The GuideStar Blog retired September 9, 2019. We invite you to visit its replacement, the Candid Blog. You’re also welcome to browse or search the GuideStar Blog archives. Onward!

GuideStar Blog

Black, White, or Gray: How are Your Fundraising Ethics?

Have you ever been in a situation that didn’t feel quite right? Or, where you weren’t sure what to do?

We all have, and it’s probably because some ethical dilemma was taking place.

Sometimes there’s a clear-cut answer when it comes to ethics — such as when ethics and the law intersect. For example, you shouldn’t steal — stealing is both unethical and illegal.

However, sometimes unethical issues are legal. One example of something that is legal, but unethical for a development director to accept a personal gift from a donor. For example, let’s say you have a major donor who gives you an expensive gold watch for Christmas or leaves you a personal bequest in their will. What do you do?

Why Are Fundraising Ethics so Important?

The reason that ethics is so important in the nonprofit sector is that fundraising is all about trust.

Would you give to an organization or individual you didn’t consider ethical?

How do you think donors react when they learn that an organization has engaged in unethical behavior?

When facing an ethical situation, ask yourself if it passes the stink test. If it looks like a skunk and smells like a skunk, it’s probably a skunk.

You have intuition for a reason — trust your gut.

When Good Intentions Go Bad

Yesterday, I received a call from a development director — let’s call her “Mary” — because she was concerned about a situation at her organization.

Mary’s board members agreed to co-host/sponsor a fundraising event with a for-profit company (yellow flag) without consulting her (red flag). Unfortunately, the board members didn’t ask the right questions, because they were so blinded by the promises of an “easy” fundraising event. Sadly, the event didn’t raise any money (high expenses, low revenue), and the for-profit company received all the benefit (high visibility). Not only that, but the company was the one collecting the checks.

Major ethical dilemma here. Oops!

In order to prevent this type of ethical dilemma or deal with any situation that may arise, here are some rules of thumb to follow before you find yourself face-to-face with an ethical quandary.

Rules of Thumb for Ethical Fundraising

1. Check the AFP Code of Ethics

Start at the source — the AFP Code of Ethics. Have your staff and board members read and discuss the code to ensure they understand what is considered ethical and what isn’t.

If you are a member of AFP, you can take their Ethics Assessment Inventory, which is great food for thought and lets you know how you are doing.

2. Front Page Test

If you don’t want whatever you’re doing to be on the front page of your local paper or the sordid topic of some blogger, it’s probably not ethical. Ask yourself: Is there a possibility that your organization could end up on the front page of the paper for this action? Would you be proud or would donors run?

3. How Would Your Parents Feel?

Similar to the front page test, would your parents be proud or disappointed if you took the action you’re considering?

4. Trust Your Gut (and Your Nose)

Finally, once again, if it’s black and white and stinks, it’s probably a skunk. In other words, if it looks like a skunk, and smells like a skunk, it’s probably a skunk. And, if there’s a fundraising event or major gift that comes your way that seems too good to be true, it probably is.

That’s how Mary’s board got themselves into hot water. They didn’t pay attention to the many red flags waiving in front of their noses.

Shades of Gray

The difficulty with ethical situations is that they are not always black and white — in fact, they are often gray.

The most important thing to do when faced with an ethical dilemma is to be open and honest about it with your executive director and board. Discuss the situation and come to an agreement about what to do. Do not keep it a secret — it’s probably a red flag if you don’t want to tell anyone.

Have you ever faced an ethical dilemma at your organization? What did you do? Tell me about it in the comments.

EisensteinHeadshot-103 - 2014The preceding is a cross-post by Amy Eisenstein, CFRE, author, speaker, trainer, and owner of Tri Point Fundraising, a full-service consulting firm. You can read the original post here. You can also view her presentations and listen recording of her November 2013 webinar for GuideStar here. Amy Eisenstein, ACFRE is a best-selling author, speaker, trainer and consultant, as well as the owner of Tri Point Fundraising, a full-service consulting firm for nonprofit organizations and foundations. Her published books include: Amazon Best-Seller Major Gift Fundraising for Small Shops: How to Leverage Your Annual Fund in Only Five Hours per Week, Raising More with Less: An Essential Fundraising Guide for Nonprofit Professionals and Board Members, and 50 A$ks in 50 Weeks: A Guide to Better Fundraising for Your Small Development Shop. She currently serves as the president of the board of the Association of Fundraising Professionals – New Jersey Chapter. Amy received her Master’s Degree in Public Administration and Nonprofit Management from the Wagner Graduate School at New York University and her Bachelor’s Degree from Douglass College at Rutgers University. Amy became a Certified Fundraising Executive (CFRE) in 2004 and became an ACFRE in 2013. Please visit her website for her free eBooks at


Topics: Fundraising