Accepting gifts from And other ethical dilemmas faced

Accepting gifts from And other ethical dilemmas faced by fundraisers and NGOs WWW. AFPNET. ORG

What we’ll be covering… • The seven ethical dilemmas • The need for ethics, transparency and accountability • Ideas for building a culture of ethical fundraising in your organization • Discussion of sample cases that may contain ethical conflicts WWW. AFPNET. ORG 2

Baseline or Pinnacle • Dr. Paul Pribbenow, ethics expert, reminds us: – The Code of Ethics sometimes seems like this black-and-white document sent from on high – It’s a living document that represents just the floor for ethical behavior. – The key is for us to slow down and think through the sort of lives we want to live, WWW. AFPNET. ORG our moral values, the ethical situation we 3

Hero or Outlaw: Recognizing ethical dilemmas! Pablo Escobar? Robin Hood? WWW. AFPNET. ORG 4

Examine your ethical perspective Normally we view ethics negatively … related to a controversy or scandal. WWW. AFPNET. ORG 5

Headline News … our constituents easily find. WWW. AFPNET. ORG 6

Headline News. . We Don’t need! WWW. AFPNET. ORG 7

https: //www. fbi. gov/phila delphia/aboutus/history/famouscases/famous-casesfoundation-for-new-eraphilanthropy WWW. AFPNET. ORG 8

What is ethics in relation to civil society? • Norms of conduct (standards) • used by members of a profession to determine the right course of action in a given situation. • Members are expect to adhere to the norms • Codes of principles and norms in the practice of the profession WWW. AFPNET. ORG 9

Why talk about ethics, transparency and accountability? • Donors are demanding it. • It’s the #1 reason for not giving (when asked): people don’t trust NGOs. • Sound administration and good stewardship requires it. WWW. AFPNET. ORG 10

The Ethical Equation • Philanthropy makes the work of NGOs possible • Trust makes philanthropy, the procurement of gifts, possible • Ethics helps make trust possible WWW. AFPNET. ORG 11

The Ethical Equation Ethics and the procurement of gifts are directly related to the performance and operations of organizations in civil society. WWW. AFPNET. ORG 12

Ethical Dilemmas • An ethical dilemma involves a conflict between two or more ethical principles. • Important to know the scale of values of your organization. 13

The Seven Ethical Dilemmas 1. Tainted Money 5. Stewardship 2. Compensation 6. Honesty and Transparency 3. Privacy 4. Appearance of Impropriety 7. Conflicts of Interest WWW. AFPNET. ORG 14

Tainted Money Conflict between the mission and the source of funds WWW. AFPNET. ORG 15

Compensation • Persons who provide you with the names of prospects or donors should not receive any form of compensation • Compensation of fundraisers or consultants should never be based upon a percentage of funds raised WWW. AFPNET. ORG 16

Privacy • Fundraisers, consultants, board members and volunteers should not obtain or retain nonessential or highly personal information • Information obtained should remain within the organization, the custodians of confidential information, not the fundraiser WWW. AFPNET. ORG 17

Appearance of Impropriety We can be abiding by the law and adhering to regulations, but still not be acting ethically. WWW. AFPNET. ORG 18

Stewardship • Assure the public that philanthropic funds will be used in accordance with the wishes of the donor • Comply with the donors’ written stipulations as well as with their spirit and intent WWW. AFPNET. ORG 19

Honesty and Transparency • Promote decision-making on the part of donors and prospects based upon complete and accurate information • Honesty with our donors is the basis for healthy relationships WWW. AFPNET. ORG 20

Conflicts of Interest Business transactions with board members should: • be totally transparent • use open processes • be subject to the same rules and norms as other business transactions (E. g. , bidding) • be addressed openly WWW. AFPNET. ORG 21

Ethics: Observations • Ethics need to be considered in the most routine transactions • Simply because something is “legal” does not necessarily mean that it’s ethical • Sometimes none of the options are “incorrect” – use the most “correct” WWW. AFPNET. ORG 22

Ethical fundraising and managing philanthropic funds – whose job is it anyway? Executive Staff / Management Program Personnel and other Staff The Fundraising Staff The Ethical NGO WWW. AFPNET. ORG The Board of Directors / Volunteers 23

The Fundraiser • Strives to practice our profession following ethical standards • For members of AFP, our efforts should be based upon the AFP Code of Ethical Standards WWW. AFPNET. ORG 24

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The Board of Directors • Determine what motivates the members of the Board to serve • Establish high standards, Code of Ethics and Conflict of Interest Policy and Annual Statement for the Board • Adopt a Conflict of Interest Statement • Directors sign the Conflict of Interest Statement annually • Conflicts of interest can lead to many controversies – members of the Board must transparent, in advance, about perceived or actual conflicts of interest • Review the Board meeting agenda and require directors to declare any perceived or actual conflicts of interest prior to the start of business. Affected members must recuse them selves, not participate in the conversation and not vote. WWW. AFPNET. ORG 26

Management and Program Staff • See ethics, transparency and accountability with relation to philanthropic funds as an integral part of program management and the organization’s operations • Take appropriate and corresponding measures toward that end WWW. AFPNET. ORG 27

Integrating Ethics into the Organizational Culture • Adopt a Code of Ethics • Adopt a Conflict of Interest Policy • Adopt the Donors’ Bill of Rights • Promote three -- internally and externally -- as institutional policies WWW. AFPNET. ORG 28

Integrating Ethics into the Organizational Culture • Integrate transparency and ethics into the organization’s decision-making processes, policies and procedures • Familiarize new employees, volunteers and board members with the organization's professional standards and commitments WWW. AFPNET. ORG 29

Integrating Ethics into the Organizational Culture • Incorporate adherence to your organization’s ethical standards as part of staff performance evaluations • Use your website, social media and other communications vehicles to share your organization’s ethical standards and provide examples of ethical behavior WWW. AFPNET. ORG 30

Examples of Ethical Standards • Statement of Professional Standards and Conduct of the Association for Healthcare Philanthropy (http: //www. ahp. org/membership/profstandards. php) • Code of Stewardship and Ethics of the National Catholic Development Conference (http: //www. ncdc. org/accountability/code. asp) • Statement of Values and Code of Ethics for Nonprofit and Philanthropic Organizations (www. independentsector. org/pdfs/code_ethics. pdf) • Access more than 100 norms, codes and principles from associations and philanthropic organizations at: (www. independentsector. org/issues/accountability/standards 2. html) WWW. AFPNET. ORG 31

What should you do? WWW. AFPNET. ORG 32

Ethical? “Bonus Points” You are the director of development of a biomedical research organization. The organization’s Board decides to establish a bonus plan for all senior managers, based on performance of responsibilities. Your bonus is to be 10% of your annual salary if you bring in 10 new corporate sponsorships and another 10% of your annual salary if you bring in at least 10 major gifts of $10, 000 or more. 1. Would this bonus plan be acceptable under the AFP Code of Ethical Principles? 2. Suppose that instead of the plan above, the size of the bonus was based on your performance in three areas: Number of new volunteers recruited; Number of new major gifts received and Exceeding the amount raised the previous year in the organization’s annual fund. Could such a bonus plan be acceptable under the AFP Code? 3. Suppose that the bonus was a fixed amount (5% of your base salary) and was based on achieving three performance targets: Recruiting 50 new volunteers; Successfully soliciting 10 new major gifts and growing the organization’s annual fund receipts from the previous year. Would this bonus plan pass muster under the AFP Code? WWW. AFPNET. ORG 33

Ethical? “ Share and Share Alike” Two small arts organizations each have struggled to generate sufficient public awareness for a community-wide annual fund campaign. The director of development of one organization suggests that if the organizations pool their resources, they can maximize their visibility in the community, minimize their individual costs, and increase their chances for a successful campaign. 1. If the two organizations worked from their own donor lists, would this arrangement be acceptable under the AFP Code of Ethical Principles? 2. If the two organizations pooled their lists and hired a telemarketing firm to conduct a joint campaign, would this arrangement be acceptable under the AFP Code of Ethical Principles? 3. If the two organizations each solicited from their own lists in a joint campaign, would this arrangement be acceptable under the AFP Code of Ethical Principles? 4. Would it be permissible under the Code for organizations to 34 WWW. AFPNET. ORG work together in a fundraising drive?

Ethical? “Trust Revoked” In your old job with a highly regarded, financially stable organization, you developed a close working relationship with an elderly couple who set up a revocable trust with the organization. You then move to a new organization whose financial situation is somewhat shaky. Several months later the couple comes to you and says that because they have such confidence in your ability to look after their interests, they want to revoke the original trust and set up a new one through you with your new organization. 1. What should you do? 2. Suppose the couple proposed to make a major gift to your new organization without revoking the old trust. What should you do? WWW. AFPNET. ORG 35

References Nonprofit Fundraising Strategy : A Guide to Ethical Decision Making and Regulation for Nonprofit Organizations 2 nd Edition Janice Gow Pettey, Editor Wiley, 2013 Ethical Decision Making in Fund Raising, 1 st Edition Marilyn Fischer Wiley, 2000 WWW. AFPNET. ORG 36

Thank you! For additional information … Visit the AFP website: http: //www. afpnet. org Information, articles and position papers are available to the public as are copies of the AFP Code and the Donor’s Bill of Rights (in multiple languages). WWW. AFPNET. ORG 37