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Strategic
Source Online
August 2004
Update: Ethics Are a Big Issue
in Philanthropy Today, Just as it has Become in Corporate America
We reported in
the July issue of Strategic Source Online that the U.S. Senate had opened
hearings on perceived abuses in the non-profit sector. The chairman of
the Senate Finance Committee, Sen. Charles Grassley, recently was quoted
as saying “Big money, tax free, and no oversight have created a
cesspool in too many cases."
Foundations are under scrutiny for excessive compensation to managers
and directors, improper expense reimbursements, insufficient distributions,
self-dealing, and a host of other improprieties. Some have called for
limits on the life expectancy of a foundation; others have recommended
that the government be given the power to withdraw tax exempt status after
a review of activities every five years.
Foundations are often guided by independent experts and consultants, and
their organization, management, grant making, and reporting are often
influenced by the advice of consultants. However, to date, there are no
ethical guidelines or standards to which such consultants are bound. Most
consultants adhere to rigorous and lofty personal standards. However,
the lack of universally accepted guidelines raises the risk to foundation
clients, consumers and the public at large.
This vacuum has now been filled. In recent months, foundation consultants
from around the country have developed a Code of Ethics intended to guide
and promote high standards in service to private and independent foundations.
Now complete, consultants have the opportunity to subscribe to the Code
by committing to practice its core values.
If you are a foundation and now use or anticipate using an independent
consultant, you may wish to require your consultant to subscribe to this
Code. If you are a consultant or advisor, and wish to subscribe to the
Code, feel free to go on the Code's Website, at 
foundationconsultants.org.
It seems clear that self-regulation is preferable over governmental regulation.
If the non-profit community in general, and the foundation community in
particular, does not adhere to best practices and appropriate standards,
there will be increased restrictive and perhaps intrusive regulation.
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