Topic presentation ethics in nonprofit management sans audio


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Discussion of what ethics are and how to use ethics in nonprofit management.

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  • PSC 540 Nonprofit Management and Leadership Topic presentation
  • This is an overview of the subject area of ethics in nonprofit management.
  • The reason to be concerned about ethics is that within the last 15 years there has been an increase in the number of ethics breaches by Nonprofit personnel including such well known nonprofits as the United Way, the American Red Cross, and even the PTA.
  • The ethics of nonprofit organizations had never been questioned because the public has felt that nonprofit organizations have held themselves to higher standards than for-profit entities. The growth of the nonprofit sector and an increase of scandals in previously well-regarded organizations has caused this perception to change. In order to regain trust, nonprofits must demand an ethical culture, which includes ethics policies.
  • For transparency – make sure the public understands EVERYTHING that you are doing. No individual profits – this means no board member, no staff, no volunteer, no vendor receives special treatment Fundraising – make sure that donors know exactly where there money is going.
  • When an organization has recognized high ethical standards, it is easier to raise funds, recruit volunteers, and command respect within the community.
  • Moral Compass - Create an organizational code of ethics to guide leadership and ethics policy for management to execute. Teamwork - When an ethical culture exits teamwork is promoted because everyone is working together towards a common goal.Liability – for example, defining boundaries for allowable expenditures varies between organizations and should be tied to the mission of the organization.A code of ethics defines the organization’s values to everyone, internally and externally.
  • Relevant - Do you have as much information as possible to make informed decisions?Involvement - Has everyone been involved in making this decision?Consequential – Have you accommodated for the consequences of your decision on those effected by it?Fairness – Is the decision fair to ALL involved?Enduring – Does the decision uphold enduring organizational values relevant to the situation?Universality – Would you want this decision to apply to all similar situations?Light of Day – If the details of this decision were known to ALL, would you be comfortable?
  • The Independent Sector website offers four categories of resources to help nonprofits develop appropriate ethical standards. In addition to offering four categories of guidance on ethical issues, there is a link to a guide on Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations
  • Individuals and businesses do not like to give their tax dollars to the government because they do not believe that government spends their money wisely. Numerous tales of government waste over the years have supported that lack of trust. Nonprofits rely on individuals and businesses giving voluntarily and must maintain the public trust to maintain their existence.
  • Nonprofits are mission driven, therefore the mission is critical to the success of the organization. The mission states the reason why the organization exists.
  • Financial accountability- are there checks and balances? Does the board get monthly financial reports? Does the organization have an annual audit by an outside entity?Legal Compliance – does the organization follow the law?
  • Openness – do you provide as much information to the public as possible? Can you use your website to make financial reports, IRS 990s, and policies available for the public to review?
  • Advocacy- provide only facts to the public, not your opinion, but information that you can back up with evidence.
  • Don’t expect employees to act ethically if you have never oriented them to the policies and expectations of your organization. Not only new employees, but management must be trained about ethics. If leadership is not committed to your ethics policies, than management/staff/volunteers cannot be expected to act ethically. The development of an ethical culture is a team effort. Involve EVERYONE in the development of ethics policies.
  • Including ethical performance in the performance appraisal tool sends a strong message to the nonprofit organization employees and volunteers about the priority of ethics in the organization.It is important that leadership acts ethically and ethical guidelines are not just verbal, but written into the nonprofit organizations personnel and policy handbooks.Having individuals sign an Oath of Ethics formalizes and highlights the importance of organizational ethics.
  • 1-Employees come from a variety of backgrounds and tend to have a variety of perspectives on what is ethical. You cannot rely on employee values.2-Minimum standards should not be what employees aspire to. Set high, achievable standards. This is the most common strategy.3-When you say your organization has “high standards,” but don’t define them, then your organization really has no standards. This does not work.4-You cannot manage peoples values without defining what the organizational values are.
  • Managing ethics requires time and effort and each one of these steps when you create ethics policies/plans/codes.
  • Topic presentation ethics in nonprofit management sans audio

    1. 1. By Lorrie J. Carey, MPA UNC – Greensboro Nonprofit Management and Leadership
    2. 2. Contents I. Introduction: The Concern II. Nonprofit Ethics Defined III. Why Ethics Are Important IV. The Benefits of Ethics V. Ethical Checklist VI. Four Categories of Ethics VII. Creating Ethical Standards VIII. Ethics Training IX. Strategies to Manage Ethics X. Questions to Answer XI. Conclusion
    3. 3. The Concern Nonprofit Ethics are Deteriorating “Financial fraud is now more prevalent among nonprofits than among private businesses and government offices, according to 2007 data from the Ethics Resource Center.” (Philanthropy Journal, 2008)
    4. 4. The Concern “The greatest threat to the not-for-profit sector is the betrayal of public trust, the disappointment of public confidence.” Joel Fleishman Professor of Law & Public Policy Director of the Heyman Center on Ethics Duke University
    5. 5. Nonprofit Ethics Defined • Honesty • Treating people with respect • Transparency • Actions you would be comfortable reading on the front page of the paper • No individual profits from the organization • No conflicts of interest • Fundraising honesty/accountability (Schmidt, 2004)
    6. 6. Why Ethics Are Important “The good will earned by accountable and transparent nonprofits is one of, if not the most important of its assets.” Elizabeth Schmidt Professor of Nonprofit Law & Practice College of William & Mary Law School
    7. 7. Benefits of Ethics • Moral compass to guide leadership • Promotes the cultivation of teamwork • Builds employee/volunteer confidence • Decreases liability for criminal acts and personnel issues • Identifies the organization’s values • Promotes a positive public image Carter McNamara, MBA, PhD, Authenticity Consulting, LLC Complete Guide to Ethics Management: An Ethics Toolkit for Managers.
    8. 8. Ethical Checklist  Relevant information  Involvement test  Consequential test  Universal Ethical Principles test  Fairness test  Universality test  Preventative test  Light of Day test Pekel & Wallace, Fulcrum Group Ten Step Method of Decision Making
    9. 9. Four Categories of Ethics The Independent Sector provides four categories for ethics resources on their website: Legal Compliance & Public Disclosure Responsible Fundraising Effective Governance Strong Financial Oversight Resource Center for Good Governance & Ethical Practice
    10. 10. Four Categories of Ethics “Maintaining the public trust is crucial to the success of the nonprofits and foundations. That helps charitable organizations win resources – including donations of time, money, and other support.” Independent Sector Washington, D.C.
    11. 11. Creating Ethical Standards 1. Mission: well developed & formally approved by board, evaluated regularly 2. Governance: governing body should be representative of the community 3. Conflict of Interest: policies should be in place 4. Human Resources: are diverse and policies set clear expectations Utah Nonprofits Association, 2002
    12. 12. Creating Ethical Standards 5. Financial Accountability • Financial reports on a timely basis - available to public • Organizational means to report suspected fraud • Written financial policies for investment/ purchasing/reserves 6. Legal Compliance • Federal/State/Local Laws • Fundraising/ Licensing/ Labor/ Advocacy/ Taxation/ Finances Utah Nonprofits Association, 2002
    13. 13. Creating Ethical Standards 7. Openness • Truthful public information • Responsive to public interest 8. Fundraising • Respect wishes of donors • Manage raised resources being mindful of public trust • Be responsible for those fundraising on your behalf • Use truthful solicitation materials Utah Nonprofits Association, 2002
    14. 14. Creating Ethical Standards 9. Public Policy Advocacy • Have written policies for advocacy • Provide only facts to the public 10.Information Management • Personal information is confidential • Have policies for who can access organization information Utah Nonprofits Association, 2002
    15. 15. Ethics Training 1. Orient employees about organization ethics 2. Train management about ethics 3. Make sure leadership committed to ethics 4. Involve staff in development/review of ethics policy 5. Engage in discussion of ethical resolution Carter McNamara, MBA, PhD, Authenticity Consulting, LLC Complete Guide to Ethics Management: An Ethics Toolkit for Managers.
    16. 16. Ethics Training 6. Include ethical performance in performance appraisal 7. Lead by example 8. Put ethics guidelines in writing 9. Have board/management/staff/volunteers sign an “Oath of Ethics” Carter McNamara, MBA, PhD, Authenticity Consulting, LLC Complete Guide to Ethics Management: An Ethics Toolkit for Managers.
    17. 17. Strategies to Manage Ethics 1. Rely on employee values Problem - Values vary 2. Compliance – Minimum Standards & Penalties Problem - Employees/ volunteers won’t rise above minimum standards 3. Ethical exhortation Problem - Organization “high standards” are undefined 4. Managing values Problem - Defining a set of values & minimum standards Kirk Hanson, Director Markkula Center for Applied Ethics Santa Clara university
    18. 18. Strategies to Manage Ethics Managing Ethics Requires Leadership/ Management Effort!        Communicate Educate Implement Model Apply Reflect values Reward values Renew values every three years Kirk Hanson, Director Markkula Center for Applied Ethics Santa Clara university
    19. 19. Questions to Answer 1. Does your organization want to promote an ethical culture? 2. Does your organization have policies relating to governance, conflict of interest, financial oversight, responsible fundraising, legal compliance, and public disclosure? 3. Do you evaluate your mission regularly? 4. Does your board and staff represent the multiple groups in your community?
    20. 20. Conclusion Ethical standards are imperative to maintaining positive nonprofit operations and the public trust. Time and effort and buy-in at all organizational levels must occur in order to develop and execute an ethical culture in nonprofit organizations.
    21. 21. References Nonprofit ethics seen deteriorating. (2008). Philanthropy Journal. Retrieved from Fleishman, J. (n.d.). Ethics and accountability in the nonprofit sector. Retrieved from Schmidt, E. (2004). How ethical is your nonprofit organization? Retrieved from McNamara, C. (n.d.). Complete guide to ethics management: an ethics toolkit for managers. Retrieved from
    22. 22. Pekel, J. & Wallace, D. (n.d.). Ten step method of decision making. Complete guide to ethics management: an ethics toolkit for managers. Retrieved from Independent Sector. (2011). Strengthen accountability. Retrieved from Utah Nonprofits Association. (2002). Standards of ethics. Retrieved from Strategies for Managing Ethics. (2011). Retrieved from