Discussion of what ethics are and how to use ethics in nonprofit management.

1. By Lorrie J. Carey, MPA
UNC – Greensboro
Nonprofit Management and Leadership

2. Contents
I.
Introduction: The Concern
II. Nonprofit Ethics Defined
III. Why Ethics Are Important
IV. The Benefits of Ethics
V. Ethical Checklist
VI. Four Categories of Ethics
VII. Creating Ethical Standards
VIII. Ethics Training
IX. Strategies to Manage Ethics
X. Questions to Answer
XI. Conclusion

3. The Concern
Nonprofit Ethics are
Deteriorating
“Financial fraud is now more prevalent among nonprofits
than among private businesses and government
offices, according to 2007 data from the Ethics Resource
Center.”
(Philanthropy Journal, 2008)

4. The Concern
“The greatest threat to the not-for-profit
sector is the betrayal of public trust, the
disappointment of public confidence.”
Joel Fleishman
Professor of Law & Public Policy
Director of the Heyman Center on Ethics
Duke University

5. Nonprofit Ethics Defined
• Honesty
• Treating people with respect
• Transparency
• Actions you would be comfortable reading on the front
page of the paper
• No individual profits from the organization
• No conflicts of interest
• Fundraising honesty/accountability
(Schmidt, 2004)

6. Why Ethics Are Important
“The good will earned by accountable and
transparent nonprofits is one of, if not the most
important of its assets.”
Elizabeth Schmidt
Professor of Nonprofit Law & Practice
College of William & Mary Law School

7. Benefits of Ethics
• Moral compass to guide leadership
• Promotes the cultivation of teamwork
• Builds employee/volunteer confidence
• Decreases liability for criminal acts and personnel
issues
• Identifies the organization’s values
• Promotes a positive public image
Carter McNamara, MBA, PhD, Authenticity Consulting, LLC
Complete Guide to Ethics Management: An Ethics Toolkit for Managers.

8. Ethical Checklist
 Relevant information
 Involvement test
 Consequential test
 Universal Ethical Principles test
 Fairness test
 Universality test
 Preventative test
 Light of Day test
Pekel & Wallace, Fulcrum Group
Ten Step Method of Decision Making

9. Four Categories of Ethics
The Independent Sector provides four categories for ethics
resources on their website:
Legal Compliance & Public Disclosure
Responsible Fundraising
Effective Governance
Strong Financial Oversight
Resource Center for Good Governance & Ethical Practice

10. Four Categories of Ethics
“Maintaining the public trust is crucial to the
success of the nonprofits and foundations. That
helps charitable organizations win resources –
including donations of time, money, and other
support.”
Independent Sector
Washington, D.C.

11. Creating Ethical Standards
1. Mission: well developed & formally approved
by board, evaluated regularly
2. Governance: governing body should be
representative of the community
3. Conflict of Interest: policies should be in place
4. Human Resources: are diverse and policies set
clear expectations
Utah Nonprofits Association, 2002

12. Creating Ethical Standards
5. Financial Accountability
• Financial reports on a timely basis - available to public
• Organizational means to report suspected fraud
• Written financial policies for investment/
purchasing/reserves
6. Legal Compliance
• Federal/State/Local Laws
• Fundraising/ Licensing/ Labor/
Advocacy/ Taxation/ Finances
Utah Nonprofits Association, 2002

13. Creating Ethical Standards
7. Openness
• Truthful public information
• Responsive to public interest
8. Fundraising
• Respect wishes of donors
• Manage raised resources being mindful of public trust
• Be responsible for those fundraising on your behalf
• Use truthful solicitation materials
Utah Nonprofits Association, 2002

14. Creating Ethical Standards
9. Public Policy Advocacy
• Have written policies for advocacy
• Provide only facts to the public
10.Information Management
• Personal information is confidential
• Have policies for who can access organization
information
Utah Nonprofits Association, 2002

15. Ethics Training
1. Orient employees about organization ethics
2. Train management about ethics
3. Make sure leadership committed to ethics
4. Involve staff in development/review of ethics policy
5. Engage in discussion of ethical resolution
Carter McNamara, MBA, PhD, Authenticity Consulting, LLC
Complete Guide to Ethics Management: An Ethics Toolkit for Managers.

16. Ethics Training
6. Include ethical performance in performance appraisal
7. Lead by example
8. Put ethics guidelines in writing
9. Have board/management/staff/volunteers sign an
“Oath of Ethics”
Carter McNamara, MBA, PhD, Authenticity Consulting, LLC
Complete Guide to Ethics Management: An Ethics Toolkit for Managers.

17. Strategies to Manage Ethics
1. Rely on employee values
Problem - Values vary
2. Compliance – Minimum Standards & Penalties
Problem - Employees/ volunteers won’t rise above minimum
standards
3. Ethical exhortation
Problem - Organization “high standards” are undefined
4. Managing values
Problem - Defining a set of values & minimum standards
Kirk Hanson, Director
Markkula Center for Applied Ethics
Santa Clara university

18. Strategies to Manage Ethics
Managing Ethics Requires Leadership/
Management Effort!






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Communicate
Educate
Implement Model
Apply
Reflect values
Reward values
Renew values every three years
Kirk Hanson, Director
Markkula Center for Applied Ethics
Santa Clara university

19. Questions to Answer
1. Does your organization want to promote an ethical
culture?
2. Does your organization have policies relating to
governance, conflict of interest, financial
oversight, responsible fundraising, legal
compliance, and public disclosure?
3. Do you evaluate your mission regularly?
4. Does your board and staff represent the multiple
groups in your community?

20. Conclusion
Ethical standards are imperative to maintaining
positive nonprofit operations and the public trust.
Time and effort and buy-in at all organizational
levels must occur in order to develop and execute
an ethical culture in nonprofit organizations.

21. References
Nonprofit ethics seen deteriorating. (2008). Philanthropy Journal. Retrieved
from http://www.philanthropyjournal.org/news/nonprofit-ethics-seendeteriorating
Fleishman, J. (n.d.). Ethics and accountability in the nonprofit sector.
Retrieved from
http://www.councilofnonprofits.org/resources/resources-topic/ethicsaccountability
Schmidt, E. (2004). How ethical is your nonprofit organization? Retrieved
from http://www2.guidestar.org/rxa/news/articles/2004/how-ethical-isyour-nonprofit-organization.aspx?articleld=827
McNamara, C. (n.d.). Complete guide to ethics management: an ethics toolkit
for managers. Retrieved from
http://www.managementhelp.org/businessethics/ethicsguide.htm#anchor33077

22. Pekel, J. & Wallace, D. (n.d.). Ten step method of decision making. Complete
guide to ethics management: an ethics toolkit for managers. Retrieved
from http://www.managementhelp.org/businessethics/ethicsguide.htm#anchor33077
Independent Sector. (2011). Strengthen accountability. Retrieved from
http://www.independentsector.org/accountability
Utah Nonprofits Association. (2002). Standards of ethics. Retrieved from
http://www.nonprofit.utah.org/una/standards.html
Strategies for Managing Ethics. (2011). Retrieved from
www.youtube.com/watch?v=M6FAZI3G-6I