When describing the nonprofit sector in America people use different terms such as charitable, voluntary, third, civil society sector, amongst others. Frequently people call our sector the ethical sector, and I believe that many of our organizations set high ethical standards and act on them. However, there are always challenges and issues that arise that cause executive directors, boards and leaders of organizations to take pause and look carefully at the decisions we are making.
Probably 20-30 years ago several state nonprofit associations began to look at the ethical standards that nonprofit organizations should be fostering. Kellogg Foundation gave the Maryland Association of Nonprofits money to develop standards. Minnesota and Colorado soon followed. We have articulated standards for behavior in terms of board of directors, conflicts of interest, executive director, and treatment of volunteers, but to my knowledge, as a sector, we have not agreed on these standards and they are not a part of a code of conduct that is universally agreed to.
The leadership of a nonprofit is mandated to seriously look at and decide how it wants to conduct its business, treat employees, volunteers, donors, and all stakeholders. Our sector is built on trust, and once we lose this it not only impacts our own organizations, but the entire sector as well. Looking ahead, some of the key issues that I have been concerned with include:
- Salary scales for the executive director in relationship to staff– At the Community Resource Center we used a salary ratio that ensured nobody in the organization made more than two times anyone else. Do you have any guidelines for determining salary differential?
- Mission drift– So many nonprofit executive directors are always “living on the edge and the ledge” when it comes to covering costs, making payroll, etc. It becomes easy to focus on applying for monetary opportunities rather than asking yourself, “Does this grant fit into our mission?” or “Is it a high priority to apply for these resources?”
- Media relations– When a reporter calls from the media, do we ask ourselves if we are the right organization/person to respond to their request? Are we inclined to take the interview because it offers us an opportunity to become more visible or is it more appropriate to refer them to another organization that has more expertise?
- Hiring an executive director– RMA conducts many executive searches for nonprofits, and we’ve found that organizations frequently overlook internal candidates and automatically go outside of the organization to hire lead staff. What is the message here for the people who want to be promoted? Do they have the qualifications and are they being considered? Is the organization willing to invest in their development?
- Bringing constituents on the board of directors– I know many youth organizations that don’t have anyone under 40 years old on their board of directors. People always want folks of wealth on their board, and that is important, but it is also important to have people who represent the issues, communities and constituencies with which you are working. These individuals bring reality and a deep understanding of the issues, and sometimes, can be the best fundraisers in the organization.
There are many of these ethical issues and challenges that need to be considered. The larger and more important the nonprofit sector becomes, the more we need to consciously look at these issues. I believe it is the responsibility of not just the executive director, key staff, and board, but everybody concerned to grapple with these questions and apply our ethical standards to the decisions we make.
Ethical challenges and choices
Ethical challenges are sometimes referred to as the difficult choice “between right . . . and right.” Well above the non-negotiable boundaries of the law, conscience, and/or one’s own faith, there are often grey areas in our lives where a choice must be made between valid, but competing, courses of action. This is the kind of high-level decision-making that nonprofit boards hire executive directors to tackle.
One challenge we’ve touched on before in discussions of corporate sponsorships is the decision to take money from a company whose industry, product, advertising, hiring practices, or philosophy is arguably contrary with your mission. Does the benefit to fund your program–which could be substantial–outweigh the community’s potentially misguided perception of your mission? Can you find a win-win that doesn’t compromise your nonprofit’s values but also helps the corporation improve its image?
As seasoned nonprofit leaders know, many more ethical challenges exist in our everyday lives. Here are a few examples (all borrowed from real life):
Events. Your nonprofit serves minority youth in a low-income area, and you’re raising money for a badly needed recreation center. Your board is looking at different kinds of special events for fundraising in 2011. One idea is a golf tournament, which you think you might be able to raise money with, and a private country club has offered to host the event within your budget. The exclusive club has never seemed to embrace people of color in its membership, nor is golf a sport that the population you serve can afford. Should you choose this event and/or venue?
Social/political agenda. You have received news of funding for your new teen health outreach/education program from a large, faith-based foundation in your area that has a conservative stance. You have just been informed that the program has also been awarded a startup grant from a smaller foundation that is identified with progressive policy, particularly on behalf of the gay, lesbian, bisexual and transgendered community. The large funder advocates abstinence and the new, smaller funder sees your program as an opportunity to teach safe sexual behavior, including condom use, as well as tolerance for alternative lifestyles. Your program hasn’t even rolled out yet. Can you deliver program that satisfies both funders, or should you finalize the curriculum based on one perspective, and return the other foundation’s money?
Media coverage. A reporter from a major news outlet in your area calls you with a specific story idea in mind. It’s not really your primary program area, and in fact another nonprofit (with whom you probably compete for donors, grants, and volunteers) has a much stronger, more successful project that would fit the reporter’s story beautifully. It’s a pressing community issue that certainly warrants more public awareness. Do you do the interview, trying to bend the angle to be more of a fit to your own organization . . . or refer the reporter to the other nonprofit?
Employment. Your organization has had a lean year. It’s time for performance reviews and salary adjustments for your 12 staff members. Your three program managers have performed exceptionally well in spite of various internal and external challenges, and they are the star performers who make it all work. If you give them a modest raise (which they clearly deserve), you will have to eliminate an entry level support position. If you don’t reward your core leaders, they may well seek other jobs; if you eliminate the support job, morale and productivity throughout the team will be affected. What do you do?
Board education. You’re an executive director with a pressing problem on your desk that needs prompt attention. The solution you’re inclined to seek is theoretically large enough in scope to alter your organization’s major program, and, according to your bylaws, thus requires board approval. Your next board meeting is three weeks away. Discussing this issue would be an excellent opportunity to educate your board on timely challenges in your industry and the true “nuts and bolts” of your operations. Do you wait on the solution until your board has had a chance to really discuss it in person and take a vote, or do you make your own decision and explain to the board later why the timing dictated that you not bring it forward as a board action?
In-kind donors as vendors. As it has evolved and grown, your nonprofit has enjoyed the generous donation of in-kind printing for the past two years from a particular local shop. Now you have a budget to purchase printing, and you’ve gotten bids from several providers. Your in-kind donor’s bid is significantly higher. Do you owe that printer the work?
Our goal isn’t to provide the answers but to help you recognize these challenges as they arise. Too often we fear talking about these kinds of questions because tempers may flare or feathers will be ruffled.
Remember that part of leadership is facing fears and being willing to have difficult conversations. Ethical challenges confront us virtually every week. Your first task as leader is to see them and prepare to move through them with grace and wisdom. Together, your board and senior staff must build the trust and the fortitude to address ethical dilemmas honestly and directly, making choices that you all can live with.