When it comes to nonprofit organizations, governance is one of the most important aspects of running a successful and ethical organization. In this article, we will explore the different ways that nonprofits are governed and the importance of having a code of ethics in place. We will also look at some of the common ethical dilemmas that nonprofits face and how to avoid them.
How are Nonprofits Governed?
There are a few different ways that nonprofits can be governed. The most common way is by including a board of directors. This board is typically made up of individuals who have experience in the nonprofit sector and who are passionate about the mission of the organization. The board is responsible for making decisions about the direction of the organization and ensuring that it is run in an ethical and responsible manner. The board of directors ultimately holds the nonprofit accountable.
The Importance of a Code of Ethics
Having a code of ethics is one of the most important aspects of running a nonprofit organization. This code should outline the values and principles that guide the organization. It should also be clear about what is expected of employees, volunteers, and board members. The code of ethics should be reviewed on a regular basis and updated as needed.
Common Ethical Dilemmas that Nonprofits Face
Now that you know a little bit more about how nonprofits are governed, let’s take a look at some of the common ethical dilemmas that they face.
Conflicts of Interest
One of the most common ethical dilemmas that nonprofits face is a conflict of interest. This can happen when board members or employees have personal interests in the organization that could influence their decision-making. For example, if a board member has a family member who works for the organization, they may be more likely to make decisions that benefit that individual rather than the organization as a whole. To avoid a conflict of interest, it is important to have a clear policy in place that outlines what is and is not allowed.
Another common ethical dilemma facing nonprofits is transparency. This means that the organization is open and honest about its finances, decision making process, and anything else that might be of interest to the public. Nonprofits are required to disclose certain information to the IRS, but there may be other information that they choose to keep private. It is important for nonprofits to be clear about what information they are sharing publicly and why.
Tainted money is another ethical dilemma that nonprofits may face. This occurs when the organization accepts money from sources that could be considered unethical or harmful to the mission of the organization. For example, a nonprofit might accept money from a company that produces cigarettes even though the nonprofit’s mission is to improve public health. To avoid accepting tainted money, it is important for nonprofits to do their research and make sure that they are accepting donations from sources that clearly align with their values.
Another ethical dilemma that nonprofits may face is privacy. This happens when the organization collects or uses personal information about individuals without the consent of the individual. For example, a nonprofit might collect data about its donors in order to send them targeted solicitations. To avoid violating privacy rights, it is important for nonprofits to have a clear and well-defined policy about how they will collect and use any and all personal information.
Making a Profit
Finally, an ethical dilemma that nonprofits may face is making a profit. This is when the organization generates income that is not related to its charitable mission, or the nonprofit does not allocate the income properly, as required by the IRS. For example, a nonprofit might sell advertising space on its website or rent out its office space to a for-profit business, channeling the income into activities other than those connected to the nonprofit. To avoid making a profit, it is important for nonprofits to make sure that all of their activities are related to their charitable mission.
How to Keep Your Nonprofit Accountable
Now that you know more about the common ethical dilemmas that nonprofits face, you might be wondering how you can keep your own nonprofit accountable. Here are a few tips:
Create a Solid Code of Ethics: Make sure that your nonprofit has a clear and well-defined code of ethics. This code should outline the values and principles that guide the organization’s decision making.
Be Transparent: Be open and honest about the nonprofit’s finances, decision-making process, and anything else that might be of interest to the public.
Do Your Research: Make sure that you are only accepting money from sources that align with the values of your nonprofit.
Make Sure All Activities Are Related to the Mission: Make sure that all of your nonprofit’s activities are related to its charitable mission.
Now you know more about governance, accountability, and the code of ethics in nonprofit organizations. By following the tips in this article, you can help to keep your own nonprofit accountable.