Tales from the Field: Donors Gone Rogue – Ethical Considerations
Every October, the Association of Fundraising Professionals celebrates Ethics Awareness Month to spotlight their Code of Ethics and Donor Bill of Rights.
In that spirit, we use this month to share stories that highlight real-world ethical conundrums you might face in your work, whether you sit in the development office, the executive director’s chair, or the boardroom.
Today we take you to an organization with what many of us might consider a dream problem – a potential donor with a magnificent gift.
A donor approached this small, mostly volunteer-led organization with an offer to pay for a significant building expansion and the design work to plan it. Excitedly, the board voted to move forward and had the engineering and design work completed. When the final design came back, the price tag exceeded what the donor had anticipated; the donor asked the organization to raise the balance – to the tune of more than $1.5 million. For this organization, that number presented a hefty lift. I stepped into this project at this point, with a capital campaign on the horizon to raise this $1.5 million.
Then the donor started making demands. They wanted their name on the building – not uncommon for a gift of this size. They wanted input on the design. They wanted a say on who the organization hired to build the building. They wanted control over the fund development and campaign process – and construction timeline. The red flags continued to wave.
Oh, and – as icing on the cake – the donor planned to fulfill this commitment with a non-cash gift. Not a big problem, but another layer of complexity for an organization that had never managed this type of gift – and the expense of hiring attorneys and other professionals to advise it on the gift arrangement.
On the morning of the scheduled vote on moving forward with the capital campaign and project, the executive director called me to say the board pulled the plug. The director had long held a nagging feeling about the project and, on further thought, realized that (1) the organization did not need a new, larger, fancy building; part of its charm and brand came from its small, quaint facility; and (2) the operating costs of more than double the square footage could bankrupt it. When the director presented this rationale to the board, the board agreed.
The director then had the unenviable task of calling the donor. After learning that the organization would not accept their generous gift, the donor ghosted the director, who never heard from the donor again.
This true story raises some cautions from which all organizations can learn so you do not put yourself in a similar situation.
Look at the donor’s motivation and intention. It appears this donor made the offer for a reason other than advancing the mission and purpose of the organization. While maybe not initially evident, the fact that the donor wanted to control the process – including the timeline for completion – and never spoke to the organization after it chose not to move forward lead me to this conclusion. If the donor truly wanted to support the organization, the donor would have come back to ask how to make a generous contribution toward the organization’s goals rather than the donor’s. Heck, I bet the organization would have happily accepted that non-cash gift – even with all its headaches – to create an endowed fund in the donor’s name. But that conversation never happened.
Get it in writing. From when I stepped in, the donor’s intended role and gift seemed to shift continually – how much they would give, what they would pay for, how they wanted recognition. The organization could have avoided much of this uncertainty and heartache by having an open, frank conversation at the very beginning to clearly outline the donor’s intent – and then getting a signed written agreement that records what both parties agreed.
Maintain your organizational priorities. The board never had this new building as an organizational priority – at least not as far as I know. Perhaps it felt so out of reach that they never even dared to dream of it, but nonetheless, it did not land on their radar until a donor brought it forward. This points to the critical importance of strategic planning and knowing how your organization would spend a windfall if an opportunity like this knocks on your door. Regardless, your donors should not dictate your priorities; your board and staff should. This became the tail wagging the dog.
Do not let the bright shiny object sway your goals. My dad always said, “if it’s too good to be true, it probably is.” In this case, the offer proved exactly that. From the outside, it appears the board – and executive director – became excited by the prospect of a bigger, newer, more modern building and all that could bring to the organization. They had not taken the time to really think through the implications – until they did. Do not let the donor’s timeline overshadow the organization’s due diligence as I think it did here.
If you need to pull the plug, pull the plug. The board and executive director ultimately did not feel that moving forward with this project served the best interest of the organization – consistent with their responsibility to always act in the organization’s best interest. While I assume they had a very challenging conversation at the board meeting, I applaud their bravery and integrity for making this decision.
Today, this organization continues to thrive – in its small, original, crowded building that still has all its charm. By every measure I can see, they made the right decision. Could you have made this decision?
More importantly, does your board have the trust and ability to hash out important and potentially controversial topics like this with professionalism, objectivity, and dispassion? If not, whether you serve on the board, lead the staff, or raise the funds, start building that culture before a challenge or need like this arises.
