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Ethics Corner

This is an online resource for ethical questions and answers as they relate to fundraising and planned giving. The NCGPC posts real questions from real people and Doug White answers them. All identities, both of people and places, are kept confidential.

Transparent Reporting

Submitted July 1, 2019

Q

We're in the middle of a capital campaign — but this has been a problem before — and a donor made a sizeable commitment — in this case $4.7 million — to our arts center. While we're well known and highly respected, and the campaign is going fairly well, we're not swimming in cash. Everybody heard about the gift and it basically sounded as if we got the money already. But we didn't. The reality is that the donor parted with $100,000. Another gift of $400,000 is due by the end of our fiscal year, and another of $500,000 is scheduled by the end of the following year. The rest — $3.7 million — is designated to us in the donor's will. He's 65. My problem is in reporting this gift to our other donors and the public as if we had the money in hand. It's true that the gift is a commitment of $4.7 million, but is there a way to be more clear about what actually transpired, while at the same time showing our gratitude for the gift?

A

Yes. But disclosure and transparency are subjective ideas and many people with good intentions disagree about how to go about informing others. On the one hand you have a generous donor who is committing lots of money to your organization, and on the other you have a little less than three percent of it in the bank. That's a lot of leverage you're giving the donor, but more important, it's not much to substantiate the organization's claim. Even if you have a signed agreement (and I sense you do?) that takes into account every conceivable possible reason that he might not come through, either in his lifetime or in his estate, I sense that your concern is that the advertised result is not yet a result. The future is never certain and it gets less certain the longer it takes to arrive. Much of the future portion of the commitment likely won't be realized for some decades from today.

One good rule of thumb is to anticipate, as best you can, another person's expectations. Ask yourself: If you were hearing the news, what would you want to know? Charitable organizations are experiencing increasing scrutiny about their work and effectiveness — the world has changed dramatically in that regard over the last 20 years or so — and they must be especially alert to potential criticism. The senior staff and the board should think through the implications of the communications with this in mind. I get that the public might not care about the particulars — but it may, and in my view the right thing is to be as transparent as possible.

My own approach on this would be to announce the entire commitment, because the donor deserves the recognition, and at the same time provide specifics of the schedule, along with how the money will be used when it is received. Saying something like, "This gift will make the arts more accessible to the public," is nice — and the local paper might eat it up — but by itself it is broad and, even, misleading.

This is not just a matter of correct reporting. If the employees don't know the details and the general line items of the business plan resulting from the commitment, they might wonder how the money will be used: When will new acquisitions be coming? When will the physical improvements begin? Will we receive pay raises soon?

Whether an organization is in a capital campaign or not, it's simply best for as much detail as is appropriate to be reported when gifts are made.

If you have a question, please feel free to contact Doug White at dwhitepg@gmail.com. While all issues discussed are real, identities are kept confidential.

Doug WhiteDoug's Bio

Doug White, a long-time leader in the nation's philanthropic community, is an author, teacher, and an advisor to nonprofit organizations and philanthropists. He is the former director of the Master of Science in Fundraising Management program at Columbia University, where he also taught board governance, ethics and fundraising.

He is the author of four books on philanthropy. His most recent, "Abusing Donor Intent," chronicles the historic lawsuit brought against Princeton University by the children of Charles and Marie Robertson, the couple who donated $35 million in 1961 to endow the graduate program at the Woodrow Wilson School. The family contended that Princeton abused its mandate to spend the money as the donors wished — and as the university agreed to. His fifth book, which is about the crisis that developed at Wounded Warrior Project, the nation's largest Veterans Service Organization, is scheduled for publication in 2019.

Since 1979 Doug has advised hundreds of charities of all types and sizes. Today, he works closely with select organizations on ethical decision-making, board governance, and fundraising, as well as with individual philanthropists who want to see their gifts used most effectively.

In 1995 Doug testified before a Congressional committee in support of the Philanthropy Protection Act and served as an expert witness for the charitable defendants in a national lawsuit — the "Texas Lawsuit" — that threatened the ability of charities to raise money, primarily through gift annuities.

Ethics Corner Archive

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How Does it Work?

Emails are sent to e-list members with a teaser about the ethical question of the month with a link to the site. Readers are encouraged to submit a question to Doug and/or to disagree with his opinion on the question.

Why Should You Read Ethics Corner posts?

The primary objective is to establish and grow an ethics-based dialogue about important issues facing gift planners and other fundraisers at charities today.

Doug, a teacher of ethics and philanthropy at Columbia University, states that, "Based on the queries I receive, it is clear that those who have worked in this field, even those who have served charities for many years, have too few places to go to discuss issues that are not covered by legislation or the IRS. This site is meant to address that need."

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