Dirty Money

Posted by Laura Otten, Ph.D., Director on March 11th, 2011 in Articles, Thoughts & Commentary


Now is clearly not a popular time to suggest that nonprofits should think carefully before accepting a gift—as gifts of dollars or those things that can easily translate into dollars—are such desperate commodities these days.   But the reality is that now—and always—is the time.

Earlier this week, The Wall Street Journal published an article identifying a number of American and British nonprofits—institutions of higher education and think tanks—that had, knowingly, accepted gifts from the Gaddafi Family Foundation and/or the Libyan government.   The prestigious London School of Economics lost its director when he resigned earlier this week following the revelation of the School’s accepting almost $500,000 from the Gaddafi International Charity and Development Foundation, stating that accepting the gift “backfired.”  I’ll say it backfired!  It made LSE an international headline and a week-long story—and not for positive reasons.

One of my regular urgings to boards of directors is the need to protect the reputation of the organization.  There are so many things over which we have no control that can taint or ruin our reputation—such as the client who gets injured on our property or the employee who unpredictably goes amuck in any number of ways, etc., why allow something over which we have control to do such harm?  I have said this very thing here before in talking about the importance of having a good conflict of interest policy, not one that simply meets the letter of the law.

And so it is with a gift acceptance policy.  Every nonprofit needs one, and yet I repeatedly get the “deer in the headlights” look when I ask boards about this policy.  The time to create this policy is not when a gift is being dangled in your faces, but rather in the vacuum of nothing but values, mission and ethics—and no tantalizing gift.  Many people when they think of a gift acceptance policy think only of the “what” not the “from whom.”  So, that is a start.  Will be accept only cash or will we accept other things, such as stocks or land or art?  Will we get into the vehicle acceptance business?  Some of these questions may become moot depending upon what Congress does with the federal budget before it.  Nevertheless, for at least a little while longer, boards must stipulate what it is they will and will not accept as gifts.

The trickier component in a gift acceptance policy—and too often ignored, perhaps because of that very trickiness—is the who.  But boards must ask themselves that tough question:  from whom (or from what organization) will we accept gifts?  Will we accept anyone’s or any company’s gift or are there some gifts, no matter how desired or needed, that we simply will not accept?  Should an anti-violence group accept gifts from manufacturers of weapons or alcohol, the latter because of the role alcohol plays in a significant number of violent interactions?  Should they accept gifts from the CEOs of such companies?  Should a community center that promotes physical fitness programs for youth accept gifts from a soda or candy manufacturer, or their CEOs?

Should an educational or social justice institution—or any organization–accept funds garnered through theft, violence and destruction, whether the gift is from a country, a company or an individual?  While to some, answers to these questions—and the many others like them—are easy to answer; things appear very black and white.  These discussions, however, never go that simply.

The answers to these questions lie in the complex intersection of organization mission and core values, desire for survival and the hovering disquiet that goes with the prospect of turning money away.  As a result, too many boards shy away from tackling this conversation.  And this cannot be.

Boards must engage in this dialogue that at times might seem more philosophical than practical and other times more waste than valuable.  Either that or be comfortable knowing you may be tomorrow’s ugly headline.

The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.