To Take Or Not To Take: Considerations For Donor Ethics And Funder Policies

Created By: Melissa Chang, Vineet Chauhan and Jace Prokupek
Published: March 31, 2021
Updated: August 21, 2024

Philanthropy comes with power. And balancing the power between funders and nonprofit organizations is a difficult act. Many nonprofit leaders have faced the challenge of appeasing a funder who wants to stipulate how a program is executed or making the difficult call to accept funding from an organization with a lapse in values or a tarnished reputation. As the number of charitable donations increase, nonprofits with an influx of funders have struggled to navigate maintaining the values of their mission. To help nonprofit organizations think through this issue, we’ve outlined several recommendations and considerations to take into account when making the decision of whether or not to accept a gift from a funder when conflict arises.

Navigating Value Assignment

“Don’t look a gift horse in the mouth” might have been a fundraising strategy at one point in time, but finding partners who share your nonprofit’s values leads to a longer-term and more sustainable partnership. A generous funding opportunity might seem appealing in the short-term, but if the funder does not share your values, you will inevitably contribute to actions that undermine your nonprofit’s work. Without a clear acknowledgement of this conflict upfront or strategy for engagement, this is not the right way to start a partnership. Conversely, finding donors who have shared values can lead to a more fruitful and long-lasting partnership. Having a corporate, foundation, or private individual in your community who also actively advances your organization’s work through their leadership and actions will bolster longevity.

While finding a funder with value alignment is ideal, we know that every prospect arrives at the negotiation table with their own unique intentions and values. With that in mind, there may be a benefit to having partners who acknowledge that their practices might not be aligned to your nonprofit’s work. Having funders that are a part of your community can enhance their learning, and they may use your organization as a resource as they change their strategies. Ultimately, the more funders you have within your community means there are more opportunities to learn from your organization on how to become better actors and conduits to advancing your mission.

When assessing value alignment…

• Determine your organization’s core values, such as the protection of women’s rights, or employment and advocacy for people of color, etc.
• Determine your organization’s immediate disqualifiers or non-negotiable categories, such as employment discrimination, pollution, businesses in drugs, alcohol, or tobacco, etc. Listen for the reactions from fellow colleagues and the communities you serve to understand what matters most to your mission’s integrity.
• Listen first and be open and honest with the funder about any hesitations; you might learn more about their values from the conversation.
• Determine if there is willingness and room for the funder to change their practice to align with your values, or if the relationship would be unsalvageable.

Calculating Reputational Risk

We’re judged by the company we keep. As a nonprofit leader, a key priority is the organization’s reputation. Funders play an important role in establishing that reputation. Considering a gift from a prospect or current funder with a reputational risk should be discussed with as many stakeholders as possible. While there may be a short-term benefit from a funding standpoint, the repercussions of this perceived endorsement of the behavior could be detrimental to the rest of your donor community.

When assessing reputational risk…

• Determine the gravity of the risk: evaluate the incident, frequency of this behavior, and impact on their business.
• Assess the coverage of this funder’s issue in the media or within your community, paying particular attention to the reactions of other donors.
• Evaluate the funder’s response to correct mistakes and determine if these are sufficient for continued collaboration.
• Determine the willingness and capacity of the funder to address the issue and enact changes in their organization. Consider that the individual manager you work with may personally want changes, but they may not have the support of their organization, and that this may ultimately affect partnership decisions.

Establishing Value Alignment and Reputational Priorities

Articulating the core values of your organization is the first step to understanding your reputational priorities. Now equipped with this deep understanding of your mission and intended impact, we can build policies that uphold our values as our organization grows.

When establishing best practices to uphold your value- and reputation-based priorities…

• Create a written policy and set key triggers and dates for reviewing substantial philanthropic partnerships.
• Implement a committee or governing body to oversee compliance with your policy. Include members with diverse backgrounds and roles across your organization – not only from Development Teams but also Programs, Operations, Marketing, etc. – to enhance decision-making.
• Approach with grace. Understand there is room for every organization and funder to grow. Try to engage and educate them as much as possible.

Ultimately, every organization comes with its own unique history, but we can build stronger communities through our conscious decision-making in partnerships. Development itself is impact: as we engage supporters, we can transmit our values and foster change, helping others recognize and own their responsibility to our greater community.