Topic: Professions & Institutions

Non-Profits: Virtue Is Not Enough

The Independent Sector, a membership organization "committed to strengthening, empowering, and partnering with nonprofit and philanthropic organizations in their work on behalf of the public good" has crafted a Statement of Values and Code of Ethics for Nonprofit and Philanthropic Organizations. If it didn't strike everyone as remarkable that there wasn't a national Model Ethics Code for non-profit organizations before this, it should have. Non-profits are in some ways more vulnerable to unethical practices by their board, officers and employees than their profit-minded cousins. Why? Because a worthy mission is a great corrupter. Those who believe that they are on the right side of the angels are more easily seduced by "ends justify the means" tactics, and are more prone to the insidious syndrome of self-validating virtue: "I am a good person who does good things; I have decided to take this action, so therefore it must be good."

While the Enron, Tyco, WorldCom, Adelphi and other corporate scandals (Wouldn't it would be useful if someone would write a song that listed them all, in the style of "I am the Very Model of a Modern Major General?") spawned an avalanche of model business ethics codes, and significant revisions to the model codes covering legal and accounting ethics, non-profits were left to their own resources. In fairness, many non-profits have been attentive to this issue all along. For example, the Maryland Association for Nonprofits developed a Standards for Excellence Program, including a voluntary certification program, based on a code of conduct called the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector. It is in the process of being replicated in other states. But the Independent Sector's Model Code represents an important step toward acceptance by US non-profits that they are every bit as vulnerable to ethical misconduct as their more-maligned for profit cousins on the Big Board.

The new Model Code contains nothing revolutionary; indeed, truth be told, all ethics Codes are 75% identical. But it makes one strong statement that needed to be made, and that is that every non-profit organization and charity needs to take pro-active measures to encourage and foster ethical conduct in-house. A virtuous mission is not enough; it is not responsible for such organizations, secure in their own goodness, to say in the manner of "The Treasure of Sierra Madre," "Ethics? We don't need no stinkin' ethics!" In the recent past we have seen non-profit institutions turn a blind eye to child abuse; we have seen wildly excessive bonuses and compensation for executives who were charged with getting funds to the needy; we have seen environmental groups cut deals with polluters, and teacher's union officers abscond with millions in dues. The Independent Sector's new Code states in strong terms that every non-profit needs an ethics code of its own. This is a healthy sign that, at long last, non-profits and charities are facing facts. Ethics isn't always easy, and good intentions alone may not suffice when the choices get tough.

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