Ethics summer 2011

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  • 1. Leigh N. Hersey, PhD
    PADM 7642
    Legal Requirements & Ethical Considerations of Fundraising
  • 2. Legal Requirements
  • 3. File to Fundraise
    Register with the Department of State in order to solicit contributions directly or indirectly from, or within, the State of Tennessee.
    Application for Registration
    A Summary of Financial Activities
    A copy of the organization’s IRS Form 990, form 990EZ, or Form 990N from its most recently completed fiscal year, if tax exempt.
    An audited financial statement if the organization’s revenues, excluding grants received from government agencies and 501(c)(3)private foundations, exceeds $500,000
    Governing documents (Articles of Incorporation, if incorporated, by-laws, etc.)
    $50, http://state.tn.us/sos/forms/ss-6001.pdf
    http://www.multistatefiling.org/
  • 4. Other things to be familiar with
    Be familiar with tax laws
    Written disclosure
    Deductible amount is limited
    Provide good faith estimate
    Written acknowledgement
    Receipts for gifts over $250
    Receipts for non-cash under $250
    Form 990
  • 5. Considerations for Volunteers
    Control
    Confidentiality
    Don’t replace paid employees with volunteers
    Treat employees that volunteer as volunteers
    Organizational liability for acts of volunteers
    Liability for injury to volunteers
    Vehicular responsibilities
    Board members
  • 6. Ethics
  • 7. Relationships are built on Trust
    Truth-telling
    Promise-keeping
    Accountability
    Fairness
    Fidelity (faithfulness)
    Anderson, `96
  • 8. Areas of Trust
    Donation will be used for its intended purpose.
    Information will be kept private and confidential.
    Fundraiser will not be swayed by conflicts of interest.
    Organization will conduct ethical decision-making.
  • 9. Three-Step Process to Assess Your Ethical Position
    The Stomach Test – How does your stomach feel after making this decision? If it feels upset, maybe it is not the ethical decison.
    The Grandmother Test – Would you want to tell your grandmother what your decision was and why?
    The 60-Minute Test – Sit on your decision before finalizing it. Do you still think it is a good decision?
  • 10. Potential Ethical Abuses #1Misusing Donor Funds
    The misuse of contributions for purposes other than those to which donors assume they will go.
    Using restricted building funds for operational expenses.
    Investing funds in an endowment rather than purchasing equipment.
    Using restricted contributions to pay for a consultant.
  • 11. Potential Ethical Abuses #2Divulging or Absconding with Donor/Prospect Information
    Donor/Prospect lists and research data belong to the charitable organization, not to the fundraiser or researcher who produced or developed the information.
    Taking donor lists or data when leaving one organization to join another.
    Selling donor lists.
  • 12. Potential Ethical Abuses #3Intruding on Private Affairs
    Technology allows the development office to dramatically increase its ability to research the potential donor.
    Obtaining an individual’s credit history.
    Above and beyond basic research.
  • 13. Potential Ethical Abuses #4Exploiting Relationships
    Accepting personal gifts, favors, or benefits from donors you have cultivated for your organization.
    Treating donors as a means to your own end.
    Encouraging donors to change loyalty when you move from one organization to another.
    Undue influence on estate planning decisions.
  • 14. Potential Ethical Abuses #5Negligent Security
    How should donor/prospect information be handled by staff and volunteers?
    Openly discussing prospective donors in a “rank and rate” meeting.
    Leaving files and data where they can be easily copied or studied.
    Leaving donor/prospect computer files open.
  • 15. Potential Ethical Abuses #6Questionable Charges or Expenses for Services
    The nature of compensation for services is a controversial issue.
    Percentage-based compensation.
    Finder’s fees.
  • 16. Why not Percentage-Based Compensation?
    The charitable mission can become secondary to the person gain.
    Donor trust can be damaged by undue pressure to give.
    The fundraiser may be tempted to influence the nature, size, and timing of a donor’s gift.
    This type of compensation ignores the role of volunteers and other staff members involved in the process.
  • 17. Questions to Ask when Exploring Alternatives to an Ethical Dilemma
    How does implementing a given alternative relate to the organization’s mission?
    Does it relate to the organization’s mission?
    Does it support the organizational mission?
    How does it affect those who are the beneficiaries of the organization’s services?
    How does a given alternative strengthen or weaken long-term relationships with colleagues (volunteers, donors, the broader community)?
    How does a given alternative impact your own sense of personal integrity?
    How does taking a certain course of action strengthen or weaken one’s personal integrity? Fischer, 2000