Written by Woods Bowman Created on Friday, 26 October 2012
Editors’ note: This article was excerpted from a chapter in a forthcoming book, Practicing Professional Ethics in Economics and Public Policy, by Elizabeth A. M. and Donald R. Searing, published by Springer. Used with permission.
Slightly more than half of employees in nonprofits observed misconduct in the previous year, and this is roughly on par with that observed in the other sectors. “On average,” the report states, “nonprofits face severe risk from a handful of behaviors: conflicts of interest, lying to employees, misreporting hours worked, abusive behavior, and Internet abuse.” The value of a well-implemented ethics program is beyond question. In organizations with little to no ethics and compliance program, 68 percent of employees observed two or more types of misconduct over the course of a year. This is significantly reduced to just 22 percent in organizations with a well-implemented program.
Although 60 percent of nonprofit employees who observed misconduct reported it, nearly 40 percent of witnesses remained silent, due largely to feelings of futility or fear of retaliation. Indifference is harder to combat than fear. Several famous controlled psychological experiments clearly demonstrate that most people in a crowd will wait for someone else to take action—whether it is helping someone in distress or reporting a crime. Even if employees do not fear the kind of retaliation that is forbidden—discharge, demotion, stalled advancement, and reassignment—they may not want to “get involved” in other people’s affairs. “It’s not my job,” they might say. The best ethics programs address this perverse psychology by providing training that sensitizes people to their personal responsibility in addition to the rules and regulations.
Although nonprofits may believe they have a strong ethical culture, this does not always translate into better ethical behavior or better reporting of unethical behavior. So possibly nonprofits do not deserve the public’s confidence....
Fred Leeb: I think that this is an excellent article. As a turnaround consultant with a specialty in nonprofits for many years, I have found many of the points in the article to be true in practice. I particularly agree that "fish rots from the head down" and that it takes constant vigilance on the part of the board to ensure that the organization is behaving in an ethical manner. Board members serve for many reasons but few serve expecting to ask tough or embarrassing questions or dig into matters not elaborated upon by the CEO. CEO's often perceive that the board members want meetings to be as short as possible and that they don't want to work hard on key issues. This leads the CEO to sanitize the information provided at board meetings. If nobody complains, this results in the CEO realizing that there is really no supervision by the board and no scrutiny of decision-making. The results of this are obvious. I wrote an article myself (Who Cares About Nonprofit Finances? The Top 12 Reasons Why the Most Vulnerable are at Risk) on similar issues and it can be found on my Huffington Post blog at http://www.huffingtonpost.com/fred-leeb/who-cares-about-nonprofit-finance_b_1871260.html.