Irony & Ethical Execution:
A closer look at nonprofit behavior code
Felecia M. Daniels
August 24, 2012Fmdaniels7770@yahoo.com Nonprofit Organization Management Professor Jennifer Pryor

Irony & Ethical Execution:
Table of Contents
Introduction…………………………………………………………………….Page 3 Why is a Code of Ethics Important?..................................................................Page 4 Important Ingredients in the Code of Ethics………………………………….Page 4 Administration of the Code of Ethics………………………………………….Page 6 Cases of Nonprofit Ethics Issues………………………………………………..Page 6 Minimizing Unethical Behavior…………………………………………………Page 7 Conclusion………………………………………………………………………...Page 9 References…………………………………………………………………………Page 11 & 12

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Irony & Ethical Execution:
Introduction
In wake of the Pennsylvania State University recent scandal, the United Way indiscretions, NAACP payout for sexual harassment, Goodwill Industries of Santa Clara, California embezzlements and even the debacle of The American Red Cross’ lack of attention on the donor’s intentions during 9/11 along with a near endless list of other the of quality ethics in nonprofit organizations is illuminated as a topic needing acute attention. The supposed intent of a nonprofit organization is to do something in good faith for the sake of mankind. It seems, though, that increasingly the ethical standards have lessened over time. More and more, there are reports of nonprofit personal albeit staff or members of the administration are committing dubious acts of indiscretion. Interesting enough, the common thread appears to be monetary gain. “From banking scandals to Wall Street, elementary schools to universities, the scramble to succeed in dollar terms, to bring in ever more money has led individuals and organizations ignoring visible, powerful, and pressing evidence of malfeasance. Money and power buy impunity, or at least rent it.” (Queen, 2011) In our study of Starting and Managing a Nonprofit Organization, one of the many tenets outlined is the understanding that a variety of ethical issues and dilemmas might arise and as a manager of the organization it is important to understand how to assess the impact of the manner in which these incidents are handled on board/staff/volunteer relationships and on public relations, community relations and governmental oversight. This writing will take a look at the need of establishing a Code of Ethics, overview best practices, discuss requirement needed in a written code, pinpoint some of the occurrences at large and discuss suggested deterrents to the acts.

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Irony & Ethical Execution:
Why is a Code of Ethics Important?
The public expects a charity to abide by ethical standards that promote public good. (Hopkins, 2009) Merriam-Webster defines charity as a benevolent goodwill toward or love of humanity. In order to ensure there is congruency in thought concerning desired actions and direction in any organization it is best to develop a Code of Ethics to help guide, inspire, and govern the day to day business events. Doing so sets the standards and tone from the top of the organization to filter down. If the Code is effectively written, it will establish what is expected from both management and employees alike. It will also construct the inner-workings for consequential enforcement in instances of noncompliance. Training, integrating, following and enforcing the Code as a vital component of the organization’s culture will help to create a veil of protection for the organization against unethical acts of ill intent from swindlers. Doing so will be viewed as an adequate attempt at prevention by Federal Sentencing Guidelines refocusing the blame on the culprit rather than the entire organization. Because public and government scrutiny is at an all time high due to a rise in national and local scandal as well as an increase in the amount of nonprofit organizations, overall importance of establishing ethical interaction within the organization and with the public as well is keen. Recent rise in scandals has also counteracted to create a sense of distrust and confusion concerning the nonprofit sector of business. Creating a Code of Ethics efficiently will help to close the gap between expectations and performance.

Important Ingredients in the Code of Ethics
“Every nonprofit organization should develop its own code of ethics, writes Doug White, academic director at the George H. Heyman Jr. Center for Philanthropy and Fundraising at New
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York University.” (Bermudez, 2010) The Code of Ethics should reflect the policies, processes, and controls of the organization it was written for. One of the most tempting things to do would be to copy policies from another institution for the purposes of attempting to create a “best practices” document. Unless doing so is a true reflection of the principle organizations business processes and practices the Code will not efficiently create the protective shell nor will it help to inspire and direct the staff within the organization. In Kyarimpa’s book review of Svara James’ “The Ethics Primer for Public Administrators in Government and Nonprofit Organizations” she points out the authors statement that “duty-based ethics is inherent in public servants because they enter the profession motivated by a sense of duty to serve.” Attention to inclusion of that sense of servitude in the institution’s mission, motto, and Code of Ethics will do well to infuse that theme throughout the actions of day to day practices. At the very least, the Code has to encompass polices concerning: hospitality and gifts, insider trading, conflicts of interest, privacy and information security, cooperation with any audits and investigations, and a provision for the “whistleblower”. The purpose of the provision for the whistleblower is to create a process by which an employee can report suspected unethical, improper and/or illegal activities without fear of retribution by other employees or administrators. Another aspect that would be wise to incorporate is a policy with regard of lobbying, political activities and contributions. The Code should outline procedures for management of the program’s ethics which should guide employees into assessing particular instances and evaluating the behavior standard considering: if all facts and circumstances encasing a situation were put on public display, would the individual be comfortable being connected with that particular circumstance or activity? The Code should also establish a procedure for administration, including mechanisms
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Irony & Ethical Execution: that will be utilized to disclose and document possible conflicts of interest. It is also a good practice to ensure the Code provides direction on where to go if there is a need for more information or help. According to Hopkins in our text, creating a separate Code of Ethics for the board of directors is a promising process. Because there are many components within an organization's Code that do not necessarily pertain to outside directors, and having, conversely, additional requirements applying only to board activities solidify this point. Likewise, the organization may find it important to govern certain practices of vendors, service providers, and contractors with provisions written into the Code.

Administration of the Code of Ethics
Administration of the Code will be indicative of the organizations make up. In most cases the Board of Directors will oversee operation of the ethics compliance. Depending on the size of the organization though, there may be an actual law department designated to deal with all ethics compliance issues. There are also instances where the organization appoints individuals from all the various departments to serve as compliance officers. These candidates are generally high level officers, hence their desire to set good examples should equate with their sense of responsibility to their position as well as the positive interest of the institution. The organizations General Counsel would serve well as Chief Compliance Officer as their knowledge of legal parameters would be more in depth than those not connected with the study of law. The General Counsel should meet regularly with the compliance officers to manage the day-to-day administration of the Code compliance. The organization may also establish a separate audit committee and meet regularly to review operation of the Code compliance. Compliance officers are permitted to contact audit
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Irony & Ethical Execution: committee members at any time to discuss concerns with Code compliance and other possible ethics issues. Overall, the intent to ensure personas finding any concerns with non-compliance of the Code should feel free to address those issues freely within the process.

Cases of Nonprofit Ethics Issues
“It is nearly impossible to turn on television or pick up a newspaper or magazine without hearing someone lament the current decline in morals.” (Lee, 2003) This is certainly the case with the recent Pennsylvania State University sexual abuse scandal that rocked the entire core of the once considered highly prestigious school’s foundation. The claim is that oftentimes persons become so wrapped up into being loyal to a program or particular individual that we lose site of the original purpose of the organization. When we place our loyalty, our commitment, in the service of individuals, organizations, or money we already have started down the path of corruption. Had administration monitored their execution of the school’s Code of Ethics after the first allegations, the negative impact on subsequent students would have been stifled. Instead, the focus was seemingly placed on concern for the reputation of the school and its coveted football program leading to poor decisions that have consequently nearly destroyed the entire organization, not to mention the countless lives of the students impacted. The irony is the entire purpose of the educational system is to create opportunities. It is easy to question whether or not there is an increase in crimes of moral turpitude as time progresses because there seems to be so many allegations being reported by the media. Even as I complete this passage I am notified by the television playing in my background of a world renowned, seven-time award winning Tour de France cyclist Lance Armstrong will likely to be stripped of all his titles due to the alleged use performance enhancement drugs. “The last
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Irony & Ethical Execution: decade has brought an escalating supply of moral meltdowns in both the for-profit and the nonprofit sectors.” (Rhode & Packel, 2009) In 2009, ACORN, Associations of Community Organizations for Reform Now, was recorded by hidden camera counseling a young couple over how to hide prostitution activities so they would not have to pay taxes resulting in their filing of Chapter 11. In 2005 Ameridebt charged over debt strapped consumers $172 in hidden fees and promised debt counseling that was not ever delivered. Roughly 300,000 customers were defrauded. A $6 million settlement was made to the Federal Trade Commission as a result. The continued claims are eroding the core of goodwill business. Rhode and Packel report, “in the 2007 National Nonprofit Ethics Survey, slightly more than half of employees had observed at least one act of misconduct in the previous year, roughly the same percentages as in the for-profit and government sectors. Nearly 40 percent of nonprofit employees who observed misconduct failed to report it, largely because they believed that reporting would not lead to corrective action or they feared retaliation from management or peers.” Hall and Panepento report in their article that a “study found that 19 percent of nonprofit employees believe that their organizations have become less ethical in the past five years. By comparison, only 7 percent of those who work for businesses and 11 percent of those who work in government agreed with this perception.” Across the board there is a sense of discomfort with nonprofit organizational fundraising tactics with concern for kick-backs given in the form of commissions for bringing in funds. The pleading of guilty and no contest from 6 different charity officials to charges of embezzlement totaling over $15 million from The Goodwill Industries of Santa Clara, California certainly do well to go against any ethical code established by that organization as well as weaken the resolve of the public’s previous faith in organizations of such stature. An effort has to be made to reverse bad behavior and level of trust in our nonprofit organization so that we may return to
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Irony & Ethical Execution: being the goodwill advocates in which the category of business was originally created. Doing so may serve to help guide for profit organizations back to the core of good business practices merely by default.

Minimizing Unethical Behavior
So what are some solutions to eliminating unethical behavior in our nonprofits? “We argue that there are three key pieces of the ethical environment that work together to promote ethical behavior: (1) ethical leadership, (2) ethical practices, and the (3) ethical climate.” (Mayer, 2011) In most cases boards are not taking full advantage of their influence in curbing ethical deviations. Ethical leaders should set the tone in the organization. They can do so by being in tune with the employees they hire. General conversation oftentimes reveals motive and behavior that will eventually become associated with the manner in which business is conducted within the organization. Ensure management’s behavior matches that of the Code written. Be mindful of how employees are handled and be certain those employees executing business in an unethical manner aren’t given a pass. These sorts of actions reflect on the management’s adherence to the Code as well as the entire organization. It only takes one bad apple to spoil the bunch. Be sure that ethical practices are habit. Hire people who possess a background of strong ethical activity. Highlight ethical activity in the hiring process through general conversation as well as formal training. Give lots of positive feedback to those executing ethical practices and adversely, again, be sure to punish those who do otherwise. Hold every individual accountable for their actions and implement making the right decisions into the organizations daily culture as if it were as vital as breathing.

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Irony & Ethical Execution:
Conclusion
The responsibility of executing “good” business practices and ethical behavior lies with every person involved in our organizations. Top officials and board members must start with themselves imbedding the intents and purposes of the organization from the outset and furthermore hiring and training employees, who will through clear background screening, fit the scale of the organization’s scope. Using a team of top officials across the organization to create the Code will help to infuse the climate of ethical culture desired as there will be representation of requirements in every aspect of the business. The need to restore faith in our nonprofit organizations in general places a strong sense of responsibility on our leaders to actively monitor the processes in our institutions so that we don’t become part of the negative statistics. "The good news is that, when compared with for-profit businesses and government institutions, nonprofit organizations still exhibit somewhat stronger ethical cultures where employees' personal values are aligned with the missions and values of their organizations,". (Philanthropy Journal , 2008) Creating an intentional ethical environment within our organizations will help to increase this trend and in turn help restore faith in humanity.

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Irony & Ethical Execution:
References
Are More People Cheating?; Despite Ample Accounts Of Dishonesty, a Moral Decline Is Hard to Calculate. Full Text Available By: FELICIA R. LEE. New York Times. 10/4/2003, p7. David M. Mayer. 2011. How Can We Create Ethical Organizations? Retrieved from http://www.centerforpos.org/2011/07/how-can-we-create-ethical-organizations/. August 11, 2012 Deborah L. Rhode & Amanda K. Packel. (2009). Ethics and Nonprofits. Stanford Social Innovation Review. Retrieved from http://www.ssireview.org/articles/entry/ethics_and_nonprofits. August 13, 2012. Edward Queen. 2011. Ethical Lesson of Penn State Scandal. Retrieved from http://www.cnn.com/2011/11/10/opinion/queen-penn-state-ethics/index.html August 9, 2012. Half of Charity Employees Report Seeing Ethical Lapses. Full Text Available By: Hall, Holly; Panepento, Peter. Chronicle of Philanthropy. 4/17/2008, Vol. 20 Issue 13, p29-29. Hopkins, Bruce R.. Starting and Managing a Nonprofit Organization: A Legal Guide, 5th Edition. John Wiley & Sons (P&T), 2009. The Importance of Charity Ethics. Full Text Available By: Bermudez, Caroline. Chronicle of Philanthropy. 12/2/2010, Vol. 23 Issue 4, p27-27.

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References Part 2
Philanthropy Journal. April 2008. Nonprofit ethics seen deteriorating. Retrieved from http://www.philanthropyjournal.org/news/nonprofit-ethics-seen-deteriorating. August 19, 2012. Svara James. 2007. “The Ethics Primer for Public Administrators in Government and Nonprofit Organizations”. Full Text Available By: Kyarimpa, Genevieve. Public Organization Review. Mar2008, Vol. 8 Issue 1, p89-91.

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