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.

Can You Give and Receive at the Same Time?

Submitted October 1, 2020

Q

My school seems to be morally adrift. I have learned that we both accept and make gifts to the same person at the same time. We, as all charities, send a statement with gift receipts that say the donor has not received any goods or services in exchange for the gift. (At least when that's true.) Yet we accepted a gift from a donor — and sent the receipt with that wording — while the donor, in the same year, received financial aid. In fact, based on communications I have read, the gift was conditioned on the financial aid. When I asked my boss (the development director) and the treasurer about it, I was told the financial aid was proper because the donor's circumstances had changed for the worse and that the annual gift was also proper because even financially strapped people should be allowed to be generous. This seems hypocritical to me.

A

We have a couple of things to unpack here. First, the broad idea of what seems to be hypocrisy: a charity giving and getting at the same time from the same person — and calling the getting a gift. As with all ethical questions, facts matter, and we don’t have enough here to make a fully informed decision, or even an informed evaluation. Specifically, it would be good to know the amount of each: the financial aid and the gift. If the annual gift is relatively small, then it’s quite possible that your school is doing the right thing. Allowing even a person on financial aid to be credited for her gift is not unusual or, in my view, unethical. Even those on financial aid have a little discretionary income and you are not in a position to tell her, or your school, how to use it.

It would be helpful to know the donor’s giving history. But, if the gift amount is substantial — “substantial” is a subjective word, so I’ll just use a number for illustration — such as $10,000, and the award is, say, $20,000, then I’d call into question the basis for the financial aid. Even there, though, questions could arise, such as: What if the donor is giving through a private foundation? Those assets are no longer the donor’s; the foundation might have resources to make the gift all the while the donor herself may be struggling anew.

But we have a second important matter to address. You said the gift was conditioned on the financial aid (and I sense this may be the source of your thinking that hypocrisy is at work here). If that’s really the case — and you seem able to back it up with evidence — then there certainly was a quid pro quo and the “no goods or services” clause in the receipt is not true. The financial aid was a good — a tangible good — provided to the donor.

Addressing this question would also be helped by knowing more facts — the amount of the gift, the donor’s giving history, and the donor’s relationship with the school (as well as whether the donor is a person or a foundation). It may be that the school’s leaders want to continue acknowledging her support during this difficult time when, as you say, her circumstances have recently deteriorated; perhaps the donor’s name has been on the giving rolls for years and it would be embarrassing for the name to be absent now. That’s a benign thought, driven by compassionate impulse, but that would not obviate the need to correctly identify the quid-pro-quo aspect of the transaction.

This matter is ripe for a policies manual. Even though legitimate exceptions can be made to most policies, the school should not be caught without having given consideration to the question. At the least, you will have thought through a thorny question. You will also be able to tell future donors in similar circumstances of that policy and why it was adopted.

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.

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Doug WhiteDoug's Bio

Doug White, a long-time leader and scholar in the nation's philanthropic community, is an author and an advisor to nonprofit organizations and philanthropists. He serves as the Co-Chair of the Walter Cronkite Committee at FoolProof, and as a board member of the Secular Coalition of America. He is the former Director of Columbia University's Master of Science in Fundraising Management program, where he also taught board governance, ethics and fundraising. Prior to that, he was a lecturer at and the academic director of New York University's Heyman Center for Philanthropy and Fundraising.

Doug has published five books. His most recent, "Wounded Charity" (Paragon House, 2019), analyzes the allegations of mismanagement made in January 2016 against Wounded Warrior Project. Kate Bahen, the managing director of Charity Intelligence Canada, wrote, "An epic whodunnit. A sweeping sector perspective. A gripping read for everyone interested in the charity sector. The facts behind the news headlines leaves one reeling. How could this happen? Using the dramatic case of Wounded Warrior Project, Doug White addresses the key forces shaping today's charity sector. From his unique perch, he generously shares his insights and those of the sector's thought leaders. Doug White's books should be required reading for charity directors, journalists, staff and donors alike."

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"Abusing Donor Intent" (Paragon House, 2014) 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. The Foundation Center had this to say about the book: "Well-plotted with the slow burn of a decades-old frustration, and immensely readable with the fate of hundreds of millions of dollars at stake — to say nothing of the reputation of one of America's most august universities — Abusing Donor Intent is equal parts thriller and cautionary tale."

His three other books are: "The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of Our Nation's Charities" (Palgrave Macmillan, 2010), "Charity on Trial: What You Need to Know Before You Give" (Barricade Books, 2007), and "The Art of Planned Giving: Understanding Donors and the Culture of Giving" (John Wiley & Sons, 1997), which was awarded the 1996 Staley/Robeson/Ryan/St. Lawrence Prize for Research by the Association of Fundraising Professionals.

He has written several articles for a variety of magazines and periodicals, including Trusts and Estates, the Journal of Gift Planning, Charitable Gift Planning News, and the Chronicle of Philanthropy.

Since 1979 Doug has advised hundreds of charities of all types and sizes — including social service, educational, health and environmental organizations. 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.

A graduate of Dartmouth College, Doug worked as the development director at Holderness School (NH). For almost two decades (1982 – 2000) he served on the Capital Giving Committee at Phillips Exeter Academy and as its national chair for several years during that time. He has served in leading roles with two national planned gift and endowment investment firms. As a long-term consultant to Blackbaud, Inc. in the 1980s and 1990s, he developed one of the first planned giving software programs.

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. He has also since served as an expert witness in other lawsuits relating to donor intent.

Doug is a past member of the Board of Directors of the Partnership for Philanthropic Planning (formerly the National Committee on Planned Giving). In 1996, while on the NCPG board, he founded the national initiative of Leave A Legacy. He is also a past chair of the NCPG Ethics Committee and the 1995 NCPG National Conference. He is a past president of the Planned Giving Group of New England and a past president of the New Hampshire/Vermont chapter of the Association of Fundraising Professionals. He writes the ethics column for the National Capital Gift Planning Council; in 2002 the council presented Doug with its Distinguished Service Award.

Since 1981 he has spoken at over 750 conferences on philanthropy, including the Association for Fundraising Professionals, The Council for the Advancement and Support of Education, the Partnership for Philanthropic Planning, the Association for Healthcare Philanthropy, United Jewish Communities, and hundreds of local professional organizations and planned giving councils, as well as many audiences sponsored by local charities and other groups.

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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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