Fundraising without an ethical policy can leave your organization’s reputation at risk, particularly when dealing with corporate sponsors, major donors and even government grants, when your priorities and their might not be aligned. Knowing how to deal with potential conflicts of interest between your mission and your funding can be an essential part of your fundraising strategy.  I was therefore delighted when asked to be a guest on the Sponsorship Collective’s blog, on this topic, where we explored some of the challenges around fundraising and sponsorship ethics.

I’ve teamed up with fundraising Jedi, Mena Gainpaulsingh of Purposeful Fundraising. Mena has worked with international charities involved in everything from human rights to international development and knows first hand how important an ethical policy is as part of the fundraising strategy.

The questions are all mine, the answers are all Mena’s:

Why is it important to have a policy relating to ethics when working with corporate sponsors?

Reputation is everything for a charity. Public perception and reputation can make or break a charitable organization, so having a policy that determines the types of companies that a charity aligns itself with is crucial. What may be an appropriate relationship between one charity and a sponsor would not necessarily be appropriate for another.

In many cases, ethical policies also cover additional aspects of the relationship, including the types of gift to be accepted or the terms that are to be included within a sponsorship agreement. For example, some terms of delivering the sponsorship benefits under a contract could place a charity under considerable burden to deliver on their promises. An appropriate policy should protect a charity from inadvertently entering into such agreements that draw on resources beyond a reasonable point.

What types of organizations do you think are most at risk without having an ethical policy?

Every organization should have an Acceptance of Funds policy in place, but those most at risk are those that might be advocating for a particular beneficiary group, or social outcome. If, for example, a company is engaged in activities that work against the mission of the charity, then the charity may be at risk of reputation damage with their donors, beneficiaries, staff and other stakeholders.

Typical examples might include a human rights organization accepting funds from a company engaged in the arms trade or a labour-rights organization working with a company that has been condemned for discriminatory employment practices.

Can you give an example of where you had to turn away a gift because of an ethical agreement?

One example was while I was working with a human rights charity that had an individual donor who often hosted events for the organization where he would talk about his financial support. It later came to light that the company where he held a very senior position had been involved with groups overseas that had committed human rights abuses. The charity had to make some very difficult decisions with regard to how to approach this relationship moving forward since the funds were not technically coming from the company but were in fact personal donations. In this case, the organization felt that the donor’s alignment with the company was so strong and so public that he could no longer represent the organization publicly at events.

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Wow! That sounds like a really tough situation. How do you handle a conversation like that?

It’s not easy and it is up to each organization to determine the stance that they would take in particular situations. The decision an organization makes often depends too upon whether the situation has become public knowledge or still an issue that remains within the walls of the charity.

I know of charities that feel that where their donors work is irrelevant, regardless of the position held within the company, while other charities believe that people operating at a senior board level within a company are always representing that company. Having a policy in place in advance, and possibly even carrying out a risk assessment relating to different scenarios, is very helpful in determining an appropriate course of action should such a situation arise.

What kinds of things should an ethical agreement cover?

Most ethical policies are relatively broad and include terms that simply state that all gifts should be in accordance with the vision, mission and values of the organization and should not put the organization at reputational risk. While a broad policy can be appropriate, the charity should ensure that it has in place a process relating to the policy that ensures that decisions around what funds to accept and what not to accept are consistent and in line with their brand, values and goals.

Other policies go much further and clarify a number of factors relating to the gift, such as:

  • The types of companies that the charity is willing to accept funds from
  • The types of support that the charity is willing to accept e.g. donation, sponsorship, gifts in kind etc.
  • The terms of the agreement in relation to the gift and whether fulfilling them could place too onerous an administrative or financial burden on the organization
  • The process to be adopted when reviewing a gift under the policy

What should sponsorship-seeking organizations be concerned about when aligning their brand with external brands?

Some things that come to mind:

  • The reputational risk of accepting a particular gift
  • Whether or not there could be a perception that a company might be seeking to influence the activities of the charity
  • Whether the company is seeking access to the organization’s contact database and how this relates to privacy and data protection laws

Big thank you to Mena for sharing her knowledge and insights into the sometimes complicated world of fundraising ethics and for helping us make the connection to the world of corporate fundraising.

Originally published by the Sponsorship Collective, May 18th, 2015.

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