Ethics, Morals and Standards, Oh My! How Nonprofits Navigate

By Katie Cray

Nonprofit organizations are held to a higher moral standard than most others. Transparency and accountability are crucial in gaining and holding the public’s trust, so nonprofits must always remember to act in a manner that would be acceptable if done publicly. If a scandal does occur within a nonprofit agency, and the public’s trust is lost, it is extremely difficult to earn back. Once that trust disappears, so does their funding.

While it would make sense to think that nonprofits would naturally perform on a higher moral ground, studies show that this is not always the case. The Ethics Resource Center revealed the results of three surveys that show very similar numbers in the amount of people who witnessed one or more acts of misconduct within the span of a year: 55 percent at nonprofits, 56 percent at businesses and 57 percent in government. People are still just people, and will inherently act accordingly.

Ethical issues that afflict nonprofits include misrepresenting yourself in grant applications or to potential donors, accepting personal gifts or services from donors or giving gifts or services to donors. Board misconduct can also occur within an organization. It is the board’s responsibility to ensure that all regulations and laws are abided by, and that the leaders of the organization are acting appropriately and ethically. If the board becomes disengaged, ethical boundaries are more likely to be crossed.

Staff misconduct can be just as big an issue, if not bigger, than board misconduct. Inappropriate salaries, self promotion, or even dishonesty and inappropriate relations have been known to occur in nonprofit organizations. One thing that will certainly lose the public’s trust is the misuse of funding. Allocating money for certain programs or projects, and then using it for something else, even for personal expenses, is one of the biggest no-no’s in the nonprofit world.

While circumstances do exist where there is a gray area between acting ethically and unethically, there are several best practices used to keep an organization on the straight and narrow. Nonprofits should employ the use of a Code of Ethics. Many businesses and industries have established Codes of Ethics as a way to clearly define inappropriate versus appropriate behavior. These guidelines serve as a tool to set an ethical climate for an entire organization. Codes of Ethics outline topics such as conflicts of interest, disclosure, and instruction in making honest and fair choices and decisions on behalf of the organization.

A Statement of Values is another constructive tool used to identify an organization’s criterion for actions and behavior. Independent Sector, a leadership forum for charities, foundations, and corporate giving programs lists the following as items typically found in a Statement of Values:

  • Commitment to the public good;
  • Accountability to the public;
  • Commitment beyond the law;
  • Respect for the worth and dignity of individuals;
  • Inclusiveness and social justice;
  • Respect for pluralism and diversity
  • Transparency, integrity and honesty;
  • Responsible stewardship of resources; and,
  • Commitment to excellence and to maintaining the public trust.

It is crucial for leadership of a nonprofit to set the example for ethical and moral standards within an organization. The more lax an executive director is about crossing certain boundaries, no matter how big or small, the more at ease staff will feel about letting things slide. Any work atmosphere, whether in the private, public or nonprofit sector, will without a doubt suffer when moral standards are lowered.

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