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Weaving Ethics Into Your Fundraising. AFP Ethics & Accountability Workshop Minneapolis, MN September 14, 2010. How Do We View Ethics?. Often in a negative sense—only brought up during a controversy or scandal. How Do We View Ethics?.

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weaving ethics into your fundraising

Weaving Ethics IntoYour Fundraising

AFP Ethics & Accountability Workshop

Minneapolis, MN

September 14, 2010

WWW.AFPNET.ORG

how do we view ethics
How Do We View Ethics?
  • Often in a negative sense—only brought up during a controversy or scandal

WWW.AFPNET.ORG

how do we view ethics1
How Do We View Ethics?

2) Solely the role of the fundraiser without an organizational context

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afp state of fundraising survey
AFP State of Fundraising Survey
  • Asks respondents to compare their 2009 fundraising totals to their 2008 figures
  • Queried participants on 2009 strategies and optimism

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perspective
Perspective
  • Typical Year: 60 percent of respondents raise more money than the previous year
  • Worst Year So Far: 2008—46 percent of respondents raised more money compared to 2007

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the current environment
The Current Environment
  • 43 percent of respondents raised more money in 2009 than in 2008, the lowest figure ever in that category
  • 46 percent raised less money in 2009 compared to 2008, the highest figure ever for that category

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the current fundraising environment
The Current Fundraising Environment
  • Underscores the immense pressure fundraisers are under to raise needed funds

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why don t we talk about ethics
Why Don’t We Talk About Ethics?
  • Comfort level?
  • Ruin a perfectly good donor meeting?
  • Remind supporters about past controversies?
  • Too many “do’s” and “don’ts?”

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we might not be comfortable talking about ethics
We Might Not Be Comfortable Talking About Ethics…

…But donors clearly are. And they’re worried!

*Brookings Institution data

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public concerns
Public Concerns
  • 70 percent of Americans say charities

waste a “great deal” or “fair amount” of

money.

  • Only 10 percent says charities are “very

good” at spending their money wisely.

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why should we talk about ethics
Why SHOULD We Talk About Ethics?
  • Donors are DEMANDING it!
  • How will donors know otherwise?
  • Educate and fight misperceptions; decisions not made in a vacuum
  • Number one reason people don’t give (when asked): They don’t TRUST the nonprofit!

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what donors want
What Donors Want
  • Disclosure of what their donation accomplishes
  • To review the financial statements of the nonprofit
  • Independent audits
  • Disclosure of staff compensation and perks

* The Wealth Institute

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communicating ethics
Communicating Ethics
  • Explaining your ethical process and safeguards in detail
  • Relating a story about correcting an ethical issue
  • Discussing your board and its ethical training
  • Providing ethics and accountability resources

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your fundraising story
Your Fundraising Story
  • Fundraising is part of your story, sometimes as important as the program itself!
    • What will you do with their money?
    • What about inefficiency?
    • What is your pledge to donors?

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the board
The Board
  • KNOWLEDGE
    • Cannot act ethical without understanding of fundraising ethics and challenges
    • Many controversies arise not because of willful wrongdoing but through ignorance
    • Specific training must be given
    • Differences between for-profit and nonprofit boards

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the board1
The Board
  • POLICY DICTATES PRACTICE
    • Sufficiently high standards must be set from the beginning—a code of ethics for the board
    • No more coddling!
    • Conflict of interest leads to many controversies—set record straight early
    • Determine WHY board members are serving

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nonprofit staff
Nonprofit Staff
  • Tend to see fundraising and ethics as removed from other nonprofit operations
  • Are closest to programs
  • Can make link from impact and efficiency to ethics

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volunteers and supporters
Volunteers and Supporters
  • Can be most powerful voice for ethics
  • Are independent, yet authoritative opinions on organization and ethics
  • Share similar views, perceptions and experiences
  • Must understand organization fundraising and ethical responsibilities

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slide20

Seven Ethical Dilemmas

Tainted money

Privacy

Stewardship

Honesty and full disclosure

Conflicts of interest

Appearance of impropriety

Compensation

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slide21

Tainted Money

  • Conflict between an organization’s mission and the source of contributed funds
  • Mission MUST be top-of-the-mind with board and fundraising staff and must NEVER be comprised
  • E.g., MADD wouldn’t accept money from a beer company, but would a museum?

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slide22

Privacy

  • In an era where privacy concerns are heightened, organizations must be methodical stewards of personal information
  • Should neither obtain nor retain non-essential and/or highly personal information
  • Information stays with the organization and doesn’t go when a fundraiser changes jobs

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slide23

Stewardship

  • Nonprofits must assure the public that the funds the organization raises are indeed being used for the purposes for which they were given.
  • Nonprofits must honor the spirit as well as the letter of donor intentions.

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slide24

Honesty and Full Disclosure

  • Nonprofits must give people enough information to make informed giving decisions, not "sugarcoat" their organizations' stories to make them more attractive to a wider array of donors.
  • Honesty with donors is the essential foundation of healthy benefactor relations.

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slide25

Conflict of Interest

  • Nonprofit organizations that "do business" with members of their governing boards must ensure that such transactions are completely transparent and are subject to the same rules (e.g., bidding process) as all other transactions.
  • Other areas with potential for concern include fundraisers acting as executors for estates of their benefactors.

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slide26

Appearance of Impropriety

  • There are many things that fundraisers can do that are legal, but are unethical, such as a fundraiser benefiting personally from a benefactor's estate gift, bequest or outright gift. The profession views such behavior negatively.

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slide27

Compensation

  • Compensation for fundraisers and fundraising consultants should never be connected to the amount of funds raised.
  • In the spirit of philanthropy, fundraisers are motivated by advancing the mission of their organizations, not by "earning" a percentage of funds raised.

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examples of incentive compensation
Examples of Incentive Compensation
  • Percentage of Salary or Fee
    • X% of salary if goals are met or exceeded
    • 5% of salary $64,000 = $3,200 bonus if goals are met or exceeded

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incentive comp examples
Incentive Comp. Examples
  • Non-Financial Indicators
    • Number of new donors acquired
    • Number of gifts upgraded
    • Number of new expectancies
    • Number of asks made
    • Number of moves made

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examples incentive comp
Examples: Incentive Comp.
  • Weight/Rate System
    • Development program elements predetermined yearly
    • Percentage of importance to organization
    • Scale and rating system defined

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weight rate system
Weight/Rate System
  • Annual Fund Campaign: 40%
  • Major Gifts Program: 40%
  • Bequest Program: 10%
  • Special Events: 10%
  • Rating Scale
    • Total of 400 Possible Points, Rating 1-4
    • 200-300 Points = $5,000 Bonus
    • 300-400 Points = $10,000 Bonus

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weight rate system1
Weight/Rate System
  • Annual Fund Campaign 40% x 4 = 160
  • Major Gifts Program 40% x 3 = 120
  • Bequest Program 10% x 2 = 20
  • Special Events 10% x 4 = 40

TOTAL POINTS 340

  • $10,000 Bonus

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ethics in a positive light
Ethics in a Positive Light
  • Ethics is the foundation of fundraising.
    • No more “can’t” or “won’t”
    • Positive language that accentuates the safeguards charities put in place.
    • Ethics empowers donors to make good giving decisions

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afp ethical resources
AFP Ethical Resources
  • AFP Website (www.afpnet.org)
    • Ethics section: Code of Ethics, A Donor Bill of Rights, articles, position papers
    • Member Gateway (log-in required): Resources for chapter leaders, including ethics education chairs
    • AFP Ethics Committee: For questions and queries, contact the President’s office

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