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In fundraising, ethics should cause red flags to wave

By Lynn Sygiel, editor, Charitable Advisors

The fallout was immediate and severe. Since New Yorker reporter Ronan Farrow broke a story in early September about the donor relationship of the Massachusetts Institute of Technology Media Lab and disgraced financier Jeffrey Epstein, the prestigious school has been on the defensive. Ultimately, the Media Lab’s attempts to conceal the extent of its contact with Epstein, both publicly and within the university, were exposed, resulting in its longtime director resigning and a deeper investigation by the university.

But after the headlines, what lessons are there for nonprofits? Just as the MIT scandal raised questions about that institution’s ethics, it can be a teachable moment for nonprofits, encouraging them to scrutinize fundraising efforts and practices and to evaluate their own organizational ethics.

Jim Langley has worked in higher education since the 1980s, and until 2010, was Georgetown University’s vice president of advancement. Since leaving the world of higher education, he founded Langley Innovations, a consulting company that advises clients on an optimal philanthropic path. Recently, he spoke with Charitable Advisors to share thoughts on ethics and to suggest ways for nonprofits, large and small, to shore up their fundraising practices. In short, Langley believes that integrity is everything, and when it is maintained, it is the most powerful personal and professional brand.

“Ethics are something that will protect you over time or add value to your career, will add value to your employability and be prized by an institution,” Langley said.

For him, if all things are equal, it’s also one way for a nonprofit to differentiate and find a trusted partner, and thinks that each organization needs to reinforce its ethics and raise awareness of ethical lapses or situations that start to create potential ethical compromises.

“The consumer then has the assurance that they’re dealing with somebody who will safeguard their time, their talent, their treasures, their sensitivities and their trust. I believe that, and this was triggered by the Epstein case, how profoundly stupid it is to behave in a short-term expedient way with the hopes that you never get caught. You put yourself on thin ice and the consequences are potentially enormous,” Langley said.

And while organizations like the Association of Fundraising Professionals published principles and adopted enforcement procedures in 2015, there haven’t been consequences for those in violation. Langley thinks there is need for an accrediting body that will censor flagrant violations and raise accrediting questions about those “that are wobbly and affirm those doing an exceptional job.”

“There are several organizations that have codes of ethics for fundraising, but then remain silent when those ethics are violated or trounced on. So, you kind of wonder, what’s the point of a code without teeth?” asked Langley.

“I think the standards are pretty clear. ‘Thou shalt not take from pedophiles’ doesn’t need a lot of nuance, but who speaks up? There’s a lot of tsk-tsking behind the scenes, but who speaks up and says, ‘The MIT Media lab should be censored in a public way so that everybody knows if you think of doing something like that again, there may be consequences greater than the dollars you’ll secure.’”

Langley said a public calling out will put organizations on notice and they might lose money as a result of their behavior if they are seen as being on a slippery ethical slope if not in a complete violation of something that so unimpeachably clear and important.

One contributing factor is the fundraising landscape and a contraction in philanthropic participation. Giving by individuals decreased as a percentage of total giving in 2018 to 68% (down from 70% in 2017), despite achieving its third-highest total dollar amount on record, adjusted for inflation. While there are fewer people giving, it’s masked by people giving larger gifts.

“If the volume of giving contracts, then the importance of big giving in terms of safeguarding the institution or advancing the institution’s mission becomes ever more important,” Langley said.

Couple that with what Langley sees as utterly false expectations surrounding fundraising.

“The top seems to inspire delusional thinking, and then that gets passed on in the form of goals imposed on development staff. ‘Thou shalt go out and get all of this money’ that we think is out there without any concrete evidence that it is. You put pressure on the fundraisers, the board puts pressure on the CEO, and it becomes what I learned as a boy in Catholic education is the occasion for sin.

“The circumstances create more wobble, more unethical behavior. You put pressure on people and they want to elevate the pressure, so I’d say all of those factors are now coming to play in a greater form than ever before. And so as philanthropy becomes less democratic, then the aristocratic few, at least some of them will then say, ‘Oh, then what leverage do I have?’”

One way to combat that is to learn the difference between high and unrealistic standards and that there are analytics that help determine what is reasonable within certain timeframes.

“In other words, a $1 million gift is generally 21 to 24 months in the making, not three months,” Langley said.

“I’d add one more point, and that is that when you don’t have a strong case for support, when you cannot point to where money will make a difference, when you think the only way to raise money is through ingratiating yourself with the rich, then you’re inclined to make these mistakes. If you’re more of a performance-driven organization, you’ll have far more confidence in the fact that as long as you are able to define differences to be made and as long as you prove that investment in (your organization) yields a significant sustainable societal return, you’re not going to be so quick to compromise yourself,” said Langley.

Langley offers these take-away lessons for nonprofits:

1.Include ethics as part of the staff onboarding process.

      “An organization has to have an orientation process that emphasizes the importance of character in both personal career development and in protecting the credibility of the institution.”

2. Develop an accountability policy.

“Spell out the larger the gift, the more comes with it. A large gift sort of out of the clear blue, we might want to go ‘Does this person have an ulterior motive? Is he or she trying to redeem or cover their own wont of character by aligning with us and appearing to be charitable? You have to have something like that in place. It’s all too easy to get around via big gifts and want them so badly that you suspend credulity and then you pay for it later.”

3. Determine who will administer the accountability policy.

“Have a devil’s advocate. Someone outside the advancement operation, maybe in the legal staff, maybe somewhere else, but outside. It needs to be someone who could say ‘While I have no personal interest in receipt of this gift, I want to protect institutional credibility.’

“In my ideal world, I want nonprofits to have an office of accountability — someone reporting directly to the president — and I want them to start projecting the philosophy that ‘We are accountable to a code of ethics, we are accountable to keep our promises to donors. It’s not just thanking donors. It is too many unkept promises, too much glib transactional fundraising and not enough conscience commitment in delivering on commitments, not enough taking the convictions of donors as seriously as we should have.’”

4. Hire the right development people.

“There are two schools of thought, which I’ve characterized as the hunters and the growers. If you’re hunting, you don’t really worry, because you just drag home the carcass, but if you’re growing, you say, ‘Well wait a second, I need to think about the implications of this over time.’ Too many organizations hired fundraisers for the wrong reasons. They thought it was all about asking and not about a process of relationship building. So, they hired people who they thought were presentable, persuasive and had the courage to ask. But over time, sheer experience started to prove that donors actually liked the curious frontline gift officer much better than the aggressively persuasive one.”

5. Develop board fundraising training modules.

“We need board onboarding. A board must orient itself. It’s something that everybody thinks they know, and they don’t know at all. So there has to be some schooling, and then second, there has to be the raising of questions and the monitoring of areas that might be predictives of ethical problems. Boards are often the guiltiest in terms of putting pressure on the CEO to produce magical fundraising results. I spend a lot of my time trying to orient boards to reality and say, ‘Yes, clamor for high achievement, but don’t throw out arbitrary metrics or suggest something is possible without having it grounded in sound analytics and a solid understanding of philanthropic behavior.’”

6. Help boards ask the right questions.

“What should really be happening between a CEO and a board is each asking the other intelligent probing strategic questions. So, for instance, ‘What are we doing to retain the loyal support that we have?’ That will open up a lens to how accountable an institution is. ‘How affective are we at retaining our gift officers?’ If they’re turning over a lot is that an indication of discomfort or unrealism.”

7. Listen to the testimony of frontline gift officers.

 “Listen to complaints coming in from external constituents and log those complaints because those can be early warning signs. Don’t get into a cocoon or to an echo chamber. Be very open to evidence that disrupts your thinking or shakes up your complacency and treat it very seriously. Understand that by definition the conscientious person is in the minority, so don’t dismiss internal discontent as the few soreheads. The minority are always the ones who make the majority of difference, who always preserve the integrity of the institution.”

8. Have a written gift policy with steps spelled out before formal acceptance.

“This should include reviewing the conditions of the gift and scrubbing the ethical character of the donor. The organization should say, ‘Make sure we don’t compromise ourselves unwittingly or wittingly in such a way where we’ll lose credibility and that will diminish our ability to do other great things going forward.’”

9. Pay attention to anonymity.

“It’s a flag that we should pay more attention to. If there’s not a longstanding relationship with an institution and someone starts to give, ask, ‘What is that about?’ Is it in fact some sort of laundering situation in which (the donor) is laundering that money to redeem (his/her) reputation or to create some standing that (he/she) wouldn’t have otherwise. But you have to juxtapose that with remarkably modest loyalties. People give to institutions for years out of spiritual motivation and nothing for themselves, and any kind of review of that ground would quickly reveal which was which.”

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