Seven Ethical "Dilemmas" In Philanthropic Fundraising

Seven Ethical "Dilemmas" In Philanthropic Fundraising
Tim J. Burchill, CFRE (deceased)

Executive Director

The Hendrickson Institute for Ethical Leadership
Saint Mary's University of Minnesota
Winona, Minnesota

By virtue of their missions, non-profits are often held to an even higher (some might argue, a different) standard of ethical performance than for profit

corporations. While the overwhelming majority of non-profit leaders, both staff and volunteers, are persons of unimpeachable integrity, on occasion these good people make bad choices simply because they are unprepared to deal with the ethical complexities of their actions.
Over the years, I've observed what I've come to call the "Seven Ethical

Dilemmas of Fundraising." These dilemmas are not obstacles to raising money, but they are issues about which all nonprofit leaders, governing boards,

fundraisers and donors need to be aware.

Dilemma #1: Tainted money- This concerns conflict between an organization's mission and the source of the contributed funds. For example, Mothers Against Drunk Driving would not accept money from Anheuser-Busch, because the

company derives profits from the sale of alcohol. But an art museum or a
historical society may have no issues with a gift from the same benefactor. An organization's mission always needs to be top-of-mind with its board and
fundraising staff and never compromised.

Dilemma #26 Compensation - Nearly all associations of fundraisers and

fundraising consultants have prohibitions in their codes of ethics against paying finder's fees and against fund raisers working on a commission basis.
Nonetheless, the practice can be found, especially in small organizations that see this approach as "risk-free." 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.

Dilemma #3: Privacy- Organizations should neither obtain nor retain nonessential and highly personal information about donors in their paper or

electronic files. Also, care must be taken to assure that development staff members do not take information about donors with them when they change jobs. Nonprofits need to be methodical stewards of personal information in an era where privacy concerns rightly run rampant.
Dilemma #4: Stewardship - Nonprofits must assure the public that the funds the organization raises are indeed being used for the purposes for which they were given. Non-profits must honor the spirit as well as the letter of donor intentions.
Dilemma #5: 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.
Dilemma #6: Conflicts of interest- Non-profit 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.
Dilemma #7 The 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.
Awareness of the existence of these dilemmas can be the most important step in avoiding unethical behavior. There is no ethical dilemma when choices are
clear-cut - when there is both a "right" and a "wrong" decision that can be made. However, there is an ethical dilemma inherent in choosing between two "rights."
Using tainted money as an example: a school can benefit from a gift of $1 million to upgrade its technology; but the prospective benefactor is a convicted felon. Is the nature of the felony relevant? If the person has served a sentence and is
rehabilitated does that matter?

Non-profit institutions need to determine the values that are important to them (e.g., honest, integrity, fairness, loyalty, compliance with the law, accountability, etc.). Whatever values they choose must be regarded as fundamental, but none of them are absolute. Ethical dilemmas will arise when the organization has to make a decision between two or more competing institutional values.

Making sound ethical decisions typically involves seeking counsel and

perspective from other people prior to making such a decision. Practicing "Lone Ranger" ethics can be dangerous.

J:\rak\cmtes\ethics\sevenethicaldilemmasinphilanthropicfundraising-burchill