Let ethics be your fundraising guide: simply raising money is not enough--ethical treatment of donors and funds is critical to an effective fundraising process.

IN THE WAKE OF THE SEPTEMBER 11 TERRORIST ATTACKS, THE WORLD OF philanthropy and fundraising once again has been thrust into the public spotlight, this time on an international level. In the immediate aftermath, generous Americans gave record amounts of money to the relief efforts. The good work of the nonprofit sector was clearly in evidence, and the value of giving and volunteering was never more prominently on display. The country came together, in part because of the healing and sense of community that philanthropy engenders.

But the public spotlight burns bright, and not all of the charity-related news was good. Many donors began to question how their contributions were going to be used and how organizations were making their charitable appeals. The public backlash against some of the nonprofits involved was significant and led to congressional hearings about nonprofit fundraising and operations. Clearly, the Red Cross Liberty Fund and the September 11 Fund (created in a collaboration between the New York Community Trust and The United Way of New York City) received some of the more high-profile publicity questioning use of funds--in part because they raised the most dollars. Nevertheless, many more nonprofit organizations suffered similar scrutiny.

Watching this transpire from a safe distance have been associations and their foundations. While an increasing number of associations have created related foundations in recent years, there remains a sense that association foundations are somehow different from other charities--perhaps because these foundations tend to solicit from association members and related business partners and not the general public; perhaps because their missions tend to be focused on their respective professions.

But as we see too often, ethical behavior (or the lack of it) affects the entire nonprofit sector and the fundraising profession. The general public isn't necessarily aware of the distinctions between associations and charitable organizations, professional societies, and nonprofit organizations. In this era of fast-paced news cycles, then, it takes only one isolated incident to tarnish an entire sector's credibility. That's why the association field has an obligation to uphold the highest ethical standards in fund raising. In doing so, individual organizations develop effective practices for ordinary times, while creating mechanisms that can also make them more effective in times of crisis.

Fundraising finds its niche

It's hard to believe, but only a few decades ago, fundraising was considered a necessary but peripheral component of every successful organization. It was often assigned to staff as a secondary responsibility. At the same time, standards of performance and ethical guidelines were virtually unknown.

But during the past 50 years, fundraising has been established as a true profession, with an ever expanding body of knowledge, a code of ethics, research, and standards of performance. At the same time, an increasing number of associations and organizations have at least one full-time fundraiser on their staff. In conjunction with the tremendous growth of nonprofit organizations, the demand for professional fundraisers has skyrocketed in recent years. More and more nonprofits are realizing that building a strong donor base requires full-time attention as well as qualified expertise--including a knowledge of fundraising ethics.

Why are ethics so important to fundraising? Because fundraising isn't about sales and check collecting. It is about cultivating and maintaining relationships as well as creating a connection between a donor and an organization. Veterans of the profession have spent years, in some cases decades, creating long-lasting relationships with individuals. Although establishing such relationships can be time-intensive work, in the long run, both the fundraiser and the donor are working toward the same goal of achieving the organization's mission.

Trust is paramount

Inherent in a discussion of ethics is the fundamental importance of relationships and trust. When individuals, motivated by a passion or desire to advance the goals of an organization, make a donation, they have a reasonable expectation that their gift will be used appropriately to support the groups mission. If a donor is given any reason to doubt the organization's commitment or reliability, the trust may be broken and the basic relationship between the donor and the organization will be compromised. While everyone from volunteers to staff and stakeholders must work to ensure proper stewardship of donor gifts, it is the fundraiser's responsibility--whether a volunteer, paid staff, or third-party contractor--to ensure that the donor's confidence is maintained and to act as a steward of the donor's trust. The fundraiser has an obligation to understand the donor's intentions and expectations, while at the same time to ensure that the organization receiving a gift honors the donor's intentions to the extent rea sonably possible.

"Once a donor's trust is broken, it's often difficult to regain," says Steve Batson, chairman of the Association of Fundraising Professionals, Alexandria, Virginia, and vice president for university relations for Georgia Southwestern State University Americus. "This relationship strikes at the very foundation of every organization's ability to achieve its vision. Without it, fundraising is nearly impossible."

Education. To educate donors about their rights, Georgia Southwestern State University makes full use of the Donor Bill of Rights, established by AFP and several other charitable organizations (see sidebar, "Doing Right By Donors," for more information). According to Batson, donor trust is so important that the university prints the text of the bill on the back of its letterhead and sends a separate copy along with major gift solicitations. In addition, the text is published in the alumni magazine once a year, adjacent to the complete listing of donors.

Transparency and accountability. Another straightforward way to build trust with donors is to be transparent about the organization's mission, governance, and demonstrable successes. Today's proactive donors want to hold their organizations accountable and with such information readily available for review, donors can--and should--conduct their own investigation of an organization they are considering supporting. Indeed, more and more organizations are making such information available in their annual reports and on their Web sites.

Many charities have realized that displaying columns of numbers in audited reports is simply not enough. While such documents are easily understood by accountants and financial types, most donors prefer that such information be explained in more understandable language. It is not uncommon for donors to feel alienated or even unintentionally misled by big numbers and complex graphs and charts. But by breaking down organizational overhead--the cost of carrying out the charitable mission--and pointing out key factors, an organization provides donors with a clearer picture of the organization's infrastructure and a better reason to take ownership of a fundraising effort. That greater sense of volunteer involvement can lead to an even more committed supporter.

Most charities understand this important relationship, which is why they go to great lengths to protect it. With so much emphasis placed on trust and relationships, it is easy to see why ethics plays such an integral role in fundraising. Ethics provides the framework, and in some cases the benchmark, to guide both organizations and individuals as they attempt to build long-lasting connections with donors.

Advancing the mission through ethical practices

In 1964, AFP adopted a Code of Ethical Principles and Standards of Professional Practice, which promotes a high degree of professionalism in fundraising endeavors. (For more information, the entire text of the code is online at www.afpnet.org.) The AFP Code and Standards is widely acknowledged as the leading resource for principled fundraising in the philanthropic sector. Since the code requires fundraisers to keep their organizations' best interests foremost as they perform their duties, it plays a key role in advancing organizational mission and goals.

Since its creation, the code has become the foundation for many successful fund raising volunteers and professionals. In fact, it is so important that AFP' 25,000 members across North America are required to sign the document not just once, but every year. Violations of the code can subject the member to disciplinary sanctions, including expulsion from AFP. Because the AFP code is generally accepted by charitable organizations as regular operating procedures, volunteer boards frequently refer to it for guidance when donors propose uncommon transactions. For example, the growing trend of donors who want to specify exactly how their charitable gifts will be used adds to the potential for conflict with the overall needs and goals of the charity. Gifts made for ulterior motives, such as to help a family member or friend gain admission to an educational institution, is another situation that highlights the need for a firm code of ethics that fundraisers can look to and rely upon.

"Nearly all charitable organizations, ranging from the American Red Cross and the Salvation Army to local soup kitchens and community theaters, employ appropriate standards regarding the use of solicited funds," says Ted Bayley, chair of the AFP ethics committee and a fundraising consultant in Atlanta.

Many charities have come to appreciate the importance of ethics and standards even more poignantly in the wake of recent questions that have been raised about the use of donated relief funds related to the September 11 terrorist attacks. Most cases of fundraising impropriety are clear and direct violations of the code. But the experiences surrounding many of the September 11 funds indicate that there can be more complex considerations that have as much to do with perceived misuse of funds as with actual transgressions. Many of the funds established after the attacks started with a particular mandate, which became much less clear as coordination with other funds-and involvement of the government-complicated matters. Nonetheless, as we have seen, the public mind-set tends to view all players in a given sector the same way, with one fundraising scandal or misstep tainting all efforts to generate charitable support.

"When one fundraising scandal hits, it affects the entire profession," says Bayley. "Because the general public does not differentiate between different groups and fundraisers, negative publicity about any fundraising directly affects all future giving campaigns."

In response to such concerns, fundraisers throughout North America have been educating their donors about the AFP code to reassure them that their donations are being used appropriately. This public education campaign is seen as one way to help allay the fears of potential donors who may be wary about donating to worthy charities.

"As fundraisers, we need to help educate our donors about the fundraising process-how it works and how it benefits our communities," says Colette M. Murray, CEO, Paschal Murray, San Diego, AFP's chair-elect, and former chair of the APP ethics committee. "The more we can demystify the profession, the more engaged our donors will be. And that benefits all of us."

Teaching the good of giving. As an association with 165 chapters throughout North America, AFP relies on its grassroots network to help educate and inform donors. Several initiatives underpin this effort.

* On National Philanthropy Day (November 15), chapter leaders work with their local communities to highlight the charitable activities taking place in their own backyards.

* Several AFP chapters including the AFP Florida, Suncoast Chapter, and the AFP Canada, Greater Toronto Chapter, work with their respective major newspapers to publish a special section highlighting philanthropy and the importance of charitable giving.

* In the fall of each year, The New York Times, in conjunction with AFP, publishes a special feature on philanthropy entitled "Giving." The pullout section includes original reporting on current trends in fundraising and charitable giving as well as information on how donors can make the most of their giving experience.

Minimizing risk

Professional fundraisers are faced with difficult ethical decisions every day. Online donors, for example, expect that the same controls they value in more traditional giving methods be clearly established for donations processed electronically. Questions regarding privacy, third-party providers, use of donor information, and the ability to opt-out of future communication with the organization need to be addressed and easily accessed on the organization's Web site.

Another developing dilemma surrounds the trend for donors to seek greater control of, and accountability for, their gifts. Making specific restrictions on how gifts can be used, a condition of their contribution, has caused concern among fundraisers who must reconcile their responsibility to the mission of the organization with their responsibility to honor a donor's intent.

Despite these trends, AFP has taken several steps to ensure that its ethical code remains relevant to the ever changing world of philanthropy and to protect the integrity of the profession.

AFP's ethics committee continually studies the code, ensuring its evolving relevance to current fundraising practice and enforcing its rules. It also provides guidance for situations in which it's not clear if the code is being violated or if a particular gift or transaction is prohibited.

In the past, the committee has advised members on a wide range of issues, including, most frequently, compensation arrangements. Standard 16 of the code states: "Members shall not accept compensation that is based on a percentage of charitable contributions; nor shall they accept finder's fees." The ethics committee advises fundraisers that a salary or fee based on the fundraiser's expertise and experience or the time requirements of the position is the preferred method of compensation. An example of an unethical compensation arrangement is the inclusion in the compensation package--either salary or bonuses--based on a percentage of the charitable funds raised.

In the event that a particular situation is not clearly addressed in the code, individuals can submit a confidential query to AFP's ethics committee. In turn, the committee will investigate the situation and make recommendations for action. This service is not limited to AFP members. Anyone with a question or concern about a fundraising transaction or the proper stewardship of charitable donations can use the service (go to www.afpnet.org/ethics for more information). The ultimate goal of this process is to eliminate unethical behavior, not to impose punishment.

Keeping donor information private

Donor privacy is one of the most important issues that the profession is currently addressing. While complex and interactive database systems have made the process of tracking donors far more effective and convenient than ever before, they also make the transfer of personal information that much easier. This ease of information flow increases the chances that such data might end up in inappropriate hands.

Several provisions within the APP code specifically address the appropriate use of private donor information. Standard 12 states, "members shall not disclose privileged or confidential information to unauthorized parties." In general, charities are protective of their donor files because such information represents confidential donor data that most donors would not like to see shared or made public. There are few occasions when sharing such information with members of the board of directors or even senior staff is necessary. The decision to open donor files is one that is made judiciously and with great care, to ensure continued confidentiality of such information.

The issue of donor privacy is an increasing concern not only for fundraisers but also for the federal government. Recent regulatory and legislative proposals, such as the Health Insurance Portability and Accountability Act of 1996, could require hospitals to receive explicit permission from patients before attempting to solicit them. Other initiatives, such as a national "do not call" list, although it applies to telemarketers and not directly to charities, might be the first step in restricting the ability of charities to raise funds.

Another key provision is Standard 13, which states, "Members shall adhere to the principle that all donor and prospect information created by, or on behalf of, an organization is the property of that organization and shall not be transferred or utilized except on behalf of that organization." This particular standard ensures that a donor's personal information is not used by any individual for personal gain. While a fundraiser may learn something about a donor while working for Organization A, it is not appropriate to use that information if the fundraiser switches jobs to Organization B. Donors support organizations by virtue of their interest in the mission of the group, and generally don't appreciate their names migrating along the career path of staff or volunteers. With the growth of the fundraising profession and the growing number of opportunities for professionals, this standard has taken on increased significance.

Fundraising equals ethics

As the market of potential funding sources becomes more competitive and donors become increasingly savvy about which organizations they choose to support, fundraisers and their associations must continue to build a donor base through trust and continued relationships. Donor privacy, transparency, and education have become critical components of fundraising success. These components build confidence not only in a single organization's credibility, but in the entire fundraising community as well. None of these is possible without established ethical standards as a daily guide.

Ethical standards are no longer simply important to the fundraising profession and the association world because they're good business practice. Ethical behavior, such as safeguarding donor privacy, is essential to create the kinds of relationships and goodwill that are necessary for philanthropy to occur. Fundraising, giving, and volunteering cannot happen without ethical standards and the public trust that they engender.

The tragedy of September 11 has taught the nonprofit community many lessons about donor trust and relationships. But history has shown that it doesn't take an event on the scale of September 11 to damage an organization's reputation and the public perception of fundraising and nonprofit organizations. Nonprofit scandals impact all organizations and all types of fundraising. Ethical behavior is for every day, not just significant occasions. Every member, every donor, and every person must be treated with the same level of ethical behavior. This consistency can only happen through a strong ethical code and dedication to maintaining high standards.

RELATED ARTICLE: Points to Consider

Association executives who have spent their entire careers in membership management and even financial stewardship are not always well versed on the profession of fundraising. And contrary to popular belief, simply asking for money does not make you a fundraiser. There are many ethical implications to consider when developing and executing a fundraising campaign. So whether you're running an association foundation or other charitable organization, keep these key points in mind.

A BODY OF KNOWLEDGE EXISTS

What makes fundraising a profession is that there is a distinct body of information, research, and data on the practice of raising funds. Developed over many decades, this information is critical to fundraisers in the development of best practices and in the planning of fundraising campaigns. So as you begin to develop your fundraising strategy, be sure to study up on the latest trends and historical data. Not only can you plan a better, more effective campaign based on solid information, but you are also likely to find new and creative ways to tackle some common fundraising hurdles.

The following organizations established the Donor Bill of Rights and are resources for information on fundraising practices and ethics:

* Association of Fundraising Professionals (www.afpnet.org);

* American Association of Fund Raising Counsel (www.aafrc.org);

* Association for Healthcare Philanthropy (www.ahp.org); and

* Council for Advancement and Support of Education (www.case.org).

FUNDRAISING IS NOT SALES

Whereas sales positions typically operate on a commission-based compensation system, fundraisers are told not to accept such financial arrangements. When a fundraiser's salary is based on a percentage of the monies raised, the organization's mission can easily become secondary to personal gain. Tying an individual's livelihood to such indicators also creates an unhealthy environment that might force fundraisers to apply undue pressure on donors to make larger gifts, which only erodes the donor's loyalty and trust.

TAKE PRIVACY CONCERNS SERIOUSLY--YOUR DONORS ARE

Privacy can be a difficult thing to define, but the impact of privacy (or the lack of it) can be felt loud and clear by donors. In particular, the Internet and the increasing use of e-mail have heightened donor concerns about privacy and how their personal information is being used. Seeing numerous unsolicited e-mails from other groups usually gets donors annoyed and frustrated--and thinking about why they supported an organization in the first place. It's become so critical that Congress and state legislatures are considering numerous kinds of proposals related to safeguarding donor privacy. If you don't already have one, create a privacy policy, make sure your members know about it, and stick to it.

These are just a few of the ethical implications to consider in a typical development operation. In the end, the ultimate goal of such considerations is to help associations develop more effective fundraising campaigns. So while these extra steps might seem burdensome at first, they are well worth the effort in the long run.

Doing Right By Donors

While many fundraisers abide by strict ethical rules and considerations, donors ought to know that they have rights too. Established by the Association of Fundraising Professionals, Alexandria, Virginia; the American Association of Fund Raising Counsel, Indianapolis; the Association for Healthcare Philanthropy, Falls Church, Virginia; and the Council for Advancement and Support of Education, Washington, D.C., the Donor Bill of Rights helps ensure that donors and prospective donors have full confidence in the nonprofit organizations and causes they are asked to support. By knowing their rights, donors can not only be more proactive, but they have the opportunity to have a more rewarding and satisfying philanthropic experience.

Although it is difficult to quantify the impact on an organization's fundraising results of adopting the Donor Bill of Rights, it is clear that anything that makes donors feel more assured and comfortable with their gifts is certainly of benefit to organizations. Tenets of the Donor Bill of Rights are as follows:

* To be informed of the organization's mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposes.

* To be informed of the identity of those serving on the organization's governing board and to expect the board to exercise prudent judgment in its stewardship responsibilities.

* To have access to the organization's most recent financial statements.

* To be assured their gifts will be used for the purposes for which they were given.

* To receive appropriate acknowledgement and recognition.

* To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.

* To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.

* To be informed whether those seeking donations are volunteers, employees of the organization, or hired solicitors.

* To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share.

* To feel free to ask questions when making a donation and to receive prompt, truthful, and forthright answers.

These rights were established as baseline standards that any nonprofit organization should be giving to donors and potential donors. How does your organization stack up? These rights are also the areas where donors have said they have the most problem or confusion when giving to nonprofits. Make sure your organization understands these rights and follows through on allowing donors to use them.

To download your copy of the Donor Bill of Rights, go to www.afpnet.org/ethics and click on "Ethics and Donors." For more information related to ethics and accountability in fundraising, visit www.indepsec.org/programs/leadership/Goal1.htm.

Paulette V. Machara, CAE, is president and CEO, Association of Fundraising Professionals, Alexandria, Virginia. E-mail: [e-mail].