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Ethics as a Risk Management Strategy

First in a micro series: An Ethics Resources Tool Kit from the Ethics Resources Committee, AFP, Greater Toronto Chapter

Here’s a thought to ponder during your next strategic planning initiative: ethics as a strategic enabler for your organization’s success and sustainability – even prosperity.

Increasingly, business schools are teaching students how societies and economies thrive in a system that is founded on trust. Trust is founded on positive, re-enforcing behaviours that are reliable and continuous. Those behaviours tend to arise out of a sense of values or ethics—the golden rule.

So, how do we make ethics real in our organizations?

Let’s begin with the concept of leadership, because we are all leaders in our own way. We will start with boards and directors. This is the seat of governance. Risk management and increasingly, ethics, is a matter of governance. We will be following up regarding CEO’s and staff leaders in future articles.

Ethics can easily be relegated to a philosophical discussion—a “nice-to-have” rather than a “need-to-have” within an organization. In practice, though, ethics can provide two major upsides. Ethics can serve as a builder by giving an organization a powerful sense of identity, instilling confidence in its staff and evoking security in donors and stakeholders. As an equally important defensive strategy, ethics can also help to identify issues before they compound into problems, prevent outright fraudulent behaviour and preserve reputation and brand.

For ethics to be real, living and breathing, it must be understood to be a leadership priority. If a board and its directors truly understand their governance roles, they will promote ethics among their ranks and inspire ethical pride organizationally.

What does that look like in “real life”—in an organization where a board takes ethics seriously?

Here is a starting point checklist:

The board ensures the following critical items are in place:

  • a Conflict of Interest Policy (as a standing board agenda item)
  • a Code of Conduct Policy
  • a Whistle Blower Policy (or mechanism)
  • an organization-specific Ethical Statement and/or Values Statement
  • a Gift Acceptance Policy
  • a Donor Bill of Rights that is widely known and distributed to internal and external stakeholders

 Additionally, an ethics oriented board will ensure these kinds of practices:

  • understanding and abiding by the regulatory frameworks of Canada Revenue Agency (Charities Directorate) and the Office of the Public Guardian and Trustee (Ontario)
  • duty of care is maintained in the work environment
  • the organization has consistent behaviour in managing donor relationships (based on approved policies for Gift Acceptance and Recognition)
  • promises to donors are transparent, achievable, monitored, reported on, and fulfilled
  • audited financial statements are publicly accessible
  • industry best practices are aspired to, and ultimately met
  • cultivates a positive organizational atmosphere of transparency and openness to address issues as they might arise
  • has a fundamental appreciation for mission delivery, making and sustaining donor relationships a key metric against which all concerns and questions are measured

In order for boards to nurture ethically minded organizations, they need to make ethics an organizational priority and see ethics as a strategy to build strong, effective leaders. Ethics is a powerful enabler when it is continually utilized as a means to empower people to have a set of values that enliven and strengthen their organization. Boards, more than any other group, have the responsibility and the power to lead a sense of organization-wide integrity. In a values-based sector, ethics and integrity is more than just a motivator – it gets to the heart of the meaning of philanthropy, and why both board and staff leaders are (presumably) in their roles!

Submitted by Valerie Campbell, Chair of the Ethics Resources Committee for the Association of Fundraising Professionals Greater Toronto Area Chapter. The Ethics Resources Committee works to enliven the discussion about ethics in fundraising and the charitable sector. The committee's role is to inform, promote, educate, and be a think tank on ethics.

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