Week 4 Video: Introduction to Ethics in the Nonprofit Sector

Video Transcript: Intro to Ethics

This week we will explore the important role that ethics plays in the nonprofit sector.

Why are ethics so important?

As we've already learned, nonprofit organizations are exempt from many federal, state and local taxes. In exchange for their tax-exempt status, non-profit organizations (particularly

501c3 organizations) provide charitable services to their communities. Nonprofit organizations rely on donations, grants, contracts and other sources of income to fund their programs,

sustain business operations (also known as overhead), attract additional resources and otherwise generally fulfill their mission.

Volunteers and generous donors are critical to the success of any non-profit organization. These volunteers and donors are attracted to specific organizations because they have had a positive

experience with them, they trust that the organization is being responsible steward of its money and resources. In other words it is doing what they say they're doing with the assets under their control.Building trust within a community and attracting resources are how non-profit organizations become sustainable and effective in fulfilling their mission.

Key Point: Ethical scandals lead to a decrease in charitable donations to individual

organizations and they hurt the sector overall.

According to the most recent large-scale survey done on the topics of ethics in the nonprofit sector, trust is a bit higher for non-profits than it is for the government and for-profit sectors but barely…

High ethical standards mean more donation. Since the work of nonprofits receive public scrutiny and often depend on the generosity of donors to continue providing services, non-profits have a vested interest in maintaining ethical organizations.

Key Point: Trust is essential to the overall health and stability of any non-profit organization.

While non-profits enjoy more trust overall than their counterparts in other sectors, this trust is eroding as a result of high-profile scandals such as those seen at the United Way, Hale House, Wounded Warriors and others. In the age of social media, even when organizations are later vindicated, the damage to an organization's reputation is not easily repaired. This erosion in trust could mean the loss of millions of dollars in charitable contributions for the non-profit sector.

Key Point: NO nonprofit organizations are immune from the impact of scandal even if they have not been directly involved with one.

It is important to understand just how much ethics plays a role in making or breaking not just one nonprofit organization, or even a group of them, but how ethics impacts the overall health and viability of the entire sector.

So, as you continue with your readings this week, there are several things I’d

like you to keep in mind. I'd like you to pay attention for the types of scandals that commonly plague the sector; what organizations can do to avoid scandals; laws and other measures that help ensure ethical behavior and accountability; and how non-profit organizations can begin to regain the public trust.

The other thing I'd like you to do is reflect on your own experience. Think of a time when you have read about heard about, from a trusted source, or observed directly an ethical violation in a non-profit organization.

· What was the impact of this information on your perception of the organization?

· How did it make you feel about the sector as a whole?

· How would you like to see the situation handled? In other words what would return the organization to good standing in your eyes?

Finally, looking ahead, the final assignment for this course will be to write a new code of ethics for a fictional organization. No cutting and pasting from another organization, please!

Details on this two-part assignment can be found in course content week 10.

Right here I listed some of the sources that I used to create this document.