ETHICS AND THE NON-PROFIT ORGANIZATIONS

Ethics and the Non-Profit Organizations

Table of Contents

Introduction2

The Importance of Ethics to Nonprofit Organizations2

Distinctions between the Nonprofit, Business, and Government Sectors4

Accountability, Governance and Daily-Ethics Behaviors5

Ethical Issues within the American Red Cross7

Conclusion8

References10

Ethics and the Non-Profit Organizations

Introduction

Ethics exists in a multitude of formats from the philosophical and abstract to the realm of applied contexts defined by statutes and codes (Ostrower 2007). All forms vary in their situational importance and some present as contradictory to each other. Scholars and students often find that ethical studies within a particular field follow a similar developmental pattern of moving from concrete, or black and white, to a more fluid shades-of-gray model (Seligson & Choi 2006). Narrowing the focus to applied, organizational-level ethics in the nonprofit sector we find an emerging body of knowledge that is moving along this developmental continuum. To advance the understanding of this important subject, this paper discusses a variety of concepts to provide a foundational understanding of ethics assessment relevant to nonprofit organizations. Discussions about the characteristics of the nonprofit sector, organizational culture, and the value of organizational-level assessment combined with the identification of salient constructs for assessing nonprofit ethics, and proposed future directions for this emerging field serve to accomplish this task. The paper also applies a case analysis for American Red Cross, where ethics have been particularly relevant in the non-profit domain.

The Importance of Ethics to Nonprofit Organizations

Ethics plays an integral role in the viability of nonprofit organizations for multiple reasons. Nonprofit organizations serve as stewards of public monies and as a result they receive tax exemption privileges. This benefit comes in exchange for the work and services they provide to the societal common good. Nonprofit organizations historically have filled the gap between (a) the goods and services provided by business and government and (b) the remaining unmet needs of communities. This typically includes the specialized needs of marginalized populations. Since the work of nonprofits receives public scrutiny and often depends on the generosity of donors to continue providing services, nonprofits have a vested interest in maintaining ethical organizations (Abraham 2006). Even the hint or perception of unethical behavior can destroy a nonprofit entity as donors and community members will typically not support a nonprofit organization labeled as unethical (Lewis 2009).

Healthy and able nonprofit organizations increasingly recognize the value of periodically assessing their current ethical standing and continuously working to maintain high ethical standards within their organizations. Reviewing the events of the past decade, one can easily see the detriment that ethical lapses can cause when nonprofit agencies fail to maintain ethical organizations. The highly publicized unethical behavior of a few large nonprofit organizations has yielded, by some accounts, a sectorwide negative impact in the form of decreased donor generosity (Berns 2007). Donors and the public at large don't appear to trust nonprofit organizations in the wake of ethical problems as evidenced by decreased giving trends.

Organizations seeking to ride out the guilty-by-association phenomena, while maintaining their funding streams and reputations, have needed to take a proactive approach ...