Good Ethics Equal Increased Donor Trust for Nonprofits

CHICAGO - The number one reason donors don’t give is because they don’t trust the nonprofit sector and/or the specific organization. Choosing the right ethical path for your organization could help change that perception and boost your donations. Knowing the most common ethical challenges that a nonprofit faces is the first step in establishing trust and credibility with your donors. Leaders, staff and volunteers should all operate under the same set of ethical guidelines when representing the organization.

Let's review the top five ethical issues facing nonprofits:

  1. External Conflicts of Interest Be aware of donors who are contributing to further their own mission, rather than yours. Learn to identify the situations which are likely to have a conflict of interest attached. Make sure that accepting a donation from an individual or a group is not likely to damage your reputation in any way. Educate your fundraising team to always consider the source of the funds so that accepting the gift will not conflict with your organization's mission. Reputable donors don't appreciate their efforts being aligned with individuals or companies with a questionable stake in the organization.

  2. Internal Conflicts of Interest A conflict of interest could originate from inside the organization as well as from outside, as mentioned above. These internal conflicts could involve the way that financials are handled and reported, the bending of ethical rules and requirements for a board member, as well as competency issues for individuals in leadership positions. The interests of individual members of the board should never supplant the legal and ethical interests of the organization. Be cautious of situations where somebody has more at stake for themselves (ego, connections, opportunities) than for the best intentions of the organization.

  3. Privacy It's great to have information on your donors so you can understand your donor base and how best to connect with it. However, don't be tempted to collect more information than is necessary. Donors have the expectation of privacy when they contribute to an organization. A breach of this privacy is a great way to lose their trust.

  4. Questionable Public Image due to Appearances of Impropriety Fundraising events and situations don't have to be illegal to be considered unethical. Make sure that your team stays away from situations that make donors question whether the organization is conducting an illegal or unethical activity, relative to its mission. Appearances can also be ruined if your event team plans the wrong type of event to support your organization's mission.

  5. Stewardship Many donors provide funding for specific programs under the umbrella of your mission. In return, they trust that your organization is using the funds in the exact manner that was stated when they made the donation. It is highly unethical to accept money from a donor for one purpose and then use the funds for another purpose, even if it is a "good" alternate purpose and for a small dollar amount. If there is a question that the donation cannot be applied according to the specific intent of the donor, then don't accept it. Organizations that have strong stewardship practices are more likely to retain donors over time than those with lax stewardship.

A strong ethical framework for your organization can increase donor trust in your mission and this may lead to more donations. Not every ethical dilemma will be immediately apparent and some will be difficult to identify and resolve. The manner in which an organization handles an ethical conflict becomes an example to all external and internal stakeholders by setting acceptable standards for behavior for everyone. If your organization experiences an ethical dilemma and cannot resolve the issue internally, consider seeking guidance from an outside, unbiased expert (like an attorney, nonprofit consultant, etc) who may provide the support the team needs to fix the situation for all involved.





Contact Us

Sign up for email updates

Office (Main)

125 South Wacker Drive, Suite 300

Chicago, IL 60606

Phone: 312.462.3972

Office (West)

2839 Miradero Drive, Unit A

Santa Barbara, CA 93105

Phone: 805.301.4005

Copyright ©2009 - 2020 Certified Impact LLC.  |  Contact Us