Yet, one of the disturbing trends the past two decades is the rise of blatant conflicts of interests in nonprofits. This is more than just the outright fraud, but also the petty mutual relationships which enrich both parties. Few people seem to understand the seriousness of what’s happening. One way to create a culture of cleanliness is by having a very clear Gift Policy.
My most vivid experience about the need for such came one Christmas during the 1990s in the office of an ExecDir of a Community Action agency. Since they acted as fiscal agent for numerous federal $$$ he had a number of subcontractors. His office was stacked with various ’holiday’ gifts from various vendors, some innocuous such as a fruit basket, but others like luxury box tickets to an NHL game. However, it never crossed his mind nor that of the Board that this might set up a conflict of interest.
So YES, you do need a gift policy. The Board is the supreme fiduciary authority in the organization and is responsible for making sure all business is done in an ethical and transparent manner.
While corruption can kill a nonprofit, equally damaging can be the mere appearance of impropriety. Your image and reputation translate into community goodwill as well as cash…conflicts of interests put that at risk. Furthermore, if your ExecDir were to conspire to defraud the agency in collaboration with a vendor, one of the things your insurance company will look at is if you had policies in place governing the relationship. Insurance companies have denied claims for less.
Furthermore, if the ExecDir thinks it’s OK, then other employees will act accordingly. Thus the vague ethical problems permeate the organization until one day something happens somewhere which winds up on the Six O’clock news. Not good.
Gift policies are not intended to stop outright criminal behavior. Law breakers don’t have much use for the personnel manual. However, a clear concise policy will head off the softer conflicts of interests which can subtly affect behavior that is not in the best interests of the nonprofit.
Here’s a policy I helped a nonprofit draft back a few years ago. It is short, to the point, and provides helpful guidance on what is and is not acceptable. The need for my assistance in drafting this came about after an issue arose where the ExecDir was winter storing his camper and boat free of charge in a contractor’s warehouse. It came out as part of a story about the contractor and severely embarrassed the organization.
17. General Policy On Gifts To Any Representative of ‘XYZ Nonprofit’
- To avoid a conflict of interest, the appearance of a conflict of interest, or the need for our Board members and employees to examine the ethics of acceptance, XYZ Nonprofit Board members and employees do not accept gifts nor in-kind services in excess of $10 (ten dollars) from vendors, donors, volunteers, clients, suppliers, potential employees, potential vendors or suppliers, or any other individual or organization, under any circumstances.
17.2 Exceptions to this rule are limited to:
- Gifts of food, candy, flowers, etc which can be shared amongst all staff/volunteers. Such gifts must be placed in employee lounge and accessible to all.
- Such promotional items such as coffee mugs, pens, key chains, etc which vendors distribute to all clients as part of their general marketing.
- Invitations to meals at moderately priced restaurants (up to $25) for the purpose of discussing business matters related to XYZ Nonprofit.
17.3 When an invalid gift is received:
- When Board member or staff receive a gift which violates this policy, such person shall notify their immediate supervisor and make arrangements to return the gift along with a brief note expressing appreciation for the thought, but that such gifts are not accepted under XYZ policy.
By making this part of the core ethics of your organization can you avoid entanglement in publicly embarrassing situations.