Tainted Donors, Tainted Dollars?
A Process for Ethical Decision Making in an Era of Epstein & MIT
L. Rafael Reif, president of the Massachusetts Institute of Technology (AP Images - Stephan Savoia).
The most recent wave of cases involving nonprofits’ questionable decisions about tainted donors illustrates the need for nonprofits to change their decision making strategies with respect to these problematic gifts. Nonprofits need to adopt a gift acceptance decision-making process that includes a deliberate ethical analysis.
In implementing such a process, nonprofits must have four pieces in place:
- A clear mission and well-thought-out values that will work as an ethical lens in making decisions.
- A team of decision makers for gift acceptance who apply the framework consistently.
- A method for considering the concerns of stakeholders, those who are impacted by the potentially problematic gift.
- A strategy to be transparent in the decision making about problematic gifts.
The Markkula Center for Applied Ethics’ Framework for Ethical Decision Making provides useful guidance for nonprofits to develop a framework for gift acceptance decision making for their own organization. The steps for decision making are reviewed below.
The recent scandal of MIT and Media Lab accepting gifts from Jeffrey Epstein is illustrative. If MIT and Media Lab had adopted such a framework and applied these practices, the decision about Jeffrey Epstein’s gifts would have turned out much differently.
Recognize an ethical issue. Determine who will make the decision.
Whether to accept or return funds from a problematic donor is always an ethical question. Having a dedicated team to make a decision means the team has practice and training to weigh the relevant considerations with consistency across cases.
If there is decentralization in fundraising, which often happens at large institutions, all fundraisers should be bound by the same decision-making process. It is the nonprofit’s responsibility to set and enforce gift acceptance rules.
In the Epstein case, the director of Media Lab, Joi Ito, was the primary decision maker for accepting gifts at MIT. MIT had a system for gift acceptance, and Epstein was labelled a disqualified donor at MIT, yet the rules were not followed. MIT’s president later acknowledged that his administration had known of Media Lab’s acceptance of anonymous gifts from Epstein and said the administration had relied on Ito’s judgment – instead of relying on their institutional procedure.
Get all of the facts. Consider the interests of individuals and groups with a stake in the outcome.
The categories of stakeholders that nonprofits need to consider in decision making are generally consistent. These stakeholders are the nonprofit itself, including employees and volunteers; donors, past and present; those who use the nonprofit’s services; and the public. The specific nature of these stakeholders and the significance of their interests is different for each nonprofit.
Ito knew that Epstein had been convicted of sexual crimes with underage girls. Because of the gravity of Epstein’s acts, all of the stakeholders could be negatively impacted by the decision to accept a gift. This included MIT and Media Lab, faculty, staff, volunteers, students, alumni, donors, and members of the public – including Jeffrey Epstein’s victims.
Ask whether some stakeholder’s concerns are more important than others and why? Consult with the stakeholders.
The identity of the stakeholders and how they are valued by the nonprofit can impact the decision on whether to accept or keep a donation. In this case, all of the stakeholders had important concerns, though Jeffrey Epstein’s victims suffered the most direct harm through a major institution normalizing or whitewashing the behavior of someone who harmed them.
By taking the gift anonymously, Media Lab and MIT effectively silenced stakeholders’ voices. No one engaged in careful consideration of the stakeholders and their interests, or consulted with them. In hindsight, Ito said he regretted this lapse stating in his letter of resignation: “I am deeply sorry to the survivors, to the Media Lab, and to the MIT community for bringing such a person into our network.” Those were the voices Media Lab and MIT needed to consider before accepting the gift.
Identify possible options and evaluate them with the lens of the organization’s mission and values.
Nonprofits define their work through their mission statement and the principles that guide nonprofits are reflected in their statements of values. A nonprofit working toward its mission is paramount as the mission is the basis for a nonprofit gaining tax exemption. The public effectively subsidizes nonprofits with the understanding that these tax exempt organizations will maximize their contribution to the public good through fulfillment of their missions. There are other ethical approaches that may be used as ethical lenses, but an organization’s mission and values should be primary; these are what the organization presents and publicizes to all stakeholders.
Ito did not consider the mission and values of Media Lab or MIT, rather he applied his own personal preferences, based on his interactions with Epstein. According to Lawrence Lessig, a friend and advisor to Ito, Ito knew Epstein was a tainted donor but believed that Epstein would not repeat his crimes and that was sufficient to accept his gifts. This personal assessment ignored the values of MIT, which had listed Epstein in the official donor database as “disqualified.” MIT failed to be consistent in applying its organizational values, giving tacit approval to Media Lab accepting the donations.
Ito also applied his own preferences when concluding that the anonymity of the gift was a good idea. He apparently believed that by making the gifts anonymous, it would prevent Epstein from benefiting from whitewashing his reputation with his philanthropy. This conclusion was based on Ito’s private reasoning – not a tested and public process for decision making. MIT was silent.
The next step in the framework is to make a decision and test it, thinking about the reaction of outsiders such as the media. The final step is to act and reflect on the outcome. If MIT and Media Lab had applied this framework for ethical decision making in assessing whether to accept gifts from Jeffrey Epstein, they would not have accepted them. As a result of the decision they did make, they were embroiled in a scandal and ultimately redirected $800,000, the full equivalent of what MIT received from Epstein over 20 years, to a charity benefiting sexual abuse victims or Epstein’s victims.
Leaders at Media Lab and MIT did reflect on the outcome of their decisions. Joi Ito resigned from Media Lab and the president of MIT wrote to the MIT community: “[w]ith hindsight, we recognize with shame and distress that we allowed MIT to contribute to the elevation of his reputation, which in turn served to distract from his horrifying acts. No apology can undo that.”