Fundraising Ethics: Why They Should Matter To You and Your Organization

transfer and onboarding team to make sure your system is set up correctly and that it matches your unique needs and ways of working. Our professional trainers will then make sure you get off to a fast start explaining what you need to succeed using a variety of Read More

transfer and onboarding team to make sure your system is set up correctly and that it matches your unique needs and ways of working. Our professional trainers will then make sure you get off to a fast start explaining what you need to succeed using a variety of training programs that cater to your preferred learning methods. Our customer care team provides ongoing support whenever you need it by phone, chat or email. They’ll answer your questions help you improve results and quickly become your best new work friends. While you focus on your mission. Our product managers and developers are incorporating your feedback and prioritizing your needs and concern to deliver easy to use software that will enable you to achieve all your goals when our customers and employees are asked what do you like best about DonorPerfect they both say the same thing the people you will to learn more about how DonorPerfect can meet your unique needs by speaking with your account manager or attending a product demonstration webinar.

Good morning everybody. My name is Sean McLoughlin and I am a senior DonorPerfect Training Specialist. Welcome to Robbie Healy’s session the fundraising ethics, why they should matter to you and your organization. A little bit about Ravi. She is the founding member of Aurora philanthropic consulting, and brings more than four decades of diverse experience insight and success to philanthropic fundraising consulting, strategic planning, board governance, and nonprofit organization management highly regarded and sought after she has worked with more than 150 organizations. As a sector leader, she has served on the board of directors and directors and global ethics committee for the Association of Fundraising Professionals working to keep the AFP Code of Ethics current. also committed to community service she has served on several nonprofit boards and these days you will find her outdoors serving the natural lands force of nature team every chance she gets. Now before I hand the session over to Robbie, I’d like to address a few housekeeping items. All presentations are attached to the session and can be downloaded for your review. Please be sure to add your questions to the q&a tab that’ll be next to the live chat tab so that we can see them get them answered for you. And all sessions will be recorded and found on our DonorPerfect website after the conference. So please give a warm welcome to Robbie. Robbie, you can take it away.

Thanks so much, Shawn. And thank you to everyone who decided to take a session on ethics today. It’s always an interesting topic and often one that we only decide to think about when we’ve had a problem. I want to give you a heads up as Shawn’s already said the session materials are already loaded for you. One of them is the new All AFP code. So I’ve got it in my PowerPoint. But thank goodness, I’m not going to read it to you. But we’re going to talk about it in broad categories. But you might want to download that, so that you have it available because at the very end, we’re going to spend a few minutes looking at a theoretical ethical dilemma. I also want to let you know, I’m going to take a pause, about a third of the way through and two thirds of the way through. So if you’re one of those people who has an immediate question, please go ahead and load it in the q&a. Sean’s going to help me monitor that. And we’ll take a pause to see if you’ve got questions at each of those breaks. So I was listening to Mallory’s keynote, and I thought it was really interesting, you may have noticed this too, when she was talking about rational motivation. Some of the characteristics of that are transparency and accountability. So in my opinion, and experience, ethics fits clearly in that. And as you think about those underlying motivations that make your donors pay attention to you and stay with you. Rational motivation that transparency and accountability are clearly aligned in that. And hopefully, your organization takes that seriously. I know you do, or you wouldn’t be in this session in the first place. So Andrea McManus and I chaired the AFP Code of Ethics revision Task Force. And Andrea is in Australia right now. couldn’t join us today. But I want to make sure you realize, this is the work product of several years of very dedicated AFP volunteers. And I did not care this Andrea and I did it together. So why should fundraising ethics really matter to your organization? I’ve already talked about transparency and accountability. But why you as an individual professional, we have our reputation, our personal brand. And ethics is clearly a part of that. And hopefully, you won’t ever be in a position to be an ethical professional working in a questionable organization. But I want to put on the table that sometimes that does happen. So how do you set your own ethical ethics benchmark for you as a person for you as a professional? And how do you do that in the context of your organization? One of the things that we really think about then, is this holistic view of what are the ethics dilemmas we encounter as Fundraising Professionals? Why does public trust matter in the sector? And why does it specifically matter to us? So when we think about and if you’re familiar with Dr. Sargeant with Adrian Sargeant who’s now at Plymouth University in the UK, the number one reason your doctor Sergeant’s research, the number one reason why people don’t give when they’re asked is because they don’t trust our sector. I don’t know about you, but I still read several newspapers. And every time there’s a story about a nonprofit scandal, it tends to cast a negative shadow on the entire sector. Even if it’s only one organization, it’s that reverse halo effect. So not shining light on us as amazing, the casting a shadow on us as being questionable. So we don’t want to be part of that sector that our organization’s donors or prospective donors don’t trust. So the late Paul Burchill characterize the seven ethical dilemmas into these categories, tainted money, and if ever there was a time in history, when boards and nonprofits are really looking at what makes money that we want to walk away from, it’s been the impact of the ME TOO generation the impact of social justice atrocities and donors that organizations don’t want associated with their brand. Executive Compensation and of course, compensation in the context of a percentage of the money we raise. Privacy donor privacy, privacy of our electronic records privacy of our paper records, the appearance of impropriety, and that has a lot of links with conflict of interest, but it’s really distinctly different. So if you want to do a deep dive into these, that’s a separate workshop. But of course, you don’t want to be one of those organizations that appears that you’re behaving inappropriately. Stewardship, how we steward our donors and prospects, honesty and transparency, and of course, conflicts of interest. You can have the appearance of a conflict without having an actual one. So we’re looking at both of those. So what’s the ethical equation? And I think this is where we really can make the connection between Mallory’s point about rational motivation, transparency, accountability, philanthropy is usually the money that makes our work possible. If we’re using public funding. If we’re using fee for service revenue, rarely does that fund 100% of the need. So philanthropy makes the exceptional work we do possible. Rust makes philanthropy possible, because we already know the number one reason they don’t give us because they don’t trust us. Mallory’s already pointed out to us that rational motivation says transparency and accountability are what donors are looking for. And what makes trust possible ethics being an ethical organization, being an ethical professional, and what happens if we have that, and we screw it up. I love this. Think about a perfectly flat, beautiful piece of paper, and it gets crumpled up. You might be able to smooth it out. But it’s never going to be exactly the same again. It’s never going to be so how do we make sure we never screw it up? And I’m really eager to see some q&a questions or comments or feedback or pushback. Because this is really setting the stage for how we position this within our broader organizations leadership structure. What questions do you have? What feedback do you have? What are you thinking about this? Thing? Thanks, Tammy. I love the analogy too.

Robbie, I got one that I see in the live chat from Denise, my nonprofit who has already had a history of mistrust. How can we correct that one with old donors and with new ones? And then add to that as they have new leadership?

I was gonna say hopefully you have new leadership. And I think as you look at what caused the trust to erode, how are you speaking directly to the change and not knowing exactly what it was? Sometimes, quite frankly, you may need to work with a communications professional who can help you position your messaging in a way that addresses the conflict addresses the solution and sustains that solution over time. There’s nothing like person to person face to face, if your prospects and past donors will give you that opportunity. But I think you are talking about trying to flatten out the crumpled piece of paper. And as you look at correcting the damage, you can’t eliminate the damage. But what you can do is communicate the systems and processes you’ve put into place in order to make sure you don’t do that again.

Excellent. Thank you. from Allison, we have affairs and I’m paraphrasing here but if if there is damage that was done in the past, do you have recommendations on how to correct?

Well, again, I think it goes back to that comment about what were they where did they start in my experience? The issues rarely start with the development office. They often splash up onto us but they don’t typically start with us now, obviously they can. But in my experience they rarely do. So part of it is making sure the development offices at the table with leadership, so you’re really dealing with this. I’m a fan of having an organizational code of ethics. The organization adopting the AFP code as part of its solicitation policy, having a an organizational conflict of interest policy, whistleblower policy, so that you’ve got all of the things lined up as foundational documents. And I’m also smart enough to know that the development officer can’t walk into the CEOs office and say, okay, guy or gal, we got to have all these things before it can raise $1, we don’t have that position, we don’t have that authority. However, finding your natural ally within the board within the development committee, who will help you advance that can be a real piece of making it happen.

Excellent, thank you. Do you have time for one or two more?

Happy to when I’m looking at the that, but I’ll let you curate them in the order that they came in?

Oh, if there’s one that you want to jump on, by all means, take the wheel. No, go ahead. Alright, so this one’s more of a comment than a question specifically. So I think the fundraising sector needs to do a better job to self govern and be more equitable. It seems to prioritize targets over trust relationships. Philanthropy is an enabler. But I don’t think it is the main event for nonprofits. Do you have any thoughts on that?

I do. And I think self governing is an interesting idea, because within our sector, there are some sectors that are more self governed than others. And as we look at being an enabler, rather than the main event, it really depends on the sector in which you work. Because in Oregon is in in sectors where public funding is a very dominant part of, of the revenue stream, I would absolutely agree with that. Some organizations have very little public funding depends on where you work. But I also think that even if you have public funding or fee for service revenue, as a very significant piece of your revenue stream, there’s no guarantee it’ll stay that way forever. So helping people see that we have three revenue streams, and I’m a nutcase about helping boards and our colleagues on the staff understand public funding are not grants, they are contracts. And I call them that, because we tend to get sloppy with the word grant. And if we reserved the word grant, for private philanthropic grant making foundations, it helps to distinguish between those three revenue streams. So I think there’s a lot of truth in your comment. But I think it also depends on what sector you’re in. I did notice a comment about being in a controversial sector for experiencing people who are experiencing homelessness, or people who are living with addiction. I think sectors broadly have to reposition the work. But within our own organizations, I think we have to be realistic about the fact that we have a niche constituency. And every I’ve worked in my development officer career a lot with under resourced elderly, they are not a boutique constituency, like under resourced children. But that doesn’t mean there aren’t people who care passionately about the dignity of aging of under resourced elders. So think a little bit about being realistic. people experiencing homelessness are going to be a niche constituency, the work is maybe harder to identify your your donors. But it doesn’t mean they aren’t there. But that means we have to be realistic about the cost of fundraising because it’s going to be higher, for example, than a large regional or national children’s hospital. It’s just the way it works. So I think, Shawn, let’s move on. And if you want to curate some of the other questions, we can Can I try to get to them later if we if we have time? Absolutely.

I’ll see in a bit.

So looking at the work that Andrea and I were fortunate enough to lead through taking a piece code through a really meaningful update even if you’re not a member of AFP, and of course I hope you are but I’m smart enough to know you may not be even even if you’re not a member you have access to a peace code and And it’s the single most downloaded document that is available on AFPs website. Anyone can use it, any organization can adopt it. And AFP members certify every year that they acknowledge that they are going to abide by it. So it can be a baseline for you and your organization. And as we looked at revising the code, we wound up looking at what needed to be in there. So a strong introduction, why? What is the call to action? What is essentially the mission of a code of ethics? What are the ethical principles that guide it? And then what are the standards of practice? So we’ve gone from four standards of practice categories to five, formerly public trust and transparency were blended together with conflicts of interest, they are now two separate categories, because they really are not just nuanced. They’re very different. solicitation and stewardship of philanthropic funds, donor privacy, treatment of confidential and proprietary information, and fair, equitable and transparent compensation practices. We have also added seven very specific definitions, not because people don’t know what they mean, but because in looking at them in the context of ethics, some of the nuances of meaning are really important. And we wanted to bring them together in one master document. So the introduction really talks about why a code, we talked a lot about how we engage with donors and our external public versus within AFP. The way we treat each other as members, we are not trying to address how members treat each other. There is a separate standard for that, a have peas board as a statement of standards of ethical practice, as well as how we engage with each other as professionals. So the link to the member fair behavior policy will actually be live in the online version of the ethical standards. Diversity, Equity and Inclusion are across the board priorities of AFP. But it is not exclusively the purview of the ethics committee. So there will also be a link to the AFP idea statement. So the code will look at the duties of fundraisers to the organizations and communities we serve, and the duties and fundraisers in relationship to the wider public and the profession at large. So they we have guiding principles that inform the standards, these guiding principles have been changed. I’m smart enough to know even if you’re an AFP member and have been, you may not have realized those standards were there because they weren’t necessarily published as a piece of the code document. And they will be from now on. And again, I’m not going to read this to you. This is in the session resources. So public trust and transparency, fundraiser secure philanthropic support for organizations whose missions respond to community needs and aspirations. We are in the trust of the public for our work, and ensure its effectiveness by adhering to the highest standards of integrity, honesty and respect. And these are the eight standards that we then promise to abide by. And as you weave these documents into your solicitation policies, your gift acceptance policies, you’re also reminding the boards as they approve these, that these standards are out there. Conflicts of interest, potential or actual conflicts of interest can undermine confidence in members, organizations and the profession. three very distinct standards around conflict of interest, solicitation and stewardship of philanthropic funds. The list of solicitation, receipt and stewardship of donations must fulfill the organization’s promise to donors and should be handled with the utmost care and consideration. Honors donor honoring donors wishes is core to the work fundraisers do on behalf of The organization, please understand, this does not demand that you accept every gift you’re offered. Some of them may not be consistent with your mission. And as we’ve looked at the conversations over the last decade, we are more courageous about saying, a gift is not something we’re going to take, depending on what strings are attached. And what the donors reputation and motivation is, once we decide to say yes, then we’re promising to do this. But if we need to walk away, we’re going to have the courage to walk away.

Donor privacy, giving as a personal choice and relationships with donors fundraisers have access to information about individuals and their giving that they must respect. Organizations have an obligation to ensure donors rights to privacy. This includes but is not limited to data protection standards and list management practices. So for very specific donor privacy considerations. And of course, for those of us who work in health care in the US, HIPAA is an additional layer. But there are also globally standards about how we use data, some of which is unique to each country, and culture. Oops. And there shouldn’t be one about compensation, and I’m not sure where it went. So I’ll have to make sure that that’s in the version that you upload, but the last group are around donor compensation. So if you’ve downloaded that document from the resources, you will see that they are in there, and I apologize for that. So let me take a pause here, and see if you have any specific questions about the structure, the sections and the standards, as I’ve summarized them.

Alright, can you hear me again? Robbie?

I can. Okay,

so um, q&a, I’m just gonna take a look at the top voted questions you haven’t answered yet. So we have one, if you are planning a fundraising event, and you raise sponsorships that exceed the cost of the event? Are there any ethical concerns with that?

I think the answer to that depends upon what material was in your solicitation, because in my opinion, sponsorship accrues to the organization itself. So while I understand that, in soliciting sponsorships, you absolutely want to underwrite the cost, so that every ticket you sell over and above the sponsorship is, quote, profit. But I think as you’re looking at sponsorship, make sure you’re positioning at supporting the overarching needs of the organization. And in particular, if you picked one, pause from and Mallory talked a lot about this, what’s the emotional call to action, if your emotional call to action is adding access for people so you don’t have a waitlist? Whatever it is, make sure that your sponsorship material is not exclusively to underwrite the direct expenses of the event. And if I didn’t answer that questioners question, please add some clarifying information so that I can do a better job.

Absolutely. If I see anything, I will pass it along. The next one is kind of a combination of a few different people’s questions, but they’re all pointing in the same direction. Do you have a recommended way to for organizations to share their codes of ethics with their donors in a way that makes it clear that it’s important to the organization and we’ll get the donors on board and have them care about?

As you might imagine, I’ve several opinions about that, one of which is good. They’ll put a link to the code on your website. If you are abiding by the AFP code, put it on your business card, that we abide by the AFP Code of Ethics and Professional Standards, adopting an organizational code of ethics. Now, an organizational code of ethics is going to look very different than this one, because this one, of course, is professional, because it’s for us as individual practitioners. But does your organization have a conflict of interest policy and statement that the board is Senior Staff sign every year, does it have a whistleblower policy? Does it have a code of ethics? All of those things then can be part of your, your marketing and your branding through your website. To what degree do you weave this training into board onboarding into staff orientation? Is it part of the agenda of every board meeting that you have of every staff meeting that you have? Are you talking about the revenue stream of philanthropy within programmatic staff meetings, and how that’s leveraging from average to excellence because of your additional revenue? I did see a question, Shawn, about is there an update of the AP donor Bill of Rights? Let me also clarify, AFP was one of the originators of the donor Bill of Rights. But it is a sector statement, not an AFP statement. All of the organizations that signed on to the donor Bill of Rights are the guardians of that, and it is not exclusively AFPs. So well, you may think, and I think your question implies that you do and I wouldn’t disagree with you that it might need a refresh as well. That’s a conversation AFP could start, but not control.

All right. And then one more that has a many a lot of up votes. How do you go about stewarding a donor to look at their look at how their alignment is actively going against an organization’s mission and their donation? Or another way, I guess, to ask the question is how do we go about no longer accepting those funds? Because we an organization no longer aligns with the donor? And you’ve kind of touched on this a little bit earlier?

Yeah, but I think the development officer is rarely in the control seat to answer that question. I really think it goes down to two policies that a board needs a gift acceptance policy, and a naming policy. And I’m smart enough to know, oftentimes, a naming policy is only something that you work on when you’re doing a capital campaign. But it’s something that you can look at simultaneously. And the me to movement, the George Floyd murder, and the community centric, donor centric conversations around when is a gift, a good gift, and when is a gift, a bad gift has given us an opportunity to have those conversations within our organizations. And again, if you aren’t in a position to raise that conversation, find an ally on the board on the development committee, who can begin to raise that within the board, so that the board is willing to have those conversations, because you want you need protection of a good gift acceptance policy, so that you are in a position to make sure, first of all, you’re not soliciting gifts from those people that you shouldn’t be accepting gifts from. And to begin to reposition the conversation, it may be that you need to help those donors find an organization whose mission is aligned with their values, so that you can have a soft landing in your separation. I want to get to the case, because I think this group is a pretty engaged group. And you may have some strong opinions about how to answer these. So let me take, take a little bit of wrap up here. And then we’ll move to the case. So it’s your reputation that’s on the line if your organization is out of alignment, and it’s not necessarily going to be something people are really eager to talk about. So when you look at board, and your staff, colleagues and volunteers, they may be thinking it’s not their job, but it is. So who’s responsible for making sure your organization is ethical, that your reputation and your brand are strong. You never have that wrinkled up piece of paper you have to go back to you as the fundraising staff may be driving the conversation, your board, your executive staff, every volunteer all of your program staff. Everyone is part of this 30 years ago, nobody thought marketing was important in the nonprofit sector. Obviously we know it’s everybody’s job. Protecting your reputation in my opinion is the next is the next marketing. So how do we make sure our reputation is never damaged? So in my opinion, we’ve got three levels Some of discernment, first of all, is it legal? Obviously, you’re not going to break the law by doing something that’s illegal. Secondly, is it ethical? It might be, but it may or may not be smart for you. So my favorite analogy is if your Mothers Against Drunk Driving, are you going to solicit a sponsorship from a wine, beer or spirits company? Maybe not? Probably not. If you’re an arts organization, a wine beer or spirits sponsor might be perfectly appropriate. So in my opinion, you’ve got to put three lenses on this question. Is it legal? Yes, go forward? Is it ethical percentage compensations, not illegal? But do you really want to be sitting across from a donor saying, I’m so glad you’re gonna give us this major gift of $50,000? Because the way I get paid, I get to keep 5%. I don’t think I would want to be doing that. So I can have a bonus structure that doesn’t give me a percentage of funds raised. And when we think about it that way, in the context of working with our boards, it takes on a different nuance. And then lastly, is it smart? What’s our space? If we’re in the recovery space? Are we going to take money from the cannabis business? Maybe not? So look at it from all three, and there’s never a perfect answer. There’s always the right answer for us. So as you look at integrating ethics, and I’ve already managed, some mentioned some of these, adopt a code of ethics, adopt a conflict of interest policy, if you’re not already abiding by the donor Bill of Rights, do that. And make sure every single person employee volunteer board, they’re all aware of that, and put it on your website, incorporate it into your staff evaluations, make sure it becomes part of your DNA. So here’s the question for you. You’ve just completed a capital campaign that raised a significant amount of money. It’s a four Phase project. Some of the payments you’ve already gotten include restrictions by donors, but work that’s going to happen in phase three. Your CFO is recommending to the board, that you use these early payments for phase one work, rather than apply for construction or a swing loan. Is it an ethical dilemma to use money that donors earmarked for phase three projects as cash flow rather than a swing loan? Is it an ethical dilemma? Why is it why isn’t it? So let me give you a couple minutes to put your answers and please put them in the q&a.

Thanks, Ashley,

gonna pop in here for a moment, let you know in live chat, people are overwhelmingly saying yes. So I just want you to be aware of that.

Shana has an interesting response. I think you’d have to go to the donors and ask them if they would mind if you use it for a swing loan. So then you’re kind of bridging into the second part of the question. I’m grateful for that. Is there a way the campaign could have avoided this situation prior to receiving the payments? And Lori’s saying it’s borderline unethical. You can always go to the donors and ask them if it’s okay. So how could you have structured this and very beginning so that you don’t have this consideration? I’m grateful for all the people are saying yes. The way this is teed up is a problem. But how could you have done it first, so that it wasn’t?

Wind one is ever better gift agreement wording. Jane is asking why would you break it into phases? And I think we can circle back to that. Shawn is saying don’t make it quite as specific. Angela’s saying Be clear with the multi phases and Catherine’s adding focus first on racing Phase One Funds, I realized We just have a few minutes left. But let me let me help you think about it in a different way or prepped and expanded ways better. It’s one thing to award namings for things that are going to be completed in phase three, it’s another thing to promise that you won’t spend the money until you get to KS three, phase three. So, if you look at raising funds for the comprehensive campaign, but recognize that a donor may want a naming, that isn’t going to happen in the first phase, that’s a way of thinking about this. Obviously, you have to make sure you’re gonna get all the way to phase three. Because if there’s any risk, that you’re going to do phase one and stop or phase one and two, and then stop, you cannot do that. But at the same time, one of the reasons you might be doing something in phases couldn’t be you’ve got multiple pieces of a project, you might have a building construction, you might have furniture, fixtures and equipment, you might have some kind of grounds work that you’re doing, installing gardens and falling walkways, doing something like that. So there could be a very logical reason why you’re doing something as pieces of an overall. But this talks so much about the language of how we invite donors to come in with us. And if you’re listening to Mallory, and I’m sure you will, we’re this emotional response to what is my passion is what gets them to listen to what’s in the first place. So when structuring your case, for support your formal ask in a way that really touches their heart, we also need to be in mind, keep in mind, the rational motivation for why they stick with us and stay with us. We’ve got to help them understand all the phases. And a donor may choose not to begin to pay their pledge, until they can see that their piece of this is going to actually actually happen. And Jane is adding capital campaigns for affordable housing is definitely in phases. But the request is for the overall outcome. And I realize we’re out of time. But perhaps if we had more Jane would have been able to speak to whether they have namings in that particular. But the what the CFO wants, and what the donors deserve. We need to bring that together before we launched the language. So thanks again for joining me. My contact information is in the PowerPoint. And if you have questions, follow up questions. I’m always happy to get them. But please put in my email that you have a question from this conference. Because as you might imagine, if I get an email I don’t recognize I may not open it. But thanks so much for for joining me today.

And thank you, Robbie. And thank you everybody for attending this session. We hope you had some great takeaways to begin your day and set the tone for what’s to come. For this session only we are doing a 10 minute break. So everybody can stretch their legs, grab some refreshments. The next sessions will begin at 1205. Eastern. We’ll have Juliette Campbell with how to successfully launch a digital fundraising campaign. We also have Chris Barlow with surprising alchemy, how corporate partners can empower new donor growth. Again, no matter which session you want to attend live, you won’t miss any content. We will be sharing everything on the DonorPerfect website at the end of the day. So again, thank you Robbie. And thank you everybody for joining us.

Thank you so much, Sean.