secondary

14. When faced with an ethical dilemma you have three choices: Boldly confront the dilemma and seek solutions Ignore the dilemma Look for a new job

15. Simple Tests

16. A Quick Three-Step Process to Assess Your Ethical Position • The Stomach Test • The Grandmother Test • The 60-Minute Test

17. Practice Dilemmas

22. Knowing the Stakes

23. Who Creates and Shares in Ethical Dilemmas? • You, as an individual • The agency’s staff and leadership • The board • The agency as a whole • The donors and prospective donors • The agency’s other constituents • Other nonprofit organizations • The community

24. Questions to Guide Ethical Decision Making • Why is this bothering me? • Who else matters? • What is my role and responsibility? • What are the ethical concerns? • What do others think? • Am I being true to myself and the organization’s values? Source: Institute for Global Ethics

25. Three Stages of Concern I. Clearly Illegal Example: Changing date on a receipt • Clearly Unethical Example: Allowing a volunteer to use a donor file for another organization • Ethical Dilemma Ethical values in conflict; honesty and loyalty; honesty and respect

26. Step By Step

27. Seven Questions to Address Ethical Dilemmas • Have you accurately defined the problem? • How did this situation occur in the first place? • What is your intention in making this decision? • Whom could your decision or action injure? • Can you discuss the problem with the affected parties before you make a decision? • Are you confident your decision will be valid in the future? • Can you confidently discuss your decision with your boss, family or the media?

29. Potential Ethical Abuse #1Using contributions for purposes other than those to which donors assume they will go • Using restricted building funds for operational expenses • Investing funds in an endowment rather purchasing equipment • Using restricted funds to pay for a consultant

30. Potential Ethical Abuse #2Divulging or Absconding with Donor/Prospect Information • Taking proprietary donor information with you to a new job • Sharing information about donors inappropriately both internally and externally

31. Potential Ethical Abuse #3Intruding on Private Affairs • Obtaining an individual’s credit history • Above and beyond basic research

32. Potential Ethical Abuse #4Exploiting Relationships • Treating donors as a means to your own end • Encouraging donors to change loyalty when they move from one organization to another • Undue influence on estate planning decisions

33. Potential Ethical Abuse #5Negligent Security • Openly discussing prospective donors in a “rank and rate” session • Leaving files and data where they can be easily copied or studied • Leaving donor/prospect computer files open

34. Potential Ethical Abuse #6Questionable Charges or Expenses for Services • Percentage-based compensation • Finders Fees

36. Why Not Percentage-Based Compensation? • The charitable mission can become secondary to personal gain • Donor trust can be damaged by undue pressure to give • The fundraiser may be tempted to influence the nature, size, and timing of a donor’s gift • This type of compensation ignores the role of volunteers and other staff members in the process

37. Alternatives to Percentage-Based Compensation • Ask the board to give and/or raise the dollars needed to hire a fundraiser • Consider using reserves or endowment funds • Look for grants that fund new development programs • Seek a corporate or foundation partner • Identify a service organization to assist • Think outside the box – look for an “angel”

41. Ethics Case Studies

42. The following case studies are all REAL* *The names have been changed, yada yada…

43. Seven Questions to Address Ethical Dilemmas • Have you accurately defined the problem? • How did this situation occur in the first place? • What is your intention in making this decision? • Whom could your decision or action injure? • Can you discuss the problem with the affected parties before you make a decision? • Are you confident your decision will be valid in the future? • Can you confidently discuss your decision with your boss, family or the media?

44. In case you missed it…Respond at: http://pollev.com/jscola013 ORTEXT: jscola013 to 22333

45. Case Study #1 Against Company Policy An employee at the local office of a national company drops by your office delivering cash, checks and credit card gifts from the funds raised at a company event. You are ecstatic, especially since you have applied to the company’s foundation entity for a grant, so you call the foundation director to thank her and their employees for their generosity. She responds by saying that such fundraisers are a violation of their company's policy, and asks for the names of all the donors. Is this a concern?

47. Case Study #2 The Domestic Problem A board member of your domestic violence prevention organization has offered to give a $100K gift to establish a new educational program that will bear his name. Prior to accepting the gift its discovered that the board member has a criminal record that includes domestic violence. This information had never been made known to the organization.

49. Case Study #3 Confronting the Unethical Boss The CEO of your organization informs you that an anonymous donor has agreed to match all gifts from your annual mailing. You send the mailing to 25K people informing them of this wonderful matching gift. When the annual drive is complete and the money is counted you present this information to the CEO so it can be shared with the anonymous donor. At that time the CEO informs you there never was an anonymous donor. She just felt that telling people their gift would be matched would generate more contributions.