Shared Principles: Drafting Standards for Ethical, Effective Management

Published in the NonProfit Times, March 15, 2007
By Diana Aviv, president and CEO, Independent Sector

Our nonprofit community is so independent and diverse that it’s easy to forget that at the center of each organization’s work is the same purpose. From symphonies to social service providers, from environmental groups to universities, we all want to improve and enrich lives.

Crucial to fulfilling our missions is our ability to demonstrate to our stakeholders -- including donors, consumers of service, volunteers, and legislators -- that we operate ethically and accountably, since only if we earn their trust will we continue to receive their support. For them to understand that charities and foundations are meeting high standards, they need to understand what those standards are. National, state, and local organizations already offer dozens of standards of good practice, many of which are superb in quality and similar in thrust, but their very number makes it difficult, both for stakeholders and organizations trying to improve practice, to determine which ones should apply to every nonprofit. The nonprofit community would be well served by having access to a set of common principles, responsive to and embraced by organizations across the charitable sector, that set forth parameters of good governance and practice that should be followed by all. By coming together to define and then aspire to live by those practices, we would make a clear statement about our commitment to ethical operations and good governance.

It’s tempting to think that we don’t need to worry about further strengthening our governance and transparency. After all, passage of the Pension Protection Act last year provided the most significant changes to the regulations governing our sector in nearly 40 years, and early indications are that the new Congress does not see further reforms as a priority. Yet it is worth remembering that what generated such intense interest four years ago were not simply the stories describing embarrassing practices by private foundations and public charities. It was also the reaction of those in our sector who insisted that all problems could be addressed with more vigorous oversight by federal and state enforcement agencies. The hostile attitudes of key congressional leaders changed only when it became clear to them that our community was committed to working together to root out unethical conduct.

As important as stronger laws are, they are only part of the equation. Many of the key elements of governance and practice should remain the domain of our sector, not of lawmakers.

Some have argued that self-regulation ought to be the responsibility solely of the board of each organization. After all, this argument runs, shared principles will impose a one-size-fits-all straightjacket on organizations and, in so doing, undermine the distinctive features and important differences that make our nonprofit community such a dynamic part of society. This need not be a trade-off. It is possible to respect the distinctive features of each organization while also standing for values that every nonprofit honors in the way most appropriate for its situation.

While there are indisputably many differences across our community, we share more than simply a similar designation by the tax code. We also know that all of us are affected in public perception when a charitable organization or its leaders abuse the privileges granted by tax-exempt status. We have our common goal to improve lives, and we have common values that underpin our efforts. By displaying these common values through a shared set of ethical principles, we can focus on our similar ideals while still embracing the spectrum of our particular missions and approaches.

Developing these shared principles through collaboration allows us to benefit from the best ideas from across the sector. The Panel on the Nonprofit Sector has shown us how bringing together people with diverse knowledge, experience, and perspective can raise the quality of our work. This process can be time-consuming and even contentious, but by encouraging the input of people from throughout the nonprofit community, the Panel offered a real opportunity to debate ideas that strengthen the work of all types of organizations.

The same will be true of principles for good governance. By working together and exposing ourselves to others’ thinking about the best methods of running a charitable organization accountably, transparently and ethically, we are, in the end, better serving the causes we were created to serve.

The value of seeing others’ ideas reminds me of the peaks and valleys of the South African wine trade. The sanctions on the Apartheid government of the 1980s erected huge barriers for wine-producers, who then struggled to learn from improvements and innovations elsewhere. As a result, producers who had during the ’60s and ’70s been able to compete with titans of the industry like Italy and France fell far behind. When the sanctions were lifted, South African wine producers were again able to share ideas and raise their standards, and the result has been over a decade of consistent growth in the South African wine trade.

A current effort to develop principles of good governance and ethical conduct is the Panel on the Nonprofit Sector’s Advisory Committee on Self-Regulation. Led by Joel L. Fleishman of Duke University's Terry Sanford Institute of Public Policy, and Rebecca W. Rimel, president and CEO of The Pew Charitable Trusts, it brings together leaders from charities, foundations, academia, and regulatory agencies. The committee posted its initial draft principles in January in order to receive public comments and continues to solicit further feedback on revised principles it made public at the end of February.

More than 8,000 people who downloaded the principles in just the two weeks of the first comment period and the wide-ranging feedback that followed made the resulting ideas ever stronger and as we define a commonly held baseline for best practices. For those whose operations and governance already surpass the standards agreed upon, they have a platform from which to reach higher and establish new goals for the rest.

Providing a clear set of shared principles to our stakeholders can only increase confidence in our work. Adhering to them will also strengthen our operations, both individually and as a community. In the end, aspiring to a broad set of shared principles enhances our own abilities to meet our ultimate goal: improving and enriching the lives of those we serve.

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Diana Aviv is president and CEO of Independent Sector, a nonprofit, nonpartisan coalition of approximately 575 charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit community.

The draft principles are available at www.nonprofitpanel.org.