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'Dirty' Money

March 10, 2011

(Michael Seltzer is a regular contributor to PhilanTopic. His last post featured a Q&A with Jennifer Buffett, president and co-chair of the NoVo Foundation.)

Cigs-and-money An article in Monday's New York Times ("Mexican Church Takes a Closer Look at Donors") focuses on an issue that's as old as philanthropy itself. Should a nonprofit's leadership decline a gift when a donor's activities run counter to the organization's mission? To put it another way, to what extent was Alfred Nobel, the inventor of dynamite and a highly successful manufacturer of armaments, hoping to burnish his reputation as the man "who became rich by finding ways to kill more people faster than ever before" by creating the Nobel Prize? And does anyone care 115 years after the Swedish chemist's death?

Damien Cave, the reporter who wrote the piece in the Times, begins the article with an anecdote about a shiny, new Roman Catholic chapel in Pachuca, Mexico. Nothing unusual about that in a country which takes its religion seriously, except perhaps for the donor who made it possible: one Heriberto Lazcano Lazcano, leader of the Zetas, a ruthless drug trafficking syndicate. Indeed, the narcotraficante's support is acknowledged by a bronze plaque on the chapel's exterior engraved with a line from Psalm 143: "Lord, hear my prayer, answer my plea" -- a gruesome bit of irony given that Lazcano is known locally as "the executioner." Having gotten wind of it, Cave reports, embarrassed officials of the Roman Catholic Church in Mexico have begun to question the Church's longstanding acceptance of "narco alms" and its historic ties to drug traffickers.

In both good and lean economic times (but especially the latter), temptation, like the wolf in the Three Little Pigs fairy tale, knocks on many a nonprofit door. I recall vividly, many decades later, the words of a civil rights leader in the South who declared, "The problem with tainted money is 'tain't' enough." I've also heard firsthand from many nonprofits that have struggled with this decision and/or declined financial support from a funding source whose practices were perceived to be in direct conflict with the organization's values. Let's face it, these are treacherous waters for an organization’s leadership, and the chances of running afoul of key external stakeholders, especially donors, is great.

Consider these scenarios:

Should environmental organizations have refused to accept all future donations from BP after last summer's Deepwater Horizon oil spill in the Gulf of Mexico?

Should women's and LGBT organizations continue to solicit support from major media companies that publish magazines which objectify women as sex objects?

Should community-based health organizations, especially those serving low-income and minority communities, accept financial support from fast food and soft drink companies?

What is the best course of action for nonprofit executives when businesses tie their corporate contributions to their own marketing objectives?

After years of thinking about the subject and observing many of my nonprofit colleagues struggle with the issue, I've developed a number of recommendations for nonprofits that find themselves with similar decisions to make.

Know your donors. Donors rarely come in a single size or shape. In fact, their willingness to open their checkbook typically is due to a multiplicity of reasons that vary from donor to donor. It behooves a nonprofit therefore to learn as much as it can about its key supporters' interests and affinities. One useful tool to this end is Survey Monkey, a free online service that nonprofits can use to solicit anonymously expressed opinions, on any issue, from their supporters.

Develop a gift-acceptance policy. Tough calls like the ones listed above should not be made on an ad hoc basis. Boards should be proactive in developing, adopting, and publicizing policies to help inform gift-acceptance decisions.

Check out online resources. Organizations such as the Interfaith Center on Corporate Responsibility, CERES, Transparency International, and Working Assets have been leaders in tracking companies' corporate citizenship efforts and, recently, have been joined by other organizations working to grade companies within specific industries. For example, the Access to Medicine Foundation Index ranks the world's pharmaceutical companies on the basis of their efforts to increase access to global medicines. Similarly, the Sustainable Apparel Coalition recently announced it was developing an online tool to track "the environmental impact of every manufacturer, component and process in apparel production, with the aim of using that information to eventually give every garment a sustainability score" ("Clothes Makers Join to Set 'Green Score'," New York Times, March 1, 2011).

Put the topic of 'dirty' money on the agenda of national and international meetings. Most nonprofits have multiple opportunities to interact and network with peer organizations in their mission space. In the international arena, organizations such as InterAction have helped set guidelines and requirements for their members in most areas of practice. Many nonprofits also have access to listservs and discussion groups that target the leadership of like-minded groups. Use those opportunities and forums to raise the issue of questionable donations and to press for the adoption of clearly stated guidelines.

Ask your Association of Fundraising Executives chapter to address the topic with a program. It's not uncommon for arts institutions, for example, to address the issue differently than community-based health and nutrition groups. That doesn't mean that nonprofit leaders can't learn from organizations in other fields. In any case, it's an important enough issue to put on the agenda at the next meeting of your local AFP chapter.

Those of us who work in the social sector cannot afford to take our organizations' reputations for granted. Indeed, some would say it's our most valuable asset. One only has to look at the many nonprofits whose reputations were tarnished by public disclosure of a serious lapse of judgment (and the fundraising consequences that followed) to remind ourselves that good stewardship -- of our organizations and the sector -- depend on our adherence to the highest standards of transparency and accountability.

-- Michael Seltzer

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Posted by Bruce Trachtenberg  |   March 13, 2011 at 01:48 PM

Bravo, Michael. Your comments are right on the money.

Posted by Michael Seltzer  |   March 14, 2011 at 06:13 PM

Thank you, Bruce. I know that veterans like ourselves have witnessed too many painful stories of nonprofits that have dealt with this issue on an ad hoc basis. There is no time like the present to be proactive.

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