FUNDRAISING ETHICS: IS DOING GOOD ENOUGH?
Episode aired Jan. 26, 2022: Fundraising Ethics
As someone who educates nonprofiteers about ethics, Ryan Woroniecki of DonorSearch knows what happens when a nonprofit engages in unethical fundraising practices: Donors stop believing in you. In this episode Ryan discusses
- What is ethical fundraising
- 3 unethical fundraising practices that need to be fixed
- Donor profiles: Should you share them
- The “creepiness” of prospect research and
- Why it’s critical to have a gift acceptance policy.
Below you can listen, watch or read this podcast episode.
Ephraim: Welcome to this edition of the Your Weekly Dose of Nonprofit podcast, the podcast that delivers actionable items you can implement at your organization right away. I’m your host Ephraim Gopin of 1832 Communications. Today I’m really happy to have with us a nonprofit fundraising, prospect development, association sponsorships and membership smartie, Ryan Woroniecki. Ryan, how you doing today?
Ryan: I’m great Ephraim. How about yourself?
Ephraim: I’m doing okay. Let’s introduce you to our listeners, watchers and readers.
Ryan has spent the last decade in the nonprofit sector building the DonorSearch partnerships department. Over his time at DonorSearch, he collaborated with Donor Perfect, Bloomerang, Salesforce, Virtuous, Benefactor Group, Campbell and Company and many other organizations. He’s proudest of building the most knowledgeable and helpful productive partners team in the prospect development and fundraising machine learning sector. Ryan has helped hundreds of nonprofits with various prospect development efforts. He served on the board of APRA-MD and currently serves on the board of the Giving Institute and AFP DC. He recently stepped down from a leadership role at DonorSearch to attend school at NC State.
What Is Ethical Fundraising
In today’s episode we’re going to discuss ethics and fundraising. Let’s dive right in. Ryan, how do you define ethical fundraising, specifically as it relates to the donor nonprofit relationship?
Ryan: Sure thing. Everyone’s favorite topic, ethics. Everyone thinks of ethics as dull and boring or most people do. Actually my partner and I just started watching The Good Place. It’s an old show that breaks down ethics in a really neat and entertaining way, keeps bringing in Kierkegaard and other famous ethicists.
But we’re not here to talk about that. We’re here to talk about fundraising ethics. So you asked how I define ethical fundraising. What I’m going to do is I’m going to steal the Rogare definition. Rogare is a think tank for fundraising and nonprofits based in the UK and our mutual friend Clay Buck and some other friends- Barbara O’Reilly, Cherian Koshy- were all right in the middle of this. The definition they came up with is that “fundraising is ethical when it balances the duty of the fundraisers to ask for support on behalf of their beneficiaries, with the right of the donor not to be subject to undue pressure to donate, such that a mutually beneficial outcome is achieved and neither stakeholder is significantly harmed.”
Essentially what all of that means is ethical fundraising is you find the middle ground between the organization and what is interesting to the donor about that mission and probably not interesting but exciting, so that they can make a meaningful investment and bring about positive change and through that discussion, no one says anything to offend one another.
Why Is Ethical Fundraising Important?
Ephraim: Okay. So taking that definition now, can you explain to us why is ethical fundraising important?
Ryan: So put very basically, nonprofits do good, right? The definition of good that they do is described by their mission. The good an animal rights organization does is very different than the good that say the Anti-Defamation League does, right? But regardless if an organization’s mission is to do good, if they’re involved in unethical fundraising, it’s really difficult to make the argument that they themselves are good. So if you don’t fundraise ethically, it’s difficult for your donors and your constituents to believe in you and obviously that belief is extremely important.
Fixing Unethical Practices
Ephraim: We’re gonna touch on that now. Let’s look at today’s actionable items. Please share with us three unethical practices nonprofits or fundraisers may currently be employing in their fundraising and what needs to be done to change those practices?
Ryan: Before I start, I think there’s one baseline definition of ethics that I should probably include. Should have done it up above. The minimum thing that you would need to do in order to be ethical is to follow the law. Ethics technically is supposed to be above the law. It’s a higher standard but at a baseline, if you’re not following the law, then you’re not being ethical.
With that in mind, one of the first things that I would recommend is make sure your fundraising registration is up to date in the states where you fundraise. So DC: You’ve got DC as its own designated government entity. It’s not a state. You’ve got Maryland which is a state and you’ve got Virginia which is a state. Many organizations actively fundraise in all three principalities or entities but they’re not registered in all of them. I’m not saying if you have a donor in Iowa you need to register in Iowa. Technically you probably should but the point is if you’re actively trying to solicit gifts from people that live in areas, make sure you’re registered to fundraise there.
The second one that I’m gonna mention is probably a hot topic. Some people might disagree but I would say the use of mailing lists or fundraising models that include ethnicity, race, gender or age. And age is a really big one because as we all know, if you think about it, that’s one of the best markers of wealth. You’ve been around longer on this earth. You’ve had more time to accumulate wealth, which means you could probably make a bigger gift. But you know ageism is a thing, racism is a thing and so all of that information shouldn’t be used to discriminate who could give to us. That’s my personal take.
I polled some fundraising consultants who’ve had more opportunities to run into general fundraising issues ethics issues. So Laura McDonald from the Benefactor Group. She’s currently the chair of the Giving USA Foundation. She said a big one is remembering that the relationship stays between the donor and the organization, not the gift officer. We talk about this all the time but practically what could that mean? Well one thing that it could mean is make sure you put all the notes in the CRM because it needs to be institutional knowledge. But another thing that it could mean is let’s say a donor offers up their vacation home for a week to the gift officer because they’ve got a really close relationship, that’s a big no-no. You don’t want to do that. Don’t mix business and friendship when it comes to relationships with donors.
Donor Bill Of Rights
Ephraim: That last one? Stories upon stories. I’ll just say listen please to what Ryan’s saying because that last one is unbelievably important, especially when it comes to people on the outside find out about these types of relationships and then they blow it out… it gets blown up and doesn’t look good for the entire organization. Let’s turn and let’s now look from the donor side of ethics. What is the Donor Bill of Rights and how does it affect how nonprofits go about fundraising from supporters?
Ryan: So the Donor Bill of Rights essentially guides the ethical principles of fundraising. It was created by a lot of the big associations in our space- AFP, AHP, Case, The Giving Institute- back in the 90s and it’s essentially 10 rights that make sure the donor, their intent, their privacy, are all respected, in addition to the highest levels of organizational transparency. One of the cool things I just got my letter from the AFP Foundation the other week. On the back is the Donor Bill of Rights, which is great.
That said, I think most donors probably are unfamiliar with the Donor Bill of Rights and more organizations could do a lot to promote it. In fact, there’s one other thing now that I think about it, the Donor Bill of Rights and unethical practice. So one of the Donor Bill of Rights- I don’t remember which number it is- but the right is essentially that a donor can have their name removed or deleted from mailing lists that an org might intend to share. I have given gifts to organizations and then gotten mail letters, requests for other gifts from orgs I’ve never heard of and at no point was there at the very least an obvious way for me to opt out of having my name shared. That’s an important part of the Donor Bill of Rights that oftentimes is overlooked.
Ephraim: That one drives me nuts and I always tell clients, just don’t use other people’s lists. That’s it. Build your own organically in-house. Don’t use other people’s lists because it just creates way too many problems and too many angry potential donors. Speaking of potential donors, let’s talk prospect research. It can seem creepy to some people, given the amount of information we can find online about almost anyone. What are the ethical considerations an organization has to take into account before researching a prospective donor or funder?
Ryan: Sure. That question is prospect research creepy, that’s how our mutual friend Clay Buck and I got started on this crazy educational session that’s happened a million times and morphed over. One of the things to highlight is we actually change the names.
Number one, prospect research has turned into prospect development. Prospect development is a little more inclusive of a lot of the back office major gift processes and procedures. You’ve got modeling you’ve got prospect management. Prospect research is one part of that broad discussion. Furthermore, we don’t really call it creepy because that gives the connotation that there’s something wrong about it or it shouldn’t be going on. Certainly to an outsider it can seem a little invasive. That’s kind of more of a question to ask, is it invasive as opposed to creepy? There’s a lot more associated with creepy.
With all that in mind- and I never give you short answers- large corporations and financial service firms and even companies like Twitter do this at a very high level and so the thought is, shouldn’t we be doing it for good? Do I think it’s creepy? I think if you have nefarious intent, there can be something wrong about it but ultimately no.
Along those lines, AFP considers wealth screening and prospect research to be a best practice. That’s what the organizations that are highly effective in fundraising do. If you’re poking around on a donor’s Facebook profile because you want to understand what happened with their ex-spouse, that’s creepy. If you’re doing it to understand who they are and figure out where their interests intersect with the mission of the organization, it’s not creepy at all. It’s just doing your job.
But along those lines, if we keep the Donor Bill of Rights in mind, you should only include what’s relevant in the system or the profile when you’re making it. So essentially, if I’m researching you, does it make sense for me to put in that you’re Jewish? Maybe, if that’s relevant to why you’re interested in the organization. Otherwise that doesn’t really belong there, right? Same thing that story about if I’m looking up what happened between somebody and their ex on Facebook. That’s probably highly irrelevant to the organization.
That should never be there and the second part, thinking about the ethical boundaries of it, you’re only supposed to put what’s relevant in the profile because the donor… well, this isn’t why but this is an application, the donors should be able to ask to see the profile, at which point you have to show it to them. If we go back to the piece about neither party being harmed, is the donor gonna be hurt or harmed by something they see in the profile? Well they shouldn’t, right? Only put that in there.
And then lastly you’re checking to make sure you’re not getting funding from a bad actor. I mean if we think about what went down with Jeffrey Epstein and MIT, essentially they had done that and the whistleblower was ultimately ignored the first time around. But by doing that kind of research, you’re going to ensure you’re not taking money from a bad actor and ultimately tarnishing the organization’s reputation, which can then be very difficult to make up.
Ephraim: That was an excellent, well laid out answer. The one follow-up I would just say to that is, I wonder how many organizations out there, if a donor asked them to see their profile would actually show it to them? And I’m willing, I’m gonna go on a limb and say very very very few, less than one percent would actually do it. They would be so scared to do that. Oh no no no we can’t share that with you and obviously that’s not the best practice to be employing with donors.
Ryan: I’ve got two good stories where that happened. One story is, again Clay’s story, where Clay had a donor come in every year who wanted to see her profile and they went through it together and because of the relationship in part, she ultimately left the bequest to the organization.
Another one is a story from a friend, Katie Lord. Katie’s a fundraising consultant based in the Kansas City area and at one point she was doing a feasibility study, trying to figure out how much can this org raise for a campaign. Interviewing one of the organizations larger donors and they were having a back and forth conversation and she asked for a sizable amount of money and the donor- with a prospective campaign donor- said how do you know that? And she ultimately said well, you’re in the finance industry. You have tools to identify what your clients and perspective clients can invest. We’re no different in the nonprofit sector and then he asked to see his profile and he looked over it and he was like, yeah, this is all right Ultimately he wasn’t comfortable giving at that level because he didn’t want to have to do that for every other organization that he cared about over the next few years, but he gave it the level right below that. I view that as a good outcome. But that’s two stories with good outcomes. Those are the only two I know. To your point, I’m sure there’s a bunch of people that would wig out if asked that question.
Gift Acceptance Policy
Ephraim: Completely. Let’s now talk about getting in gifts, which you kind of alluded to a minute ago, a gift acceptance policy. What is it and why is it critical for nonprofits to have them?
Ryan: Number one, let’s not even think about the ethics of it. Let’s just start with something very basic again. A gift acceptance policy is there to make sure that the org can actually do something with the gift. So let’s say I wanted to give a horse to a homeless shelter. What are they going to do with a horse?! So number one it has to be a gift that’s meaningful and they can use.
Number two kind of going back to the Jeffrey Epstein example. You want to make sure that you’re not accepting a gift from a bad actor or there’s a gift designation with somewhat malicious intent. As an example, see that big Maryland flag behind me? It’s where I’m from, where I grew up and I’ve got a good friend who works at the University of Maryland and he told me this story about how there was a donor that wanted to leave a bequest, a nice piece of property, basically right on campus that would be used as student living. But he only wanted white people to be able to live there and because the school had a gift… number one, the gift officer was like absolutely not. That’s ridiculous. But because the organization had a gift acceptance policy, they were able to turn to that and say look, this doesn’t meet the criteria and the standards of our gift acceptance policy. We would be happy to accept the gift without that qualifier but because of that, we can’t.
So it keeps you from those situations. Well, it doesn’t keep you from those situations. It makes those situations easier to say look, this is what we need and to be able to do that transparently with everybody. And again, if we go back to the Jeffrey Epstein story, had the gift acceptance policy been adhered to, they would have saved themselves a bunch of headache.
Let’s Learn More About Ryan
Ephraim: Totally agreed, specifically on that example. Lightning round. Let’s learn more about you Ryan. What got you started on your nonprofit career path?
Ryan: An old high school poker buddy recruited me to DonorSearch back in 2010 and it was really funny. The company was in the house back then, the owner’s house and so I went and interviewed and it was kind of surreal. But I’m so glad I did and I’m so glad I started down this path and a big shoutout to Alexi Safranov for the intro.
Ephraim: Who knew that poker could lead to a nonprofit career! Given all your decade plus in this sector, if you could shake up one thing in the nonprofit world, what would it be?
Ryan: I’d say probably tech adoption. The nonprofit sector, at the very least on the fundraising side which is the side I’m familiar with- I’m not too informed about the program side so this could be different- but technology lags years behind, right? I mean machine learning as an example. We’ve all trained machine learning models by liking something on Facebook or by looking at something on Amazon. So it’s not even those giant companies that are using ML. There’s much smaller companies using it. If we think about the nonprofit sector, it’s just starting to become a thing. So things like tech adoption would be great.
Ultimately it would make nonprofits much more efficient and there’s a really good example of kind of leaning in to stuff like that. Cherian Koshy, who you know very well, when he was at the Des Moines Performing Arts Center, they actually had an innovation fund. I think it was like five or six thousand dollars. Every year that was line items to try something new. Oftentimes it involved tech but not always. The thought was they weren’t expecting success out of it. They were expecting to learn something that would be applicable in the future. If it worked and it helped bring in a lot of money, that’s awesome! But at the end of the day, it was just hey, let’s try something new and see how it works. They are a larger organization, so in some ways that’s a luxury but if many orgs could embrace that, I think fundraising would be far more successful.
Ephraim: Excellent answer. Favorite book or story as a kid?
Ryan: So I don’t have one book but I got a series of books. Roald Dahl. Roald Dahl novels were awesome. James and the Giant Peach. Witches might have been my favorite. For some reason I have this memory of my mom reading it to me when I was really little. We would take turns reading. That’s how she taught me to read and the part where he’s been turned into either a mouse or a rat and he’s on some boat, I want to say in like Norway, a fishing boat and his mom, his grandmother is biting the heads off of freshly caught shrimp, which is kind of gross. But for some reason that reminds me of my childhood. Makes me very happy.
Ephraim: Twitter, love it or hate it?
Ryan: I think it’s great. What’s better than a public forum for GIFs and memes.
Ephraim: Fantastic. And finally for this round, what’s the origin of your Lego fascination?
Ryan: When I was a kid, I was really into pirates. So my parents bought me a bunch of different pirate things and one year for Hanukkah, I got a pirate Lego ship and I built it and it was really cool. So then I started asking for more Legos and ended up with me having this giant bin. Probably weighs like 70 pounds, just full of Legos and I would just make whatever. Oftentimes like castles. Little violent boy things. But I used to show off what I made to the orchid man when he would come. It was very intense. I forgot about all of this until Clay brought it up when we started doing the presentation. It was like oh my God, this is great and I’ve actually since gone back and played with them when I visited my mom.
Ephraim: Fantastic. I love it. Last, let’s turn the tables. You get to ask me one question that I have no idea about, no clue what’s coming. Go ahead.
Ryan: Why did you move to Israel?
Ephraim: I kind of fell in love. Here on a post high school program and I just… I don’t have another way to explain it except I love it here. I love coming back to the states. I grew up in the states and in Canada, so I love coming back and visiting them. It’s like a second home to me. I feel very comfortable there. It’s just there’s something about living here. The people, the history, the mixing of ancient history with a lot of modernity. You and I had our discussion last time about this being startup nation. You’ve got thousands of years of history, ancient ruins everywhere you go. You could just be walking, there’s this… I’m walking in Jerusalem and I know I’m walking on the same places where ancient prophets and kings walked three, four thousand years ago and so there’s just something about that. But then suddenly you’re in a high-tech center and so now you’ve gone from three thousand years ago to tomorrow, basically all in that same little area and that’s what kind of just makes it different and special.
Ryan: Super cool. And your favorite traditional Israeli meal is…
Ephraim: Oh man. It’s funny. It used to be schnitzel, which is fried chicken breast but the truth is I never… Israelis have certain foods that they like. Hummus and tahini and all that other stuff. I eat it. I never got into the traditional Israeli meal. I guess it has to do with my American upbringing and being used to American type foods. It’s not to say I don’t like the food here. It’s just a matter of I never started, I never got down to eating those traditional Israeli meals.
Ryan: Makes sense.
Ephraim: I love it here like I said but when I come back to the states, it’s like home to me. I love visiting. I have family and friends there. I love to visit but I got a home here, so this is where I am.
Ryan: That’s awesome. Thanks for sharing.
Ephraim: Pleasure and thank you Ryan very much for appearing on the podcast. I encourage everyone to connect with Ryan, one on LinkedIn and two on Twitter so you can share all your GIFs and names. He is @nprofmillennial on Twitter. Ryan, it was a pleasure learning from you today. Thank you for appearing on the podcast.
Ryan: Likewise. Thanks so much for having me. Have a great evening.
Ephraim: Thanks and you have a great day.