Ethical Standard Deep Dive: Standard 14

Throughout the month of October, members of the AFP Ethics Committee will be addressing each of the standards in our Code of Ethics. Paul Pribbenow, Ph.D., CFRE tackles today’s Deep Dive—Standard 14 and donor intentions.

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Standard 14: Members shall take care to ensure that contributions are used in accordance with donors' intentions.

Paul: Such a simple phrase and yet perhaps the center of our work as philanthropic fundraisers. We talk about donor intent all the time – is the gift for unrestricted purposes or for endowment, maybe a special project or a facilities initiative? What lies behind this simple phrase is the integrity of our relationships with donors. 

When we develop relationships with those who choose to support our organizational missions and causes, we are creating covenants – promise-relationships – in which we vow to keep our promises to each other.  As organizational advocates, we come asking for support for our highest priorities and promise that such support will be used to advance our mission. As potential donors, our friends come to us offering of themselves – their time, talent and treasures – and expect that their interests and intentions will be honored.

At the intersections of these relationships are promises to be kept by each party.  Are we keeping our promises to each other? Are we – members of AFP – ensuring that contributions are used in accordance with donor intent?

Guidelines

• Members ensure that proper documentation outlining the intention and expectation of the donor(s) is provided to all appropriate persons and organizational units within the recipient organization (i.e., development office, accounting office). This documentation, including copies of all relevant supporting materials, is made a permanent part of the records of such units.
• Members ensure that contributions are used if and as specified by the donor. If a donor indicates a use that is inappropriate, the member confers with the donor to determine an appropriate use that is in keeping with the donor's wishes and the organizational mission. In the event that no mutually satisfactory use can be determined, the member offers to return the donation.
• Members review documentation outlined in guideline ‘a.’ above on a regular basis to ensure that those responsible for administering contributed funds continue to adhere to the donor's intentions.
• Also see Standards No. 10 and 11.

Examples of Ethical Behavior

1. Treating the terms of a document that describes donor restrictions as a contract, subject to applicable law.
2. Using donor contributions that are restricted in ways consistent with the restriction(s).
3. Declining to use restricted funds for general operating purposes, except when one of the following situations exists:
   - the donor has given explicit directions in writing to do so retroactively; or
   - the grant/contribution document expressly includes a provision for overhead or administrative costs.
4. Designing a standard document or form to contain all pertinent contribution information that will be completed by the development office and provided to all other appropriate organizational units.
5. Conducting a meeting (held annually or more frequently) of representatives of all appropriate organizational units to review the status and use of contributed funds and related accounts.
6. Maintaining proper documentation and records of all uses to which funds have been put
    

Example of Unethical Behavior

1. Deciding to change an endowed annual lecture series to biannual and using the funds in the interim year for travel by department members to an annual meeting.
2. Accepting a contribution for a specific use, (e.g., “pediatric genetic clinical research”) then subsequently eliminating that program and using those funds for another program within the pediatric department without obtaining the consent of the donor.
3. Borrowing from restricted funds for purposes other than the restricted purposes.
4. Diverting into the general operating budget funds intended to cover administrative costs for the program covered by a restricted contribution.
5. Using contributed funds remaining as surplus after the restriction has been fulfilled/expired without the written consent of the donor.

Supported by: 
The Claudia A. Looney Fund for Ethics in Fundraising
&
The Patricia F. Lewis Ethics Endowment Fund