Estimated Reading Time: 12 minutes
Executive Director
Most nonprofit leaders would enthusiastically agree that ethical conduct and core values are key to the success of their community-serving missions. Yet among your co-workers and peers, how acute is awareness of ethical dilemmas in every-day decisions? Do colleagues have the skills and patience to slog through ethical questions when they are pressured to take action, or support their superiors? Do we erroneously assume that unethical behavior doesn’t happen under our watch or that staff teams are truly motivated and empowered to report ethical breaches? In their Harvard Business Review article “Ethical Breakdowns,” authors Max Bazerman and Ann Tenbrunsel write that intentional malfeasance is rare, but “Much more often, we believe, employees bend or break ethics rules because those in charge are blind to unethical behavior and may even unknowingly encourage it.” (See “Ethical Breakdowns,” Harvard Business Review, April 2011.)
Research on ethical behavior, corporate ethics policies and trends from the Ethics and Compliance Initiative (www.ethics.org) offer a number of startling revelations, such as:
Although some leaders believe that ethics is truly black and white—either behavior is ethical or it isn’t—many more recognize that there are substantial areas of grey.
Some of the scenarios we’ve encountered at the NRMC include:
Nonprofit leaders who serve as champions of ethical conduct in their organizations wear a variety of hats, from Ethics & Compliance Officer to General Counsel to Director of Risk & Compliance, Risk Manager and more. To tap into the diverse perspectives of these leaders, I asked several members of the NRMC board to weigh in on my top of mind questions about practical issues related to ethics.
Joining me for to answer my top-of-mind questions about ethics in a nonprofit workplace are:
Carolyn Gulston, Director of Risk Management, National MS Society
Kitty Holt, Ethics & Compliance Officer, Plan International USA
Donna McPartland, Counsel, Arent Fox LLP
Mary Ann Riesenberg, Director of Strategic Initiatives, Consultance Accounting
Pat Vaughan, General Counsel & Secretary, Population Council
Melanie: In your experience, are there any common misconceptions about ethics held by nonprofit staff or volunteer leaders?
Mary Ann: Since nonprofits are often charitable organizations and may serve those in the community, there is sometimes a misconception that unethical behavior, including fraud, is less apt to happen in this altruistic environment (i.e., “We do good, so we are good”). Like any company that employs people, there’s the risk of ethical challenges, so it’s important for nonprofits to have an ethics policy and train employees and volunteers on organizational values and expectations.
Carolyn: Yes, I do think that there are some who feel that because you work for a nonprofit organization you typically hire highly compassionate, committed, altruistic individuals who are ethical. However, I feel ethics is behavior that is ingrained—you either have it or you don’t. To think that everyone working in the nonprofit sector is more prone to be an ethical individual is a misnomer.
Pat: I have encountered individuals working in nonprofits who mistakenly think that rules, including “ethical” standards are different because they are working in a “non-commercial” “mission oriented” setting. In these instances, they don’t view their conduct as “unethical” because they believe that compromises are acceptable and in some cases required, in order to achieve the “mission.” Changing this orientation requires leadership’s active commitment to establish, publish, and train staff and volunteers about the organization’s ethical standards and the consequences and accountabilities for the breach of these standards.
Melanie: Are there true grey areas that nonprofit staff members find it especially hard to navigate?
Kitty: While our organization has not found this to be the case because we have policies in place, one grey area could be a donor wanting to make a large gift towards something a particular nonprofit cannot deliver on. It can be hard to walk away from a large sum of money, but a reputable non-profit will tell the donor they cannot do what the donor wants, work with the donor to find other areas of interest within the organization, and, if that is not possible, to let the donor know about other organizations doing the work the donor wants to support.
Mary Ann: Conflicts of Interest is one of the areas that may be hard for nonprofits to navigate. It’s hard to us to see our own potential conflicts of interest, so it’s important for someone independent of a situation to provide advice on managing real or perceived conflicts. Having a clear conflict of interest policy and providing specific examples of the various types of conflicts that might occur, is a good practice.
Carolyn: Individuals responsible for generating revenue to support a mission often struggle to balance creative fundraising with policies focused on safety. There is pressure to push the envelope to offer unique events, but that may be in conflict with the commitment to provide a safe environment and minimize the risk of physical harm.
Pat: My organization works in 50 countries, conducts research in several subject matter areas including biomedicine which involves human participant research. The nature of the work and the variety of locations and cultures where work is conducted can give rise to ethical matters. In this type of complex setting, in order to address the various issues that could arise (black, white or grey areas), in addition to policies and procedures, and training, it is important to officially designate individuals or teams that have the expertise to provide guidance and/or to make determinations on these issues. For example, an Institutional Review Board reviews all ethical issues pertaining to scientific research. The size and scope of the formal designation(s) will depend upon such factors as the nature of the work and complexity of the particular organization.
Melanie: Modeling ethical behavior and setting a tone from the top is often mentioned as key to creating an ethical culture. In your experience, is this harder than it sounds? In what ways might a leader unintentionally send miscues to their staff?
Donna: In my experience, it is harder than it sounds. For instance, leaders might ask for abbreviated training. The importance of an executive sponsor at the highest levels cannot be over emphasized, as you absolutely need to have ethics and compliance really resonate, engage and filter throughout the organization.
Carolyn: I do think that there may be instances where a leader’s actions may not reflect his or her core values (i.e. excellence, leadership, compassion etc.). It’s important to remember that members of your team will ultimately focus more of their attention on what you do, and less so on what you say.
Pat: I am a member of my organization’s Executive Team (ET) and I don’t think it is hard at all. This might be because of my role as General Counsel. For me, doing things in an ethical way makes things clear, less complicated, and avoids problems now and in the future.
Melanie: What are the upsides and downsides of using a third-party hotline as a reporting tool for ethics concerns? What tips would you suggest to a leader considering the use of a hotline?
Donna: I’ve had experience with third party helplines and it was very positive, especially for multinational organizations. Providing multilingual, 24/7 help can be really beneficial for staff. Administration was much easier also. The principal downside is the cost.
Kitty: If considering going to an external hotline, I would speak with a few peer organizations and understand their experience with hotlines. From our experience, this is just one more option for employees to speak up if they are not comfortable speaking up internally for any reason at all. We would rather have someone report a concern to an external vendor than not speak up at all, or go around official channels.
Pat: An organization should want to hear about concerns so that they can be properly addressed in a timely manner. The hotline should be one of several reporting options for the staff. Also, it is helpful for staff who are in different time zones from headquarters. Periodic assessment of use and effectiveness are always a good idea. If a hotline is not going to be used the organization must assess the risk of not having it. In addition, the organization should have a defined internal response procedure and designated person/team to respond in a timely manner to a matter when it arises.
Offer your board and staff teams a few practical ethics resources and exercises to help them apply the values your mission was built on:
P = Policies: Is it consistent with my organization’s policies, procedures and guidelines?
L = Legal: Is it acceptable under the applicable laws and regulations?
U = Universal: Does it confirm to the universal principles/values my organization has adopted?
S = Self: Does it satisfy my personal definition of right, good and fair?
A similar framework is the “Ask yourself” – Ethics Decision Tree, from Cisco. Available online, the framework invites decision-makers to ask themselves a series of six questions before making a decision with ethical implications:
With each step, employees are guided on what to do if after asking the question, they aren’t sure. For example, Not Sure (if it’s legal)? Contact the legal team for guidance. At each step in the framework employees are reminded that based on whether they answer “No” or “Yes” to each question, “the action may have serious consequences. Do not do it.”
As a member of the Board I will:
As a member of the Board I won’t:
Now it’s time to remove your rose-colored lenses and quell any confusion in your workplace that might make your nonprofit vulnerable to ethical breakdowns. Honor your stakeholders and yourselves by putting ethics before everything else.
Melanie Herman is Executive Director of the Nonprofit Risk Management Center. She welcomes your questions about ethical challenges facing nonprofit leaders at Melanie@nonprofitrisk.org or 703.777.3504.
ASAE Ethics Committee – Ethical Decision-Making Models – http://info.ahredchair.com/blog/asae-launches-the-ethical-decision-making-model-flow-chart
PLUS Ethical Decision Making Model – www.ethics.org/resources/free-toolkit/decision-making-model)
Ethics Decision Tree – www.cisco.com/c/en/us/about/corporate-social-responsibility/ethics-office/decision-tree.html
“Boiling the Frog: Fighting the Slippery Slope of Ethical Indiscretions in the Workplace,” RISK eNews – www.https://nonprofitrisk.org//resources/e-news/boiling-the-frog-fighting-the-slippery-slope-of-ethical-indiscretions-in-the-workplace/
“Ethical Breakdowns,” by Max H. Bazerman and Ann E. Tenbrunsel, Harvard Business Review, https://hbr.org/2011/04/ethical-breakdowns
“Creating an Ethical Workplace,” by Dori Meinert, Society for Human Resource Management, www.shrm.org/hr-today/news/hr-magazine/pages/0414-ethical-workplace-culture.aspx
Association of Fundraising Professionals, Code of Ethical Standards – www.afpnet.org/files/ContentDocuments/CodeofEthics.pdf
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