Worst Ethics Contest

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Got an ethics issue? Write to the nonprofit ethicist and ask him what to do.

Today we ran a newswire on a bunch of organizations that have been sending goods overseas as aid. The shipments—which purportedly include medicine and, improbably, coconut-flavored M&M’S—are valued, by the organizations, at many millions. The problem is that three news organizations have tried to track the shipments down to their final destinations in Guatemala where medicine is, in fact, badly needed—and they cannot locate them. One vendor organization “facilitates” these shipments for the nonprofits. The nonprofits and the vendor point to each other as the party responsible for setting a value on the shipments. The organizations record the many millions in their books, under what has been raised for and expended on program—and there you have the perfect setting for high overhead costs (including high salaries). This practice, called overvaluation, has been around for some time. There has been a significant amount of reporting on it, forcing a number of very “big” organizations to go back and revise their 990s sometimes by as much as hundreds of millions of dollars, but the practice persists as a massive ethical violation among a small number of nonprofits and vendors. It sullies us all.

Most of us have smaller scale ethical issues, but they can be just as torturous: an executive who has burned out, leaving the staff wondering if they should talk to the board; underpaid staff who take donations home (that’s a twofer); a board member who has undeclared but well-known conflicts of interest. . . .

So, what to do?

Luckily, NPQ opens its doors once a quarter for you to pose your quandaries to the Nonprofit Ethicist. Write to him today, describing the situation and detailing what you have done or not done, what you can do or not do, and he will respond immediately. Before we go to press with question and answer, we make sure that the names of the innocent are protected.