Ethics in Nonprofits/Fundraising

1. Ethics in Nonprofits/Fundraising “We in the nonprofit sector are held to a higher level of trust than our colleagues in the for-profit sector” (Rosso, 2003) Association of Fundraising Professionals (AFP) challenges its members to (see AFP Code of Ethics in handout section): • Accept responsibility for their own behavior • Accept responsibility for the behavior of their institutions • In the areas of stewardship, accountability, confidentiality A Trust Crisis • 57% trusted private higher education • 39% healthcare • 31.6% private and community foundations • 15.8% Congress (however this increased post 9/11) “Those who presume to serve the public good must assume the public trust” (Rosso, 2003)

2. Ethics in Nonprofits/Fundraising Factors that Challenge Ethics in Fundraising • Fund raising is not “business as usual” • Due to the amount of personal attention, engagement and creativity it impossible to outline every single scenario that can occur can document an ethical response • The challenge comes from changes in non-profit organizations, changes in the public’s assumption about nonprofits, and from technological shifts in how fund raising is done • Increased education and professionalism helps, but still dependent on the professional • Being responsive to changing circumstances and conditions leads non-profit leaders and managers to consider moral issues that pertain to their organizations • What is fine for one organization, may be a contradiction to the mission of another organization; no one size fits all approaches (some examples)

3. Ethics in Nonprofits/Fundraising Answers to Ethical Dilemmas are not always clear AFP suggests using the following guidelines: • If you use this solution, will you be able to look in the mirror and feel proud? • Is your solution one for which your organization can stand tall in front of its donors and clients? • Given today’s climate, would this solution stand up under the scrutiny of the press? • As a Development Officer progresses through their career they achieve higher levels of professionalism…and an ethical sense (they progress from technician to professional). • There is no substitute for experience in this field

4. Ethics in Nonprofits/Fundraising Ethics and Professionalism The text outlines six criteria that are essential to the fund raising profession; they are: • Autonomy • Systematic knowledge • Self-regulation • Commitment and identification • Altruism and dedication to service (fund raisers are more generous with their resources and time than other citizens) • Ethics and sanctions (AFP has a process in place to sanction unethical behavior by members) “Do we live for philanthropy or do we live off philanthropy” (Robert Payton, Former Executive Director Center on Philanthropy at Indiana University)

5. Ethics in Nonprofits/Fundraising Section 501(c)(3) of the Internal Revenue Code • Professional Fundraisers must always be cognizant of the non-distribution clause • “…no part of the net earnings of which inures to the benefit of any private shareholder or individual,…” • Commits nonprofits and those associated to the public good • Establishment of trust between donors and organizations • Professional Fundraisers must be the protectors; ensure that we, and all others, do not benefit personally from the funds being donated to an organization • This do NOT mean that fundraisers should not be paid fairly and equitably; it does mean: • Fundraisers do not accept personal gifts from donors • Salaries must be commensurate with public expectation • Board members should not have competitive advantage in bidding for business with the organization

6. Ethics in Nonprofits/Fundraising Issues of Professionalism (Rosso, 2004) • What is the role of trust in our development as fund raising professionals? • What are the burdens placed on us as fund raising practitioners by the “non-distribution clause” in Section 501(c)(3) of the code? • As fund raising practitioners, who is our client: the donor or the organization? • In every transaction, what are the intents of the donor and what are the intents of the organization? • How can we, as fund raising professionals, protect and maintain our integrity as “boundary spanners” between donors and organizations? • How do we manage the tensions that arise as fund raisers working for organizations assist donors expand their philanthropy?

7. Ethics in Nonprofits/Fundraising The Josephson Institute surveyed more than 10,000 to define the values that are important to an ethical or virtuous person. Josephson’s 10 ethical values that form the basis for ethical decision making: • Honesty • Integrity • Promise-keeping • Loyalty (fidelity) • Fairness Source: Achieving Excellence in Fund Raising, Rosso, 2003 • Concern for others • Respect for others • Law-abidingness and civic duty • Pursuit of excellence • Personal Accountability

8. Ethics in Nonprofits/Fundraising Ethical Dilemmas (example in text:) What does the professional fund raiser do (the matter of personal accountability) when the organization (loyalty-fidelity) decides to use funds given for one purpose by a donor (promise-keeping, integrity, honesty) for another purpose? Three step process: • All decision must take into account and reflect a concern for the interests and well-being of all shareholders • Ethical values and principles always take precedence over non-ethical ones • It is ethically proper to violate an ethical principle only when it is clearly necessary to advance another true ethical principle, which according to the decision maker’s conscience, will produce the greatest balance of good in the long run

9. Ethics in Nonprofits/Fundraising C I Payton’s Ethics Cube: Individual (fundraiser) against the Organization surrounded by Competence, Language, Relations and Mission First Ethical Tension – Individual vs. Organization • Is the fund raising executive acting in the best interest of the organization? • Is the organization treating the professional fairly (compensation, etc.) • Who is the client? Competence • Competent in ethical and technical standard of the fund raising profession • Law abiding • Pursuit of excellence • Personal accountability L M O R

10. Ethics in Nonprofits/Fundraising Payton’s Ethics Cube (continued): Language • The way we talk about our profession • The way we discus the process of fund raising • E.g. don’t refer to donors as “targets”; or “hit people us” • Integrity, honesty, commitment to openness Relationships • Who owns the relationship? • Promise keeping, loyalty and fidelity, fairness, concern for others Mission • Fund raising begins with Mission • The Donor Bill of Rights Philanthropy is based on voluntary action for the common good. It is a tradition of giving and sharing that is primary to the quality of life. To ensure that philanthropy merits the respect and trust of the general public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights: (see next slide)

11. Ethics in Nonprofits/Fundraising Ethical Dilemmas - Some Cases • Physicians participating in philanthropy (recruiting gifts from current/former patients) • Soliciting philanthropy support from contracted vendors • Board Members as vendors • Foursome to Augusta National Golf Club • Butler Hospital Golf Tournament at Foxwoods Resort Casino