Ethical Red Flags in Fundraising - Been There, Done That (Unfortunately)

Posted May 17, 2024 by Ben Mohler

Ethical practices in fundraising are fundamental to building and maintaining trust with donors and ensuring the integrity of nonprofit organizations. Here are six ways to adhere to high ethical standards.

As nonprofit leaders, our commitment to ethical fundraising isn't just about compliance—it's about defining the core of who we are and what we stand for. These issues were addressed in a webinar for the AFP Greater San Fernando Valley Chapter titled, Red Flags in Fundraising – Been There, Done That (Unfortunately).

In this post, we reflect on the rich discussions we had, focusing on the critical aspects of fundraising ethics, from understanding donor boundaries to ensuring transparency in our operations. Together we share our insights to guide and inspire nonprofit professionals in fostering a culture of ethical conduct.

Contents

Key Themes

Understanding Professional Boundaries

Ben Mohler, from GivingThree, emphasized the importance of internalizing a robust ethical code to guide interactions with donors and decisions in fundraising efforts. Recognizing and respecting professional boundaries ensures that these interactions remain within the scope of ethical standards, safeguarding both donor trust and organizational integrity.

Transparency in Operations

Scott Staub, from Brakeley Search, discussed the critical role of transparency, particularly in hiring practices. Transparent processes not only foster trust but also ensure that all parties understand and commit to the ethical standards expected in their roles.

Proactive Ethical Policies

Mary Doorley Simboski, from Changing Our World and a member of the AFP Ethics Committee, advocated for the development of proactive ethical policies. Establishing clear guidelines before ethical dilemmas arise can provide a clear roadmap for decision-making and prevent potential missteps.

Balancing Relationships

There is a delicate balance between fostering strong personal connections with donors and maintaining professional boundaries. It's crucial for fundraisers to engage donors personally while ensuring that these relationships do not compromise ethical standards or the organization's mission.

Respecting Donor Confidentiality

Joy McKee, from Boston University, emphasized the importance of maintaining donor confidentiality, regardless of the community size or the familiarity within donor circles. This respect for privacy not only complies with ethical standards but also builds deeper trust between the organization and its supporters.

Leadership in Ethical Fundraising

Leading with integrity involves more than following guidelines; it's about setting a tone at the top that permeates through all levels of the organization. Ethical leadership enhances an organization’s credibility and strengthens its mission by demonstrating a commitment to upholding high standards.

Practical Application

To uphold and advance the highest standards of ethical fundraising, the following six detailed recommendations are based on the combined insights from during the Red Flags in Fundraising – Been There, Done That (Unfortunately) webinar.

These guidelines will help ensure that our nonprofit practices not only meet but exceed the ethical standards our supporters and the broader community expect.

1. Implement Regular Ethics Training

Based on the insights from Mary Doorley Simboski, we recommend engaging your team in regular ethics training sessions to reinforce their understanding and application of ethical standards. "Regular training sessions on ethics are not just about compliance; they’re about cultivating a mindset that prioritizes integrity in all interactions," Mary advised during the discussion. This continuous education helps in ensuring that all team members are not only aware of but can also effectively implement ethical practices in their daily operations.

Mary Doorley Simboski, ACFRE Mary Doorley Simboski, ACFRE

“Transparency in our ethical policies ensures that everyone, from staff to donors, understands our procedures and the rationale behind our decisions,”

Mary Doorley Simboski, ACFRE
Managing Director, Changing Our World

2. Enhance Transparency and Accountability

Reflecting on the contributions from myself and Joy McKee, maintaining a high level of transparency and accountability is crucial. Ben Mohler recommends setting up systems that allow for open reporting and tracking of ethical practices. According to Mohler, "transparency isn’t just about being open; it’s about being understandable and accessible. Make your processes and decisions easy for donors and stakeholders to follow". Joy McKee added the importance of transparency in donor relationships, "leading with trust, transparency, and accountability can elevate an organization's mission and enhance its credibility."

3. Foster a Culture of Ethical Leadership

Scott Staub highlighted the critical role of leadership in setting ethical standards within the organization. Leaders should model the ethical behaviors they expect to see, thereby setting a powerful example for the entire team. "Leaders must not only talk about ethics; they must live them. The actions and decisions of our leaders reflect directly on the organization and influence the behavior of all employees," Scott pointed out. It’s essential for leaders at all levels to be actively involved in promoting and practicing ethical behaviors.

Scott Staub, ACFRE Scott Staub, ACFRE

"Building trust with our teams and donors starts with being open about our processes and decisions. This transparency should be woven into every aspect of our operations,"

Scott Staub, ACFRE
Managing Director, Brakeley Search

4. Develop and Regularly Update Ethical Policies

Echoing Mary Doorley Simboski’s advice, proactive development and regular updating of ethical policies are necessary. Organizations should anticipate potential ethical challenges and set clear guidelines for addressing them. "Don’t wait for issues to arise before defining how to handle them. Having clear, proactive policies on ethics helps everyone understand the boundaries and the steps to take when faced with ethical decisions," Mary emphasized. This approach helps in navigating complex situations with more clarity and confidence.

5. Establish Mechanisms for Ethical Reporting and Resolution

Ben Mohler stressed the importance of internalizing ethical practices. He advocated for the internalization of ethical practices within the organization. "It's crucial that every member of our team not only understands our ethical code but also embodies these principles in their daily actions," he stated. This approach ensures that ethical considerations are front and center in all decision-making processes. It is crucial to establish and maintain clear channels for reporting ethical issues and a fair process for addressing them. This setup should include mechanisms that protect the anonymity and security of whistleblowers, ensuring that they can report issues without fear of retaliation.

Ben Mohler, ACFRE Ben Mohler, ACFRE

“Leadership is about demonstrating the values you want to see in your team. When leaders are visibly committed to ethical practices, it sets a powerful example for the entire organization,”

Ben Mohler, ACFRE
Chief Executive, GivingThree

6. Ensure Compliance with Legal and Regulatory Requirements

Joy McKee shared an insightful experience regarding state registration of consultants. This underscores the necessity for organizations to be aware of and compliant with all legal and regulatory requirements affecting their operations. "It’s crucial to know not just who you're hiring but also the legal implications of these partnerships," Joy explained. This is particularly important when dealing with consultants and external contractors to ensure that all engagements are in line with state and federal laws. Nonprofits should establish a system to regularly check and update compliance measures, ensuring that every aspect of their operations, including third-party relationships, adheres to legal standards. This proactive approach not only protects the organization legally but also reinforces its commitment to ethical practices.

Joy McKee, ACFRE Joy McKee, ACFRE

"When faced with high stakes, remember that the reputation of your organization and the trust of your donors are more valuable than any single donation."

Joy McKee, ACFRE
Assistant Dean for Development and Alumni Relations, Boston University

Conclusion

Fundraising is fundamentally built on trust. Upholding ethical standards is not only a professional obligation but a cornerstone of effective fundraising. By embedding these principles into every aspect of fundraising operations, nonprofit professionals can ensure that they not only achieve their fundraising goals, but also do so with integrity and respect for the donors who make their work possible.

Many thanks to the AFP Greater San Fernando Valley Chapter for hosting this important conversation. Thank you also to a distinguished panel of speakers including Joy McKee, ACFRE, Mary Doorley Simboski, ACFRE, Scott Staub, ACFRE, and Ben Mohler, ACFRE.

Resources

AFP Code of Ethical Standards

Deep Dives Into The AFP Code of Ethical Standards

The Donor Bill of Rights

AFP Ethics Awareness Month (October)

Advanced Certified Fund Raising Executive (ACFRE)