7 Ethical Dilemmas Facing Nonprofit Organizations [Updated]

*Updated March 24, 2022

If ethics were cut and dry, there wouldn’t be ethical dilemmas; we wouldn’t have to use our moral compasses. Unfortunately, life is a little more complicated than that. In the nonprofit sector in particular, there are various ethical and moral dilemmas that could creep in and bog down your goal to do more good.

At the AFP Mid-America Conference on Fundraising, Robbe Healey spoke to seven ethical dilemmas nonprofits will face. Healey is a member of the Association of Fundraising Professionals Ethics Committee, Vice President for Philanthropy for Simpson Senior Services and Founding Member of Aurora Philanthropic Consulting. Healey has worked in philanthropic fundraising and nonprofit management for more than 35 years.

The number one reason donors said they don’t give is because they don’t trust the sector. Choosing the right path could help change that perception. Let’s take back the trust that good organizations deserve by brushing up on the top ethical dilemmas facing the sector.

1. Tainted Money

A nonprofit can’t turn away money, right? After all, any gift helps you get one step closer to your mission. But the truth is that not all gifts are created equal. It’s a difficult situation when somebody is trying to offer money that may have a conflict of interest.

For example, you wouldn’t accept money that has been stolen or embezzled. You might think twice before accepting money if it were coming from somebody who goes against everything your mission stands for. Always consider where the money is coming from and whether there would be a conflict of interest because of your mission.

2. Compensation

Never, and we mean never, connect the amount of funds raised to compensation. The motivation for fundraisers should be to help further the mission, not to make more money. Instead, the focus should be on building and nurturing relationships with current and prospective donors. Don’t make personal gain the driving force.

3. Privacy

Privacy is important. Only keep the information that is necessary for your donors. Never get more than you need or use it for anything other than what you told donors you’d use it for. Be especially mindful of lists that you collect for email marketing pieces and more. Make sure the opt-in option is clear and that unsubscribe options are accessible. A small number of unsubscribers won’t hurt as much as mistrust from your entire audience.

Furthermore, make sure your information is stored safely and securely. If your nonprofit uses the Google Suite, make sure personal and sensitive information is housed somewhere else. Having an understanding of basic cybersecurity best practices will help you avoid potential dilemmas.

4. Appearance of Impropriety

Sure, it’s not illegal; but that doesn’t make it right. There are various activities you’ll need to be aware of that could come across to your constituents as shady even if they aren’t considered illegal. For example, AFP lists the example of a fundraiser directly benefiting from a benefactor’s estate gift. While not illegal, the sector would look down upon ethical dilemmas like this type of behavior. Be wary of certain situations that might be perceived in the wrong way.

5. Stewardship

Donors want to know that you’re using the funds for what you said you’d use them for. Don’t promise donors one thing and then turn around and use the funds for something else. If you must change the usage of your funds, check with the donor first and abide by their wishes. Sometimes donors have certain requests for estate gifts following their passing, in which case it’s critical to use the gift appropriately. When you do what you say, your supporters will appreciate the honesty and be more likely to continue giving.

6. Honesty

Remember what you learned as a kid—honesty involves telling the whole truth. That means leaving out specific details will inevitably blow up in your face (we’ve all been there). Tell the whole truth to your staff, donors and constituents, and nothing but the truth. Honesty goes a long way.

7. Conflicts of Interest

A conflict of interest could arise from multiple aspects of your organization. It could involve financials or the interests of members on your board. Be aware of situations where someone has more at stake than the best intentions of the organization. Do what you can to avoid conflicts of interest and maintain a credible reputation for your organization.

Remember, ethics require always listening to your moral compass; not just when it’s convenient for your organization. Not all ethical dilemmas will be apparent and some will be harder than ever. If you have ethical dilemmas you aren’t sure how to handle, seek outside guidance from somebody who can give an unbiased opinion. Also, check out the Code of Ethical Standards from AFP.

*Originally published May 2016

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