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Ethics in Nonprofit Organizations

Big business's struggles with those pesky ethics have been at the forefront of the current economic mess. Sacrificing all sense of conscience and any sign of fundamental values, the "business leaders" have chased profits on the backs of working Americans. Just as bad, but less publicized, are the scammers who target Americans through get-rich-quick schemes and ridiculous "opportunities" that only serve to separate the public from their cash. But the worst of the worst are those who go after your good conscience and use the guise of the greater good to rip off an unsuspecting public. For-profit or nonprofit, the next generation of businesses must create a new standard of ethics to rebuild trust and re-establish a strong reputation worldwide.

Nonprofit corporations suffer more than most businesses when greed disrupts the economy. When people lose their livelihood and have to tighten their belts, philanthropy is rarely a priority they can continue to afford. At the same time, a tough economy tends to bring about a return to basics and an increased interest in doing good. More people may want to help, but they are far more skeptical of the messages they hear from business leaders...even the nonprofits. To make matters worse, there are frequent reports of "nonprofit" scammers, collecting cash for a cause that doesn't exist. All of these factors add up to a critical point -- to be successful, modern nonprofits must be ethical to the core.

Ethics in business, including nonprofits, begins with the company culture, and culture begins at the top. The board of directors and executive director (the senior staff member) can make or break the organization. Nonprofit board members must participate for the good of the organization and not for personal gain. Executive directors must accept that the nonprofit career path is not the road to personal wealth, and that the job can (and often does) feel thankless. All of these folks need to be doing what they do for the right reasons -- to make the world a better place by addressing the problem at hand. The board and director drive the culture for all the volunteers, donors, and those who receive the programs or services of the organization, and ethical actions start with them.

Every nonprofit should develop and enforce a comprehensive ethics policy. At the time the bylaws are initially written, ethical standards should be built in to every aspect of the organization. Nonprofit corporations are technically owned by the public, and everything from the most basic decisions to program operations should reflect that fact. Everyone involved should be more than comfortable explaining their actions and decisions to the local news reporter...at some point, they just might have to. There are pretty standard ethics policies in place across most nonprofits; the difference lies in how well those policies are implemented and enforced. To be successful, ethics must be a priority, even when backing up the rules causes some discomfort.

The federal government has been tossing around ideas for making nonprofits more transparent to the public for several years. Although few of the ideas and recommendations have become law, it is wise for any startup nonprofit board to be aware of these potential standards and to implement as many as possible. The primary goal is to make it easier for potential donors to know exactly what they are giving for -- how money is collected and spent, how the nonprofits are run, and how they are held accountable for what they do and say. The IRS now makes nonprofit annual reports available for free on the internet, and savvy philanthropists do not hesitate to check those out before they contribute. A better option for the future of nonprofits is to make that information easily accessible themselves. Post the strategic plan and budget on the organization's website. Post biographies of the major players within the organization and be clear about what you do, how you get it done, and who benefits from the programs. Transparency is a huge indication of ethical practices -- the more your potential donors know, the more comfortable they will feel in giving their own money and encouraging others to contribute as well.

About the Author

LaunchX.com is dedicated to training entrepreneurs to turn their good ideas into great companies. The LaunchX System provides step-by-step education in the mindset and skill set entrepreneurs need to succeed. Our program includes intensive seminar training, key business software, and specialized workbooks that teach you the fundamental skills you need to achieve your financial and worklife goals through entrepreneurship. Register today for our introductory course and see what LaunchX can do for you!