The Debate Over Fundraising Costs

The last few months have brought our profession more than its fair share of negative headlines. And now there's the threat of a Senate investigation into fundraising practices. The Chronicle of Philanthropy actually published a front-page article calling for more government regulation of nonprofits!

Sensationalistic headlines aside, from a legal and ethical perspective, these cases can be reduced to two issues:

1. Was the fundraising honest? For example, did the nonprofit accurately describe its programs and do what it said it would? Did it value its gifts-in-kind honestly?

2. Is the nonprofit organization contractually and practically in control of its own marketing and budgets (including its lists), or has it ceded de facto control to an outside party?

If nonprofits were not honest in their fundraising or their use of fund, or were not in control of their budgets, there are major legal and ethical problems to be addressed in a court of law.

But the problem here needs attention beyond a court of law; in the end it's the court of public opinion that matters. The media, fueled by self-appointed, self-anointed charity watchdogs, have reduced the issues once again to fundraising costs — implying that spending money to raise money is, at best, a necessary evil.

What we can learn

Rather than rehash the accusations and cases here, I simply want to explore what we can learn from these painful situations.

At a minimum, let's agree to some key principles:

• Nonprofits operate based on the public's trust; hence, like Caesar's wife, we must behave in a way that it is entirely above suspicion.
  
• Fundraising appeals must be accurate and honest.
• Nonprofits must do what they promise and should be judged on the impact of their programs.
• The nonprofit (not the consultant) must be in control of its own programs, fundraising strategies, budgets and lists.
• Common business ethics dictate that consultants should never recommend something to a client that is good for the consultant but not for the client. Those who do will soon find themselves without any clients.
• Certainly, nonprofits (and their consultants) need to understand and obey all applicable federal, state and local laws.

The recent cases should have been about transparency, honesty, the impact of a nonprofit and ethical business practices. Instead these key issues have been eclipsed by a debate on the cost of fundraising.