Ethical Issues in Fundraising

 

Ethical Issues in Fundraising

Introduction

Fundraising for nonprofit organizations is challenging, but it is particularly tough when the economy sours. Professional fundraisers receive pressure from all types of stakeholders – their bosses, board members and, in some cases, donors and the benefactors of the philanthropy. There is pressure to meet fundraising goals and even exceed them. Facing these stressors, professional fundraisers increasingly encounter ethical dilemmas. They have to decide what is more important – their ethics or their job.

These stressors and ethical dilemmas are no different for community college fundraisers. One hundred and two (102) CRD (Council for Resource Development) members throughout the country participated in a research study that examined ethical dilemmas faced by community college fundraising professionals.

A colleague and I conducted the study after learning about an increasing number of ethical issues in the profession. We wanted to learn more about ethical issues in our profession and determine how to use the research to better educate our colleagues.

Here are a few real-life examples of ethical dilemmas in fundraising:

• Tuition payment vs. charitable contribution: A donor contacted a university and asked if he could contribute a charitable contribution to pay the college tuition of a student he knows. He was told “no” and directed to the college’s business office to pay the student’s tuition. While donors may develop criteria used to select scholarship recipients, donors cannot select the beneficiaries of their philanthropy, and they certainly cannot use charitable organizations to “pass through” tuition payments.
• Donor names employee as beneficiary: A fundraising professional became very close friends with a donor. The donor added the professional’s employer to her last will and testament. The donor later changed her will to include the individual rather than the employer. When the donor passed away, leaving a substantial amount of money to the professional, the professional was asked to give the money to his employer or resign. The professional refused and later resigned.
• Romantic relationships with donors: A fundraising professional began an affair with a married donor. The donor, who was very wealthy, contributed a great deal of money to the professional’s employer. When the affair ended, so did the donor’s commitment to the nonprofit organization.

These examples are just the tip of the iceberg. Some of these ethical dilemmas are “black and white.” However, some are “gray,” which means the correct action is not obvious. As fundraising becomes more important and prevalent, these types of ethical dilemmas may continue to occur.

Methodology

For this research study, we used the Association of Fundraising Professionals (AFP) Code of Ethical Principles and Standards as the framework for the methodology. Specifically, we took the ethical principles and standards and modified them as survey statements. We then provided the following instructions for the survey respondents: After reading each of the items listed below, please decide if the practice is ETHICAL or UNETHICAL. If you are unsure, then select that choice [UNSURE].

Survey Results

Following is a summary of the survey results, including the survey questions. The results reveal demographic information about the survey respondents and which activities they considered ethical and unethical.

Which of the following functions do you handle in your current position? Please select all that apply:

• 81 percent of the respondents indicated that they handle development in their current position
• 67 percent of the respondents indicated that they handle alumni fundraising in their current position
• 67 percent of the respondents indicated that they handle an institution-affiliated foundation in their current position
• 67 percent of the respondents indicated that they handle private fundraising in their current position

What is your institution’s unduplicated headcount?

• 21 percent of the respondents work at community colleges that have 10,000 to 14,999 students
• 20 percent of the respondents work at community colleges that have 2,000 to 4,999 students
• 19 percent of the respondents work at community colleges that have 5,000 to 9,999 students
• 12 percent of the respondents work at community colleges that have 15,000 to 19,999 students
• 10 percent of the respondents work at community colleges that have 30,000 students or more

 How many employees at your institution (including you) handle alumni fundraising, development, grant development, institution-affiliated foundation, private fundraising and/or public fundraising?

• 44 percent of the respondents indicated that one to three employees at their institutions handle alumni fundraising, development, grant development, institution-affiliated foundation, private fundraising and/or public fundraising.
• 31 percent of the respondents indicated that four to six employees at their institutions handle alumni fundraising, development, grant development, institution-affiliated foundation, private fundraising and/or public fundraising
• 11 percent the respondents indicated that seven to nine employees at their institutions handle alumni fundraising, development, grant development, institution-affiliated foundation, private fundraising and/or public fundraising

After reading each of the items listed below, please decide if the practice is ETHICAL or UNETHICAL. If you are unsure, then select that choice [UNSURE].

 

Item	Percentage of Respondents That Indicated This Item Was ETHICAL	Percentage of Respondents That Indicated This Item Was UNETHICAL	Percentage of Respondents That Indicated They Were UNSURE of This Item
1.      Making derogatory public comments about leadership or organizational activities	0 percent	95 percent	5 percent
2.      Maintaining your education in philanthropy and fundraising best practices to convey appropriate advice to constituents, the community, and the public	98 percent	0	2 percent
3.      Providing accurate and complete information to constituents regarding projects, programs, or other activities  they might support or endorse	100 percent	0	0
4.      Knowing and informing organizational leadership and/or organizational stakeholders of applicable ethical and legal fiduciary practices	100 percent	0	0
5.      Conveying false or exaggerated information	1 percent	99 percent	0
6.      Refusing to participate in activities contrary to your organization’s mission and goals	73 percent	7 percent	20 percent
7.      Developing internal contribution acceptance and stewardship policies that address the legal and fiduciary obligations of your organization	100 percent	0	0
8.      Being prepared to inform the appropriate organizational leadership of any illegal practices in which your organization may be participating	96 percent	1 percent	3 percent
9.      Neglecting to complete a transaction involving a contribution or pledge as promised	2 percent	96 percent	2 percent
10.  Ignoring unethical practices of others and not reporting them to organizational leadership or appropriate authorities	1 percent	97 percent	2 percent
11.  Holding an ownership interest in a vendor firm that provides products to your employer without reporting such interest to your organization’s leadership.	1 percent	98 percent	1 percent
12.  Ignoring known illegal practices of your organization	1 percent	98 percent	1 percent
13.  Refusing to hire a consulting firm to assist with fundraising activities after the firm approaches one of your employees with a job offer	14 percent	45 percent	41 percent
14.  Encouraging a donor or prospect to seek independent professional advice when including your organization in the individual’s estate or financial support plans	96 percent	2 percent	2 percent
15.  Agreeing – in writing – upon the amount of time per month that you can devote to private consulting	67 percent	5 percent	27 percent
16.  Failing to report to your employer that you are a beneficiary of a donor’s estate plan	1 percent	90 percent	9 percent
17.  Accepting an expensive gift from a financial supporter who you know from current or past employment	3 percent	82 percent	15 percent
18.  Encouraging a donor or prospect to inform his or her family of the intent to include your organization in the individual’s estate or financial support plans	87 percent	1 percent	12 percent
19.  Refusing to solicit contributions from any individual who seems incapable of making an independent and informed decision	87 percent	3 percent	10 percent

 

According to the AFP Code of Ethical Principles and Standards, items 2, 3, 4, 6, 7, 8, 13, 14, 15, 18 and 19 are ethical. Also, the AFP Code of Ethical Principles and Standards indicate that items 1, 5, 9, 10, 11, 12, 16 and 17 are unethical. A significant number of respondents were unsure about items 6, 13, 15, 17, 18 and 19. These results indicate that there is more that professional associations like CRD and AFP can do to educate its members and fundraising professionals about ethics in fundraising.

In what state, territory, or country is your community college located?

Respondents from 31 states responded to the survey, with California, North Carolina, Texas and Washington having the largest percentages of respondents at 6.5 percent, 8.6 percent, 8.6 percent and 11.8 percent, respectively.

How many years have you worked in this profession?

• 47 percent of the respondents have worked in this profession for one to 10 years
• 34 percent of the respondents have worked in this profession for 11 to 20 years
• 20 percent of the respondents have worked in this profession for more than 20 years

How many years have you worked at this community college?

• 67 percent of the respondents have worked at their community college for one to 10 years
• 14 percent of the respondents have worked at their community college for 11 to 20 years
• 14 percent of the respondents have worked at their community college for more than 20 years
• 4 percent of the respondents have worked at their community college for less than a year

What is the highest level of education that you have completed?

• 55 percent of the respondents indicated their highest level of education was a master’s degree
• 30 percent of the respondents indicated their highest level of education was a bachelor’s degree
• 11 percent of the respondents indicated their highest level of education was a doctorate

What is your gender?

• 76 percent of the respondents indicated they are female
• 24 percent of the respondents indicated they are male

How would you describe your racial heritage?

• 92 percent of the respondents indicated they were White
• 5 percent of the respondents indicated they were Asian American
• 3 percent of the respondents indicated they were African American

 What is your age?

• 42 percent of the respondents are in their 50s
• 29 percent of the respondents are in their 40s
• 15 percent of the respondents are in their 30s
• 12 percent of the respondents are in their 60s
• 1 percent of the respondents are in their 70s

Recommendations

Based on the survey results, I recommend the following:

• CRD should offer opportunities for colleagues to present ethics-related topics during the annual conferences.
• If CRD offers roundtables during the annual conferences, ethics should be a topic.
• Articles about ethics should be solicited and submitted for the “Dispatch” and CRD Resource Papers.
• CRD should partner with fundraising professionals to offer webinars for those who are new to the profession and those who need a refresher on ethics.
• Presidents and fundraising professionals should integrate ethics into their hiring process. Include an interview question related to ethics. An example is “Please describe an ethical dilemma that you faced in our profession and explain how you handled it.” Or give candidates a fictitious ethical dilemma to address to see how they might handle it.
• Fundraising professionals should do an ethics-related exercise with their employees at least once a year. The approach should be fun, interactive, educational and non-threatening. It can be facilitated during a team or meeting. Consider selecting a facilitator who does not supervise others. This approach will help ensure that a more objective person is facilitating the meeting, which may help ensure the meeting attendees feel more comfortable speaking openly and candidly.

Conclusion

While the survey respondents’ responses indicate they are knowledgeable about ethical issues in fundraising, some uncertainly with some of the responses indicate that more work should be done. There is a high turnover rate among fundraising professionals, and more fundraising-related academic programs are cropping up throughout the United States. In addition, fundraising is more important now than ever before, and donors place a significant amount of trust in fundraising professionals. With all of these factors at play, fundraising professionals and their professional behavior have to be above reproach, and ethical standards must be maintained at all times.

Continuing the Discussion

Let’s continue this conversation via social media:

• Facebook: http://www.facebook.com/linniecarter
• LinkedIn: http://www.linkedin.com/in/linniecarter
• Twitter: http://twitter.com/linniecarter

Here are a few questions to get us started:

• How would you have handled the aforementioned real-life situations?
• Did the survey results surprise you? How?
• Are you familiar with other ethical dilemmas related to fundraising?

I would love to hear your thoughts and learn about any fundraising-related ethical issues you have encountered.

 

Linnie S. Carter, Ph.D., APR, is the president and CEO of Linnie Carter & Associates LLC and a community college vice president.