December 30, 2010

In nonprofits, conflicts of interest shouldn't pay dividends

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts. (CONTINUED)
3. The integrity of staff and institutions cannot be guaranteed without clear and consistent policies. 


If charitable institutions choose to compensate their trustees or reimburse them for expenses, this needs to be explicitly stated and detailed, not hidden in a footnote or run through a shady outside arrangement. With the exception of student activists, volunteer leadership should not be subsidized for travel and other expenses, nor should they have any business relationship with the organization they serve. Staff members should never treat lay leaders to meals. In the exceptional case of an individual leader with limited financial resources – but judged to be indispensable – the arrangement should be explained in detail to the full board, and possibly to the public at large.


Similarly, staff should be incentivized to do their jobs with maximum effort and integrity, along with the means to prove it. Organizations should clearly disclose any outside business relationships or financial arrangements between staff and leadership, to ensure that lay leaders are not distracted from exercising their fiduciary and oversight responsibilities – and so the public knows exactly how much communal servants are profiting from their professional service. Before receiving public awards and gifts of value, staff and leadership should get approval from the organization through which they earned these benefits. The same goes for accepting free travel, accommodations and other services from governments and businesses that may expect favors or contracts in exchange. There should be a clear, written policy that protects the reputation and credibility of the individual, the institution, and the cause; it should apply to senior management in particular, so employees don’t look upstairs to see a double standard.

Tax-deductible donations to 501(c)3 organizations render them a public trust by definition. Their budgets and prerogatives should never be seen or perceived as vehicles for anyone's personal gain. Following a strict and transparent code of conduct can help keep everyone focused on the charitable mission.

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