CEO Message: Ethics and Nonprofits

Last week, I spent two days at the Markkula Center for Applied Ethics at Santa Clara University with other nonprofit executive directors and our board chairs participating in the Standards of Excellence, an ethics training program for nonprofits and philanthropists.

One of the more interesting aspects of the two days, admittedly perversely so, was the litany of nonprofit scandals that served as cautionary examples; these example scandals were so gnarly that just hearing the stories could cause a nonprofit exec to break into a cold sweat. Of course, the most prominent nonprofit scandal in the U.S. in recent days has been the relationship between Jeffrey Epstein and various nonprofits, most prominently MIT Media Lab, prompting the Chronicle of Philanthropy to keep a running tab of related articles.

In the wake of this scandal as well as recent divestments of Sackler family money by no less than the Louvre and the Guggenheim—because the family made some 30-plus billion of its fortune from selling the deadly drug OxyContin—a number of media outlets and philanthropy experts have asked whether “bad” money or money from bad people can be cleansed and thereby become safe to accept if it’s used for good purposes. In its thoughtful coverage of the scandal, MIT Technology Review quotes Rob Reich, a Stanford professor and author of Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better as saying that "nonprofits shouldn’t benefit from money amassed by doing harm unless it ‘is directed philanthropically towards causes that repair the very harms that were caused in the first place.’” One wonders whether this philosophy results in a zero sum game that doesn’t seem like a match with most nonprofit missions.

At the very minimum, it seems clear that nonprofits should have gift acceptance policies. Apparently, even large cultural and scientific institutions don’t necessarily have these policies. Obviously, one reason for having a gift policy and saying no to certain donations has to do with avoiding bad optics. But there’s a deeper, more meaningful ethical framework that ultimately should drive our organizational decision-making here. The Markkula Center’s Joan Harrington told our group last week that an organization’s gift acceptance policy (and, in fact, all other policies) should be created through the lens of the organization’s mission and values statement. Benjamin Soskis from the Center of Nonprofits and Philanthropy points out that when creating gift guidelines, organizations should make sure that diverse voices are in the mix. The oldie-but-goodie Stanford Social Innovation Review article Ethics and Nonprofits talks about how cognitive biases, cognitive dissonance, and organizational norms, among other organizational dynamics, can lead to unethical decision-making. No doubt, decolonizing ethical decision-making processes could lead to less bias and additional perspectives.

The idea that one’s fundraising principles and programmatic mission and objectives should be aligned doesn’t seem unreasonable, but the next question is how closely aligned. The National Council of Nonprofits has some great resources on gift acceptance policies, but even with helpful frameworks, I think the question of alignment with values can only be answered by at an organizational level. Based on the dialogues that I’ve been having with local nonprofit fundraisers, these questions come up regularly.

Adding to the tricky question of values alignment is the question of whether nonprofits should be bestowing donors with questionable practices like the positive recognition that donations usually merit; such recognition can legitimize and even “sanitize” the donor. But some say keeping such donations anonymous isn’t the answer either. Reich says that when accepting funds from sources with questionable reputations, organizations should not anonymize the donor and should be transparent about why the gift was accepted.

Even though my brain hurt a little last week thinking about these tough questions, it was fantastic to do so in the company of a dozen nonprofit leaders who were also interested in learning more about organizational ethics, transparency, and accountability, built on what Markkula calls the foundation of “honesty, integrity, fairness, respect, trust, compassion, responsibility, and transparency.” It was a cool group of folks! (*wave!)

Here are some resources to get your ethical game on. As SVCN turns to an update of its own policies and procedures, we will be sharing with you our learning and our updates, consistent with one of our fundamental values of transparency. Watch this space!

Independent Sector Statement of Values Checklist Principles of Good Governance and Ethical Practices

Markkula Center for Applied Ethics at Santa Clara University The next Standards of Excellent 2020 Clinic Series training is on March 12 & 13, 2020. Participants in Markkula’s learning programs have access to a library of resources on ethical standards including model procedures and sample policies.

National Council of Nonprofits Code of Ethics/Statement of Values, tools and samples Conflicts of Interest

Blue Avocado

Sample Conflict of Interest Policy

In community,

Kyra Kazantzis

Chief Executive Officer