The
Code of Ethics for Nonprofit and Philanthropic Organizations
I.
Personal and Professional Integrity
All
staff, board members and volunteers of the organization act with honesty,
integrity
and openness in all their dealings as representatives of the organization. The
organization
promotes a working environment that values respect, fairness and integrity.
II.
Mission
The
organization has a clearly stated mission and purpose, approved by the board of
directors, in pursuit of the public good. All of its programs support that
mission and all
who work for or on behalf of the organization understand and are loyal to that
mission
and purpose. The mission is responsive to the constituency and communities
served by
the organization and of value to the society at large.
III.
Governance
The
organization has an active governing body that is responsible for setting the
mission
and strategic direction of the organization and oversight of the finances,
operations, and
policies of the organization. The governing body:
§
Ensures
that its board members or trustees have the requisite skills and experience
to carry out their duties and that all members understand and fulfill their
governance duties acting for the benefit of the organization and its public
purpose;
§
Has
a conflict of interest policy that ensures that any conflicts of interest or the
appearance thereof are avoided or appropriately managed through disclosure,
recusal or other means; and
§
Is
responsible for the hiring, firing, and regular review of the performance of the
chief executive officer, and ensures that the compensation of the chief
executive
officer is reasonable and appropriate;
§
Ensures
that the CEO and appropriate staff provide the governing body with
timely and comprehensive information so that the governing body can effectively
carry out its duties;
§
Ensures
that the organization conducts all transactions and dealings with integrity
and honesty;
§
Ensures
that the organization promotes working relationships with board
members, staff, volunteers, and program beneficiaries that are based on mutual
respect, fairness and openness;
§
Ensures
that the organization is fair and inclusive in its hiring and promotion
policies and practices for all board, staff and volunteer positions;
§
Ensures
that policies of the organization are in writing, clearly articulated and
officially adopted;
§
Ensures
that the resources of the organization are responsibly and prudently
managed; and,
§
Ensures
that the organization has the capacity to carry out its programs
effectively.
IV.
Legal Compliance
The
organization is knowledgeable of and complies with all laws, regulations and
applicable international conventions.
V.
Respo
nsible Stewardship
The
organization and its subsidiaries manage their funds responsibly and prudently.
This
should include the following considerations:
§
It
spends a reasonable percentage of its annual budget on programs in pursuance
of its mission;
§
It
spends an adequate amount on administrative expenses to ensure effective
accounting systems, internal controls, competent staff, and other expenditures
critical to professional management;
§
The
organization compensates staff, and any others who may receive
compensation, reasonably and appropriately;
§
Organizations
that solicit funds have reasonable fundraising costs, recognizing the
variety of factors that affect fundraising costs;
§
Organizations
do not accumulate operating funds excessively;
§
Organizations
with endowments (both foundations and public charities) prudently
draw from endowment funds consistent with donor intent and to support the
public purpose of the organization;
§
Organizations
ensure that all spending practices and policies are fair, reasonable
and appropriate to fulfill the mission of the organization; and,
§
All
financial reports are factually accurate and complete in all material respects.
VI.
Openness and Disclosure
The
organization provides comprehensive and timely information to the public, the
media, and all stakeholders and is responsive in a timely manner to reasonable
requests
for information. All information about the organization will fully and honestly
reflect the
policies and practices of the organization. Basic informational data about the
organization, such as the Form 990, reviews and compilations, and audited
financial
statements will be posted on the organization’s website or otherwise available
to the
public. All solicitation materials accurately represent the organization’s
policies and
practices and will reflect the dignity of program beneficiaries. All financial,
organizational, and program reports will be complete and accurate in all
material
respects.
VII.
Program Evaluation
The
organization regularly reviews program effectiveness and has mechanisms to
incorporate lessons learned into future programs. The organization is committed
to
improving program and organizational effectiveness and develops mechanisms to
promote learning from its activities and the field. The organization is
responsive to
changes in its field of activity and is responsive to the needs of its
constituencies.
VIII.
Inclusiveness and Diversity
The
organization has a policy of promoting inclusiveness and its staff, board and
volunteers reflect diversity in order to enrich its programmatic effectiveness.
The
organization takes meaningful steps to promote inclusiveness in its hiring,
retention,
promotion, board recruitment and constituencies served.
IX.
Fundraising
Organizations
that raise funds from the public or from donor institutions are truthful in
their solicitation materials. Organizations respect the privacy concerns of
individual
donors and expend funds consistent with donor intent. Organizations disclose
important
and relevant information to potential donors.
In raising funds from the public, organizations will respect the rights of
donors, as
follows:
§
To
be informed of the mission of the organization, the way the resources will be
used and their capacity to use donations effectively for their intended
purposes;
§
To
be informed of the identity of those serving on the organization’s governing
board and to expect the board to exercise prudent judgment in its stewardship
responsibilities;
§
To
have access to the organization’s most recent financial reports;
§
To
be assured their gifts will be used for the purposes for which they were given;
§
To
receive appropriate acknowledgement and recognition;
§
To
be assured that information about their donations is handled with respect and
with confidentiality to the extent provided by the law;
§
To
expect that all relationships with individuals representing organizations of
interest to the donor will be professional in nature;
§
To
be informed whether those seeking donations are volunteers, employees of the
organizations or hired solicitors;
§
To
have the opportunity for their names to be deleted from mailing lists that an
organization may intend to share; and,
§
To
feel free to ask questions when making a donation and to receive prompt,
truthful and forthright answers.1
X.
Grantmaker Guidelines
Organizations
that are grantmakers have particular responsibilities in carrying out their
missions.2
These
include the following:
§
They
will have constructive relations with grantseekers based on mutual respect
and shared goals;
1
These
ten points are taken from A Donor Bill of Rights, developed by the American
Association of Fund Raising
Counsel, the Association for Healthcare Philanthropy, the Council for the
Advancement and Support of Education, and
the Association of Fundraising Professionals, and endorsed by INDEPENDENT SECTOR.
2
The
Council on Foundations has a guide for grantmakers entitled Principles and
Practices for Effective Grantmaking
available on their website at http://www.cof.org/Content/General/Display.cfm?contentID=156&.
§
They
will communicate clearly and on a timely basis with potential grantees;
§
They
will treat grantseekers and grantees fairly and with respect;
§
They
will respect the expertise of grantseekers in their fields of knowledge;
§
They
will seek to understand and respect the organizational capacity and needs of
grantseeking organizations; and,
§
They
will respect the integrity of the mission of grantseeking organizations.
Process
and Afterword
The
Statement of Values and Code of Ethics for Nonprofit and Philanthropic
Organizations was drafted by a subcommittee of the INDEPENDENT
SECTOR
Ethics and
Accountability
Committee. Its members (with affiliations at the time of their service on
the subcommittee) included:
§
Cass
Wheeler, president and CEO, American Heart Association, chair
§
Ed
Able, president and CEO, American Associations of Museums;
§
Angela
Glover Blackwell, president, Policy Link;
§
The
Reverend J. Bryan Hehir, president, Catholic Charities USA;
§
Graham
Phaup, executive director, Institute for Global Ethics;
§
H.
Art Taylor, president and CEO, BBB Wise Giving Alliance; and,
§
Bill
Trueheart, president and CEO, The Pittsburgh Foundation
The
final document that was approved by the IS board benefited from extensive
comments from IS members. At the 2003 IS Annual Conference, review copies of the
code were widely distributed and several feedback sessions were convened. In
addition,
IS sent the code to all members through Memo to Members and established an
electronic
feedback channel. As a result of all these approaches, IS received comments from
approximately fifty members. These comments dramatically improved the final
product.
In
addition, while the IS board has given its approval to this document, the Ethics
and
Accountability Committee and the Code of Ethics Sub-committee will continue to
review
and revise it, as necessary.
A
code of ethics is, by necessity, general in outlining broad ethical principles.
It is not a
detailed set of recommended practices on a specific issue. In many cases, those
more
specific recommended practices are provided by existing standards by national,
regional,
and sub-sector-specific groups. (For a comprehensive list, please visit IS's
Compendium
of Standards, Codes, and Principles of Nonprofit and Philanthropic
Organizations,
http://www.IndependentSector.org/issues/accountability.html.) In cases where
such
standards do not exist or need strengthening, we plan to offer recommendations
in the
future. This statement of values and code of ethics is not intended in any way
to duplicate
or substitute for the work of organizations promoting standards of practice, but
rather is
intended as a model that organizations can draw from in reviewing or adopting a
code of
ethics.
February
3, 2004
