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ETHICAL ISSUES FACING AN NPO 8

Ethical Issues Facing the NPO

Vibert Jacob

South University

Non-profit organizations normally experience multiple challenges as well as unethical practices as compared to other for-profit organizations. A nonprofit organization like the Ronald McDonald House Charities (RMHC) may fail to address some of the ethical issues, which could lead to the deterioration of the organization’s image and in turn decrease its funding abilities. Some of the major ethical issues that could be experienced by the nonprofit organizations include conflict of interest, accountability, fraud, and honesty and full disclosure, especially with the leaders.

In this case, one of the key issues affecting the Ronald McDonald House Charities (RMHC) is the issue of tainted money. This involves situations where the leadership of the organization receives funds from an organization with ill intentions or from individuals or organizations that operate illegal businesses. This practice puts the organization in a fragile position since many employees may lose the faith with the leaders and with time the donors and supporter of the NPO may leave the organization. According to Simon (2013), research has shown that McDonald’s donates relatively very little to the charity organization and uses the charity to drive its product purchases. People who care about the NPO, RMHC thought that the leadership of the organization was making serious slip-ups and was leading the organization astray. This implies that a considerable number of employees do not have confidence in the leadership of the organization because of issue related to conflicts of interest. This is because the name of the charity normally causes people to confuse the local houses with the McDonald’s company, which undermines the important work of the charity organization.

According to Simon (2013), McDonald's donates about $1 million annually to the RMHC, which contributes to about 14.5 to 27.4% of the total revenues of the NPO. The donations from McDonald's are so little to the RMHC chapters that the chapters must explain their connection with the corporation on their website. The donations from McDonald's may be viewed as tainted money in that the corporation gets the opportunity to significantly benefit from the NPO while it is contributing very little. Simon continues to assert such explanation by the NPO on their website may also speak to the local chapter’s needs to distance themselves from McDonald’s since the corporation presents a liability to their fundraising. McDonald’s contribution to the NPO can also be viewed as tainted money in that the corporation includes the money from donation boxes and part of the company’s contribution to the NPO. According to Simon’s the ethical issue here is that McDonald’s exploits the charities that promote its brand and it provides little financial support to RMHC. Additionally, RMHC” connection with McDonald’s may influence its image in the eyes of the donor in that the NPO receives tainted money from McDonald’s (Hrabik,2017).

Handling the Ethical Issues

One of the key issues that affect NPOs includes the management of finances in order to ensure that RMHC handles this issue effectively; there is a need to include open procedures on how finances are handled, the way fundraising and other related activities are carried out. The key personnel of the organization need to demonstrate commitment and responsibility when handling the organization’s finances. Additionally, the key personnel of the organization need to comply with the legal, financial requirements and utilize solid accounting principles. The key personnel of the organization also need to classify the fundraising expenses and report them to the appropriate stakeholders accurately to eliminate any cases of embezzlement (Hussung, 2016).

On the other hand, the organization’s key personnel can handle the issues of transparency by regularly informing the public about the NPO’s activities, accomplishments, and decision-making processes. This would create public understanding and external visibility. Furthermore, the key personnel of the organization need to ensure that they are open about the listing of every dollar the organization receives. They can do this by ensuring that any donors or members of the public visiting the NPO’s website have access to information about the management of finances, outcomes, staffing, the composition of the board, impacts of the organization among others. Most importantly, the key personnel of the organization need to show the public, employees and other stakeholders a clear proposal of how they plan to utilize the contributions to the NPO.

This issue can also be handled by clarifying the intentions of the Corporation (McDonald’s) as a donor. According to Hussung, one of the main challenges of the nonprofit organization like RMHC is to navigate the intentions of the donor. In this case, it is evident that McDonald’s support for the NPO is unethical because the corporation drives its product purchase through its support for charity while in the real sense it contributes very title to the NPO. The according to Simon, McDonald utilizes the purchase-triggered donations strategy to market its products. In this case, the corporation donates part of its product sales to the charity organization to create a positive public relations image and in turn boost its sales. The issue with McDonald’s Donations to RMHC is that the corporation uses this strategy to boost its sales by attaching good emotions to the purchase of unhealthy food products. This unethical intention of the donor affects the credibility of the corporation and thus the support it gets from other donor and supporters. In this case, it is important for the key administrators of the RMHC to turn down donations and gifts from organizations such as, McDonald’s which have some strings attached to avoid future complications.

In addition to this, the organization’s key personnel can handle the ethical issues by maintaining high ethical standards, and well-defined mission and value statements. Additionally, the key employees of the organization need to ensure that the organization’s employees follow the specific code of conduct. The new and existing employees need to sign documents stating that their commitment to adhering to the ethical principles. Such policies will be critical in establishing the commitment of the organization to the standard that applies to multiple aspects of daily activities including the process of fundraising (Hussung, 2016). Additionally, since NPO’s like RMHC play a key role in the in the betterment of the society, the key administrators of the company need to regularly evaluate the performance of the company and share this information the public and other important stakeholders. This will allow the organization to continuously expand and improve their activities, programs, activities and most importantly their reputation.

Summary of outcomes

The outcomes of these steps by the administrators include an improvement in the image of the organization. When the administrators take like providing the financial information to the public the company shows its commitment to openness which is positively received by the relevant stakeholders. The second outcome is that through regular evaluation of the NPO this enables to grow and improve their activities continually. Thirdly, steps taken by administrators such as turning down donors with unethical or malicious intends, may help in improving the image of the NPO and attracting more donors and supporters.

Recommendations

To improve the image and credibility of RMHC significantly, the organization needs to change its brand name. According to Simon, very McDonald funds little of the vital work to assist families and children’s, and much of it relies on volunteers and donations from local communities. Since MacDonald’s. As a result, RMHC needs to consider changing its name to improve its image, attract more donors and supports, and most importantly compel McDonald to contribute more. Secondly, the best practices of philanthropy involve accountability and transparency, and as a result, RMHC needs to distance itself from any practices such as receiving tainted money from McDonald’s and any other organization to improve its image. Through its support and affiliation to McDonald the company receives bad publicity since some customers view the collaboration as unethical since it promotes the purchase of unhealthy foods by disguising in charity.

References

Hrabik, L. (2017). 7 Ethical Dilemmas Facing Nonprofit Organizations - Nonprofit Hub. Retrieved from http://nonprofithub.org/human-resources/7-ethical-dilemmas-facing- nonprofit-organizations/

Hussung, T. (2016). Ethical Considerations for Non-Profit Fundraising. Retrieved from http://online.lesley.edu/news/business/non-profit-fundraising/

Simon, M. (2013). Clowning Around with Charity. Retrieved from http://www.stopcorporateabuse.org/sites/default/files/resources/clowning_around_charity _report_full_final_0.pdf