Nonprofit boards must ensure their organization makes ethical responsibility a priority as they strive to improve the lives of others and further their missions.
While a nonprofit isn’t a business per se, nonprofits often conduct business activities. Nonprofits employ staff and volunteers, and they sometimes conduct business transactions with vendors and customers. Among the many challenges nonprofits face, is there room for ethical responsibility in business activities?
Given modern expectations, boards and executive directors would be well-advised to incorporate ethical responsibility into their culture and practices if they haven’t already.
Here, we cover the following topics to help ensure your nonprofit is reaching its full potential:
- A definition of ethical responsibility
- The importance of ethical responsibility in the workplace
- The difference between business ethics and social responsibility
It is important to understand the essence of ethical responsibility, why it’s so important for nonprofits, and how to bring it into the nonprofit workplace in visible ways.
What Is Ethical Responsibility?
Ethics comes from the Greek word ethos, which means moral character. In simple terms, ethics means knowing the difference between right and wrong and continuing to do the right thing.
Ethical responsibility in the workplace means that nonprofit boards and leaders recognize various principles and values and act on them responsibly.
Behaving in ways that are morally right or wrong in the workplace is called business ethics. Ethical decisions can be based on a person’s conscience or the laws of the land.
It’s important to ensure that everyone consistently follows the code of ethics organization-wide. Nonprofit boards can take the first step toward demonstrating ethical responsibility by establishing a code of ethics and storing it in their board management system.
What Is the Importance of Ethical Responsibility?
Ethical responsibility is connected with doing good, and it’s fair to say most people have an innate desire to do good in the world. Over the past few decades, society has placed a greater emphasis on ethical responsibility in the workplace. The focus of ethical responsibility relates to the organization as a whole as well as the individuals involved with the organization.
Robb Healey, a member of the Association of Fundraising Professionals Ethics Committee, highlights seven ethical dilemmas nonprofit boards must be aware of. They include:
- Accepting tainted money – Money that’s been embezzled or stolen
- Compensation – Connecting donor funds to compensation rather than furthering the mission
- Privacy – Keeping only data that’s necessary from donors
- Appearance of impropriety – Engaging in activities that are unethical, yet not illegal
- Good stewardship – Using the funds for the reason they were intended for
- Honesty – Telling the whole truth to stakeholders rather than a watered-down version of it
- Conflicts of interest – It is illegal for nonprofit board members and staff to profit from a nonprofit’s work or activities
Any of these infractions reflects poorly on a nonprofit board.
What Do Nonprofits Get From Promoting Ethical Responsibility?
Promoting ethical responsibility in the workplace of nonprofit organizations can yield a range of benefits that contribute to a healthier organizational culture, improved performance, and enhanced impact. Here are some of the advantages nonprofits gain from prioritizing ethical behavior within their teams:
- Positive Organizational Culture: Promoting ethical responsibility helps create a culture of respect, integrity, and transparency. This fosters a positive and supportive work environment where employees feel valued and motivated.
- Higher Employee Morale and Engagement: When employees feel that their organization operates ethically, they are more likely to feel proud of their work and committed to the organization’s mission. This, in turn, boosts morale and increases overall employee engagement.
- Improved Team Collaboration: An ethical workplace encourages open communication and collaboration among team members. When ethical values are shared, conflicts are minimized, and teamwork becomes more effective.
- Enhanced Employee Recruitment and Retention: Organizations with a strong ethical reputation are more attractive to job seekers who seek meaningful work and a positive work environment. Existing employees are also more likely to stay in an organization where ethical behavior is valued.
- Reduced Legal and Reputational Risks: Ethical behavior helps nonprofits avoid legal and compliance issues that can arise from unethical practices. Moreover, maintaining ethical standards safeguards the organization’s reputation from potential damage.
- Stronger Relationships with Stakeholders: Ethical behavior extends to how an organization treats its stakeholders, including clients, partners, and volunteers. Treating stakeholders ethically builds trust and strengthens these relationships.
- Enhanced Decision-Making: An ethical workplace promotes thoughtful and principled decision-making. When ethical considerations are integrated into decision processes, it results in more informed and responsible choices.
- Increased Donor and Funder Confidence: Donors and funders want to support organizations that demonstrate ethical conduct. Nonprofits that prioritize ethics are more likely to attract and retain financial support.
- Alignment with Mission and Values: Ethical responsibility reinforces the alignment between an organization’s actions and its mission and values. This consistency enhances the organization’s credibility and impact.
- Positive Public Perception: Nonprofits that prioritize ethics are often viewed positively by the public and media. This positive perception can lead to increased public support and a broader reach for the organization’s message.
- Resilience During Challenges: An ethical workplace equips employees and leaders to handle challenges and crises with integrity. Ethical principles guide decision-making even in difficult circumstances.
- Long-Term Sustainability: An ethical workplace contributes to the long-term sustainability of the nonprofit. It establishes a foundation of trust and credibility that can support the organization’s growth and continued success.
How Do You Show Ethical Responsibility?
It’s one thing for a nonprofit to want to be ethically responsible. It’s another thing to put the concept into practice.
Nonprofits can demonstrate ethical responsibility in five ways:
- Being honest – Holding regular meetings, listening, and offering feedback
- Being accountable – Taking full responsibility for all actions and decisions
- Being transparent – Sharing the ups and downs, good and bad
- Showing concern for people – Being respectful and upholding agreements
- Showing concern for the environment – Incorporating sustainable practices
What Is the Difference Between Business Ethics and Social Responsibility?
A discussion about ethical responsibility isn’t complete without considering the impact of social responsibility in workplaces. Social responsibility goes hand-in-hand with ethical responsibility on the job, as the vast majority of people expect that your organization’s activities shouldn’t harm people, products, or services.
We live in a more socially responsible time than ever before. Corporate social responsibility is connected to what today’s companies call ESG (environmental, social, and governance) which is a practice that incorporates sustainability into a business model. Social responsibility, along with ethical responsibility, in the nonprofit realm is important for these reasons:
- Employees prefer to work for organizations that support their values and principles.
- Good ethics inspires trust which allows nonprofits to experience growth, enabling them to improve their programs and activities
- Business ethics and social responsibility attract new donors and supporters
- A nonprofit’s brand can be enhanced by showing you adhere to these principles.
By drilling down the characteristics of each term, we can see just how important each of them is.
- Paying attention to the difference between right and wrong and continuing to do the right thing.
- Doing the right thing for the benefit of all stakeholders.
- Considering your conscience and the nonprofit’s principles in making ethical business decisions.
- Not harming people, products, or services.
- Adopting a code of ethics.
- Creating a workplace health and safety program.
- Determining the best ways to give back to communities.
- Adhering to social norms and expectations.
With business ethics and social responsibility in mind, nonprofits will need to carefully consider how to best bring ethics into the workplace.
How to Bring Business Ethics Into the Workplace
Here are a few other ways businesses can bring business ethics into the workplace:
- Communicate ethical expectations – Incorporate ethical expectations into orientations and other communications.
- Offer ethics training – Customize ethics training for board members, management and staff, to coincide with the nonprofit’s mission, vision, and values.
- Reward ethical actions – Make it a point to highlight ethical choices employees have made in employee performance evaluations.
- Create a policy to discipline unethical actions – A policy eliminates concerns about biased or unfair treatment.
Business ethics can be challenging because our decisions are often a reflection of our own beliefs and cultures in addition to the corporate culture. Relationships are complicated and there’s not always a clear-cut appropriate answer. Nonetheless, nonprofits that take meaningful steps to bring ethics into the workplace will be ahead of the game.
Ethical Responsibility: Everyone’s Responsibility
The expectations for good business ethics and social responsibility are at an all-time high. Most likely, those expectations will continue to grow in the future.
Since the concept of ethical responsibility is here to stay, it’s wise to give employees a voice in what those expectations look like in practice. Furthermore, it’s important to review your expectations to ensure they dovetail with the nonprofit’s mission and vision to ensure employees see your nonprofit’s efforts as genuine.
Your nonprofit’s involvement in issues related to ethical responsibility is something to be proud of, so be sure to promote your efforts and make sure your stakeholders are aware of it. Overall, attention to ethical responsibility, along with social responsibility, creates a win-win situation for all stakeholders.
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