Enhancing Trust Or… How Not to Become One of AFP Ethics & Accountability Workshop 2015 Collaborative Conference WWW.AFPNET.ORG “Discipline is what you do when no one else is looking.” Jim Tressel, former Ohio State football coach WWW.AFPNET.ORG 2 “The reputation of a thousand years may be determined by the conduct of one hour.” Jim Tressel, former Ohio State football coach WWW.AFPNET.ORG 3 Failure to Maintain Discipline Has Dire Consequences WWW.AFPNET.ORG 4 Seven Ethical Dilemmas 1. Tainted money 2. Privacy 3. Stewardship 4. Honesty and full disclosure 5. Conflicts of interest 6. Appearance of impropriety 7. Compensation WWW.AFPNET.ORG 5 Tainted Money • Conflict between an organization’s mission and the source of contributed funds • Mission MUST be top-of-the-mind and must NEVER be comprised • E.g., MADD wouldn’t accept money from a beer company, but would a museum? WWW.AFPNET.ORG 6 Privacy • In an era where privacy concerns are heightened, organizations must be methodical stewards of personal information • Should neither obtain nor retain non-essential and/or highly personal information • Information stays with the organization and doesn’t go when a fundraiser changes jobs WWW.AFPNET.ORG 7 Stewardship • Nonprofits must assure the public that the funds the organization raises are indeed being used for the purposes for which they were given. • Nonprofits must honor the spirit as well as the letter of donor intentions. WWW.AFPNET.ORG 8 Honesty and Full Disclosure • Nonprofits must give people enough information to make informed giving decisions, not "sugarcoat" their organizations' stories to make them more attractive to a wider array of donors. • Honesty with donors is the essential foundation of healthy benefactor relations. WWW.AFPNET.ORG 9 Conflict of Interest • Nonprofit organizations that "do business" with members of their governing boards must ensure that such transactions are completely transparent and are subject to the same rules (e.g., bidding process) as all other transactions. • Other areas with potential for concern include fundraisers acting as executors for estates of their benefactors. WWW.AFPNET.ORG 10 Appearance of Impropriety • There are many things that fundraisers can do that are legal, but are unethical, such as a fundraiser benefiting personally from a benefactor's estate gift, bequest or outright gift. The profession views such behavior negatively. WWW.AFPNET.ORG 11 Legal vs Ethical It may be legal to be your donor’s executor. But it is unethical to be your donor’s executor. WWW.AFPNET.ORG 12 Compensation • Compensation for fundraisers and fundraising consultants should never be connected to the amount of funds raised. • In the spirit of philanthropy, fundraisers are motivated by advancing the mission of their organizations, not by "earning" a percentage of funds raised. WWW.AFPNET.ORG 13 Remember: It’s About Your Reputation • If a donor trusts you and believes that you are ethical, you will build loyalty and enhance your fundraising effectiveness. • If your professional colleagues view you as ethical and trustworthy, more doors may open for your career. WWW.AFPNET.ORG 14 How Do We Really View Ethics? 1) Solely the role of the fundraiser without an organizational context WWW.AFPNET.ORG 15 How Do We Really View Ethics? 2) Often in a negative sense—only brought up during a controversy or scandal WWW.AFPNET.ORG 16 Why Don’t We Talk About Ethics With Our Donors? • Comfort level? • Ruin a perfectly good donor meeting? • Remind supporters about past controversies? • Too many “do’s” and “don’ts?” WWW.AFPNET.ORG 17 Risk Factor 1: Public Concerns • 70 percent of Americans say charities waste a “great deal” or “fair amount” of money. • Only 10 percent says charities are “very good” at spending their money wisely. WWW.AFPNET.ORG 18 We Might Not Be Comfortable Talking About Ethics… …But donors clearly are. And they’re worried! 100 90 80 70 60 50 40 30 20 10 0 2000 2008 Donor Confidence WWW.AFPNET.ORG *Brookings Institution data 19 Risk Factor 2: Regulation Proposals Considered by federal and state governments Establishing arbitrary fundraising cost ratios Compensation caps Limiting or eliminating the charitable deduction for noncash gifts Limiting a charity’s board to between 3 and 15 members. Mandating that the IRS audit each charity’s operations and practices every 5 years justifying its tax-exempt status. Requiring a charity to become accredited through some third party in order to attain tax-exempt status. Urging state enforcement of federal laws that likely would result in 50 different interpretations of federal tax rules. WWW.AFPNET.ORG 20 Risk Factor 3: Media WWW.AFPNET.ORG 21 Why SHOULD We Talk About Ethics? • Donors are DEMANDING it! • How will donors know otherwise? • Educate and fight misperceptions; decisions not made in a vacuum • Number one reason people don’t give (when asked): They don’t TRUST the nonprofit! WWW.AFPNET.ORG 22 What Donors Want • Disclosure of what their donation accomplishes • To review the financial statements of the nonprofit • Independent audits • Disclosure of staff compensation and perks * The Wealth Institute WWW.AFPNET.ORG 23 Communicating Ethics • Explaining your ethical process and safeguards in detail • Relating a story about correcting an ethical issue • Discussing your board and its ethical training • Providing ethics and accountability resources WWW.AFPNET.ORG 24 Ethics: Whose Job Is It? The Fundraiser Other Staff & Volunteers The Board The Ethical Organization WWW.AFPNET.ORG 25 The Board • KNOWLEDGE – Cannot act ethical without understanding of fundraising ethics and challenges – Many controversies arise not because of willful wrongdoing but through ignorance – Specific training must be given – Differences between for-profit and nonprofit boards WWW.AFPNET.ORG 26 The Board • POLICY DICTATES PRACTICE – Sufficiently high standards must be set from the beginning—a code of ethics for the board – No more coddling! – Conflict of interest leads to many controversies— set record straight early – Determine WHY board members are serving WWW.AFPNET.ORG 27 Nonprofit Staff • Tend to see fundraising and ethics as removed from other nonprofit operations • Are closest to programs • Can make link from impact and efficiency to ethics WWW.AFPNET.ORG 28 Educate All Staff WWW.AFPNET.ORG 29 Volunteers and Supporters • Can be most powerful voice for ethics • Are independent, yet authoritative opinions on organization and ethics • Share similar views, perceptions and experiences • Must understand organization fundraising and ethical responsibilities WWW.AFPNET.ORG 30 AFP Ethics Tools • • • • • • AFP Code and Donor Bill of Rights AFP Code Guidelines AFP Code FAQ’s Enforcement Procedures Position Papers and AFP Resource Center Additional Resources: – AFP Ethics Committee – AFP’s President & CEO – AFP’s General Counsel WWW.AFPNET.ORG 31 Failure to Maintain Discipline Potential disciplinary actions through the AFP enforcement procedures: 1. 2. 3. 4. Reprimand Censure Suspension Revocation of AFP membership WWW.AFPNET.ORG 32 AFP Ethical Resources • AFP Website (www.afpnet.org) – Ethics section: Code of Ethics, A Donor Bill of Rights, articles, position papers – Member Gateway (log-in required): Resources for chapter leaders, including ethics education chairs – AFP Ethics Committee: For questions and queries, contact the President’s office WWW.AFPNET.ORG 33 AFP Ethical Resources Jason Lee jlee@afpnet.org 703-684-0410 WWW.AFPNET.ORG 34