Markkula Center for Applied Ethics - Better Choices

Social Sector Ethics

Concern for others. The Markkula Center for Applied Ethics imagines a world where such concern drives all important decisions. Many nonprofit organizations, volunteers, foundations, philanthropists, consultants and advisors share this vision as an aspect of the work they do in the social sector.

 

Overview of Social Sector Ethics

Assistant Director of Social Sector Ethics Joan Harrington describes how the Center approaches dilemmas including conflicts of interest, leadership failures, and the diversion of assets.

Commentary on Social Sector Ethics

    What is Social Sector Ethics?

    By Joan Harrington, assistant director of Social Sector Ethics

    Social sector ethics involves two large groups: the donors—who could be corporate philanthropists, foundations, or individuals—and nonprofits providing services.  Nonprofits can range from community-based organizations to universities or hospitals.  Ethical questions arise in all aspects of social sector work: in finance and operations, in leadership and fundraising, in engaging with the public, in deciding whether the organizations will be advocates or do lobbying.

    At the Markkula Center for Applied Ethics, we use a Framework for Ethical Decision Making, which takes five different approaches to help with these ethical questions: utility, which asks whether a decision will create more good than harm; common good; fairness; rights; and virtue. 

    In the social sector, we add another lens, which is mission.  The mission is the most important guiding principle for a nonprofit.  It’s available to the public so people can decide whether to volunteer or to give money.  Also the mission is what the organization used to gain tax exemption in the first place, so nonprofits are bound to follow it.  When making a decision that raises an ethical issue, considering the options in light of the organization’s mission is instructive and may be determinative.

    One way to understand social sector ethics is to reflect on the situations in which ethical issues arise.  A common ethical issue in the social sector is excessive compensation, where a non-profit executive is receiving more than seems reasonable, especially in light of the size of the organization, or where some unusual perks are coming his or her way.   Another familiar issue might be conflicts of interest, where a board member or a donor is looking for some favorable treatment from a nonprofit.  A third might be a situation where a board member, an executive, or a philanthropist is charged with unacceptable behavior.  Finally, another relatively common issue is the diversion of assets, through either fraud or theft, or a situation where there has been gross mismanagement.

    These are obvious ethical issues, and they are covered widely by the press.  But, in fact, many other ethical issues arise in the social sector that are not as apparent to the public and perhaps not even to those functioning in the sector.  For example, a donor might offer a very significant gift, and in the conversation about the gift, the donor suggests some programmatic ideas that may not really work for the nonprofit; there, the questions become, what is the nonprofit's obligation to be transparent in their programmatic thinking? What is the donor’s obligation to pull back on making programmatic suggestions if this is not a restricted gift?

    Another example might be a board that has become so comfortable with the work of the executive director that it does not ask the necessary probing questions about long-term financial sustainability, about whether the budget numbers are really hard numbers, about whether program evaluations exist, etc. In this case, one has to question whether the board is serving its fiduciary and ethical duties to the organization. Is it even serving the executive director well? 

    A final example relates to politics.  It is an ethical issue as to whether and how much an organization should engage the public in policy issues related to the organization’s mission. When an organization’s clients or other stakeholders are being harmed through various policies and laws, when does it become an ethical obligation to take a stand through advocacy or lobbying?  How should the organization make that decision?

    This article was adapted from the video What Is Social Sector Ethics?

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