The Center for Ethics, Governance, & Accountability

Happy New Year to all the executive directors of all the non-profit organizations across our country! Actually, it’s not just a new year, but it’s a New Decade. Endeavor to make the most of it. I am increasingly of the opinion that ‘ethics’ is the key issue that will set your organization apart from all the rest.

Sadly, we are not having to look far to find examples – actually, case studies in-of-themselves – of serious ethical breaches all around us. Do you follow them? More importantly, do you analyze them and seek to apply them to your organization? Have you led a fact-based (i.e., actual example) discussion with your board of directors on an ethical issue that could be related to your own organization for the purpose of being instructional, defining leadership, and differentiating your organization from your peers? Is this something you could do in the New Year? If you did, do you agree it would serve your organization well in the New Decade?

Let’s face it, as an executive director, you are in the most challenging situation that you have likely ever experienced. While you are definitely not alone, the fact that there are so many non-profit organizations – of extremely diverse mission and purpose – actually minimizes your opportunity to develop a meaningful support network. The non-profits in your community, while conveniently located around you, are your fierce competitors for precious (and dwindling) contribution funding. Finding non-profits of like kind across a broader geographic area takes time and still locks you into a competitive situation. But, connecting yourself with a diverse non-profit executive director network need not be such a challenge – use the power of the technology available to you – use the web and its powerful networking opportunities.

Our organization, The Center for Ethics, Governance, and Accountability (CEGA), has but one focus: to provide a safe-haven opportunity for dialogue and reflection among non-profits using ethics (and governance and accountability) as the foundation for strengthening your skills and the reputation of your organization. We have no other priority. No seminars, no library of broad-based information, no national meetings, no field trips – just a full focus on the most challenging issue of our time: ethics.

What examples of ethical breaches have you noted in the first three weeks of this New Year?

What is the modern day equivalent of “sacred honor?” Virginia just inaugurated its new governor who quoted our Declaration of Independence: namely, that we pledge “our sacred honor” – what does that mean today? Let’s avoid the national (and especially the political) examples that everyone is likely to have already seen or heard; instead, let’s take a look at some real examples – on a smaller, personal, local scale – that all executive directors can incorporate into their thinking. The Harvard Business School has long utilized what it calls a ‘case study’ approach to teaching. CEGA is committed to case studies because they are real, highly instructive, and promote dialogue and thought.

In this article, three different examples are offered for your consideration. One involves a non-profit, another is a department of a small local government, and the last is a membership association – but all can be instructional if you apply the situation to your own.

1. A contractor signs an agreement that contains recitals (promises) that are consideration (an inducement to enter a legal contract) but then decides, without explanation, not to honor those promises – and tells you “to sue him” – which is always your right, but is not your desire. Your organization, which is typically the ‘little guy’ in such a disagreement, probably cannot afford to sue – you don’t have the time or the money – so what do you do? Are you in a legal dispute? Sure. But, I would argue the foundational element is ultimately an ethical one. How do you get somebody to behave ethically and honor their word if they have chosen not to do so?
2. A local government entices a successful non-profit organization to relocate across jurisdictional boundaries with the promise that substantial local funding will be provided annually. The executive director works hard on the deal and the board carefully considers the move and approves it. Barely two years later, in what is termed a regretful cost-reduction decision due to the severity of the economic times, the local government eliminates its funding support of the non-profit. The executive director and the board struggles with the situation and is ultimately forced to make the hard decision to close its doors. But, it gets worse. The economic development folks of the same local government approach another non-profit about partnering to offer the same services as it had promised to the previous organization. Wow! How do you even start to understand the issues entangled with this example? Does it make a difference that the non-profit that was driven out is a nationally award winning performer – or – that the ‘new’ non-profit partner has no experience at all? Again, I would argue that the foundational element is an ethical one.
3. An association ‘goes to bid’ on some required professional services. The ‘bid’ is received from a client and friend of the president of the association. When compared to the existing service provider, there is a substantial cost savings, which on the surface sounds like a good thing. Under closer scrutiny, especially since the professional services are regulated by state government, it turns out that the cost savings are the result of a reduced scope of services by the new provider. Worse, the association collects on a claim with the existing service provider even after it knows it will not be continuing its contract. The members of the association are not fully informed of the details; they are told there is a new service provider who is offering more service for less money. Everybody seems happy, right? Wrong! The now-previous service provider has been used and dumped. The savvy association members have asked questions but they cannot get answers. The silent majority does not even know to ask questions. In the end, the association president has done business with a buddy, contracted for inferior services, and left the membership at a disadvantage. Yet another ethical dilemma has occurred in a routine, day-to-day, organizational decision-making process.

As executive directors, you have no doubt read about such examples – in fact, you may have even had the misfortune of being involved in such a mishap. There is a common theme that I find very disturbing as we analyze these case studies: the decision maker would argue vigorously that he or she was doing the right thing! Unbelievable. But, unfortunately, very true. And, from my experience, I believe that those committing these unethical acts have deluded themselves into believing that they are correct. Do you see the criticality of focusing on the issue of ethics as we move forward?

In order to develop successful strategies for saving or growing your non-profit organization, I would suggest that you should be totally invested in the inward and outward demonstration of ethics. Only you can highlight the importance of ethics among your staff, board, customers, and contributors. Not only is it the right thing to do – and not only is it among the key problems facing our country today – but, a commitment and dedication to ethics can give you an honorable and well-deserved competitive advantage among your peers.

Happy New Decade!