Ethical Standard Deep Dive: Standard 16

Throughout the month of October, members of the AFP Ethics Committee will be addressing each of the standards in our Code of Ethics. Today, Janice Gow Pettey, Ed.D., chair emeritus of the AFP Ethics Committee and founder and principal of JG Pettey & Associates in San Francisco, Calif., addresses the ethics involved in Standard 16, altering the conditions of gifts.

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Standard 16: Members shall obtain explicit consent by donors before altering the conditions of financial transactions.

Janice: The key word in this standard is “explicit,” which is defined as “stated clearly and in detail, leaving no room for confusion or doubt.” 

When donors place restrictions on their giving and we accept the conditions, it is our responsibility to honor the donor’s request.  Furthermore, if there’s a need to request a change affecting the restriction, our obligation is to make the request in a manner that leaves no room for doubt.  A face-to-face meeting followed up with a written request is an example of being explicit.

Guidelines

  • Members meet with the donor or the donor's surviving family or representatives to discuss any potential alteration in the original conditions of a contribution.
  • Should changing circumstances on the part of a recipient organization necessitate a change in the prescribed use of an existing gift, the process to be followed in making this change should be captured within the original gift agreement.
  • Members shall accurately characterize the nature of a financial transaction with any party.


Examples of Ethical Behavior

  1. Altering the original conditions of a contribution with appropriate permission (e.g., an organization phases out a program that is being supported from the income of a long-established endowment fund and the donor is now deceased). It is the responsibility of the organization to meet with the family or official representative(s) of the donor, when possible, to inform them of the programmatic change(s), and to solicit their permission to alter the use of the contribution. In some cases, this may require permission of the court.
  2. Keeping donors aware of potential changes in the mission or organization's plans that may affect the conditions of a restricted contribution.


Example of Unethical Behavior

  1. Using restricted funds for purposes other than those specified by the donor.
  2. Using endowment principal outside the written terms of the endowment agreement.
  3. Misrepresenting use of restricted funds (e.g., converting restricted funds from their intended use).
  4. Characterizing revenue intended as payment in exchange for a product or service, as a gift.

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

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