In keeping with the spirit of good governance thousands of nonprofit organisations will need to consider production of an “Ethical Fundraising and Investment Policy”.

Some will argue that donors don’t ask for a policy so why bother. But this policy is not just about ‘what the donor wants’, it’s about transparency and accountability and those involved within and outside the organisation. It’s important to write processes and procedures down and state the organisations’ ethos to how it manages donations and cautiously considers its investments.

Policies relating to ethical fundraising should be designed with not only the donor in mind but integrated with other quality management systems. 

It’s believed that less than 10 percent of the 120 000 nonprofits in the country will have these guidelines in place and only one percent will adhere. 

So what kind of ‘ics' are you applying; economical or ethical when it comes to sustainability of your cause. Are you only concerned about economic survival regardless of how it’s achieved or do you apply principles and moral fiber in your fundraising practice?

Donors are becoming skeptical of nonprofit organisations and want to know how you are raising funds and managing your investments. They even want to know background details of board members and senior managers, they seek reassurance that their money is spent in a responsible manner and that business is being done in an open and honest way – a written fundraising policy can allay fears or suspicions.

High profile organisations such as, Save the Children, Greenpeace, Lion Alert and Rhodes University post their fundraising principles onto their website for members of the public to view. This is an ideal opportunity to engage with stakeholders about how your NPO wisely considers its donations.

Board members and trustees are also searching for ways to strengthen fundraising knowledge; they often feel frustrated by their fundraisers and don’t always understand how they operate. If this is the case then it’s even more urgent to craft a policy.  As one board member said, “Fundraising (in my organisation) is a bit like tap dancing without a choreographer”.

A number of strong motivators exist for creating a policy to uphold standards and ethics, especially if a dispute arises or there’s confusion over territory which is a common problem for NPOs with a national footprint like the Cancer Association of South Africa with over 50 care centres and several ongoing fundraising campaigns. There might be issues such as brand protection and reputational risks, especially if you are tempted to accept donations from dubious companies or characters, guidelines need to be present.

Imagine how appalled the world would be if the Treatment Action Campaign accepted funds from manufacturers of antiretroviral medicines after aggressively campaigning the South Africa  government for universal access to free AIDS treatment. And what if a drug and alcohol rehabilitation centre received a new vehicle from a brewery emblazoned with beer brands and advertisements.  It would be difficult to respect and trust such an organisation.

The Salvation Army made a resolution 12 years ago not to apply to the Lotto for funds as it was a game of chance (gambling), unchristian and caused severe economic distress with the families wherein they worked. They are very proud of taking this stand and make it known to their supporters. Another Christian organisation, The Leprosy Mission also chose to not approach the Lotto, they too continue to raise sufficient funds, and in fact 90 perfect of their income comes from individuals.

Common elements of a fundraising policy should incorporate;

• Your acceptance policy – who you won’t accept money from. Such as the usual suspects – pharmaceutical, gambling, human trafficking, animal experimentation, tobacco and alcohol;
• Do you adhere to the International Fundraising Principles or the SAIF Code of Professional Ethics, especially concerning issues around finder’s fee or commission payments on amounts raised?
• If you are registered as a Public Benefit Organisation with South African Revenue Service and comply with the Non-Profit Organisations Act?
• Outline donor rights and how you will recognise your donors, and the turnaround time for writing thank you letters and receipting donations;
• What the conditions will be for naming rights to a building or a project;
• Let your supporters and beneficiaries know how you follow green and ethical investment policies aligned to your mission, values and ethos. 
• Profile how you partner with companies or government and if there’s a need for a contract to be drawn-up (important if you’re receiving sponsorship, entering a cause related marketing deal or bidding for tenders);
• State how you will work with fundraising consultants, if at all.
• Also mention in this document, if you’re a nationwide structure, how fundraising functions on a national and regional level – there’s enough competition out there without internally competing for donors.

There have been a number of cases of non-compliance with fundraising policies such as:  

1. Four children’s charities were named beneficiaries of a glitzy night of the stars.  During the event a sports car was auctioned for a couple of million, the highest bid came from the owner of a sleazy striptease club! Two of the beneficiaries refused to accept proceeds from the auction but the other two organisations banked the cheque;
2. During Muammar Gaddafi’s reign as President of the African Union a humanitarian organisation based in South Africa accepted an invitation to visit Libya for leadership training of one of its directors. This was not only in contradiction of their resource acquisition policy but against their human rights principles;
3. The National Obesity Forum, a charity in the United Kingdom which works to reduce obesity and educate school children about healthy diets received £50 000 from Coca Cola for research into low-calorie, artificial sweeteners. One of the trustees negotiated the grant with full approval from the board to accept the money.  It appears that this was against their own policy;
4. A New Zealand children’s charity, KidsCan, benefitted from US$2 million during a TV telethon campaign for the purchase of raincoats made by Adidas in a Chinese factory that used under-aged children as cheap labour.  This was in violation of New Zealand labour laws and caused uproar.
5. Often management will push a fundraising team to meet targets without any regard to how funds are solicited – this is an unfortunate attitude that emanates from charities working under pressure, more so those in the welfare sector. They justify this approach and say ‘needs must’ but remember “He who sups with the devil should have a long spoon”.
6. Goggle sites to view fundraising policies:

• www.lionalert.org
• www.savethechildren.org
• www.ru.ac.za
• www.greenpeace.org

– Ann Bown is a fundraising and sustainability consultant to nonprofit organisations.