Cause-related marketing is a powerful marketing tool that business and nonprofit organizations are increasingly leveraging. According to the Cone Millennial Cause Study in 2006, 89% of Americans (aged 13 to 25) would switch from one brand to another brand of a comparable product (and price) if the latter brand was associated with “good cause.” Earlier studies by Cone indicate an upward trend in the number of Americans who associate their own buying habits with cause marketing as well as an expectation that those companies to be “good corporate citizens.” These studies also show a substantial increase from just before to just after the September 11, 2001 attacks.

Numerous other studies have also been conducted to show that cause-related marketing has helped to increase a company’s profits. For example, in the cause marketing campaign by American Express (to which the term “cause marketing” is attributed), the company saw a 17% increase in new users and a 28% increase in card usage.

The possible benefits of cause marketing for nonprofit organizations include an increased ability to promote the nonprofit organization’s cause via the greater financial resources of a business, and an increased ability to reach possible supporters through a company’s customer base. The possible benefits of cause marketing for business include positive public relations, improved customer relations, and additional marketing opportunities.

Cause marketing can take on many forms, including:

• Product, service, or transaction specific
• Promotion of a common message
• Product licensing, endorsements, and certifications
• Local partnerships
• Employee service programs*

But are there ethical issues of which we should be aware before entering into a marketing relationship with a business? What if, for example, our organization’s mission is to support children’s health? Should we enter into a cause-marketing program with Ste. Michelle Wine Estates?

Ste. Michelle Wine Estates was ranked among the top ten producers of premium wines in the United States. Ste. Michelle is a highly respected and ethically run company. It is a good corporate citizen, making donations to charities in its head quarter’s community. It is also a subsidiary of Altria, the parent company of Phillip Morris USA, the country’s leading cigarette manufacturer.

Let us say that Ste. Michelle Wine Estates was willing to promote our organization’s name in its marketing materials. In exchange, it would pay our organization a significant sum. Do we sell our name?
While the AFP Code of Ethics does not specifically tell us whether cause marketing is ethical or unethical, it does provide us with certain guidelines which we can use to help us make some decisions.

The first consideration falls under Standard No. 1, “Members shall not engage in activities that harm the members’organization, clients, or profession.”

Could we say that allowing Altria, through its subsidiary Ste. Michelle Wine Estates, to “purchase” our goodwill would harm our organization, clients or profession? It could be argued that entering into a contract which puts a public halo over a corporation whose products might harm children (in this case, wine and tobacco) is contrary to the ethical underpinnings of our charity’s mission.

But, Phillip Morris and Ste. Michelle Wine Estates publicly oppose underage smoking or drinking. Does their public stance mitigate our concerns? Would our decision be different if the corporation’s fee was used to educate parents and children on the harmful effects of smoking or drinking?

A similar concern could be raised by a food pantry entering into a cause-marketing agreement with a manufacturer of soft drinks. Does the food pantry have an obligation to encourage its clients to make healthy food choices? Or, can the food pantry negotiate with the manufacturer that its name will only be used in association with “healthier” low sugar, caffeine-free products?

Finally, should this be the concern of a development officer? Isn’t it our job to get money in the door?

Of course, as a member of the Association of Fundraising Professionals we hold ourselves out as professionals who come to our careers with integrity and high standards. I would argue that we are the perfect employees to raise these questions and participate in discerning the answers.

*This information was drawn from Wikipedia’s article regarding Cause-Related Marketing.

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Recently, a board member suggested to a colleague of ours that in expanding her staff, she should hire a “sales force” to go out and meet with donors. The board member, a gentleman who comes from the corporate world, thought that hiring development staff with a large portfolio of donor contacts, would be beneficial because, he said, “they would have a great network they could share with us.” Having more than 15 years of experience as a fund development professional, our colleague, explained to her board member that under the AFP Ethical Standard No. 18,

“Members shall adhere to the principle that all donor and prospect information created by, or on behalf of, an organization or a client is the property of that organization or client and shall not be transferred or utilized except on behalf of that organization or client.”

Actually, she might just have said, “that’s unethical.”

Unfortunately, the board member’s response was, “Well, you know it has to happen to some degree – people build relationships over time and then introduce those folks to the next organization.” It is hard to respond to the old school yard argument, “Everyone does it!”

But, everyone doesn’t do it. And we don’t do it not just for the obvious reason that it is a breach of confidentiality we agreed to and owe our former employer. We don’t do it because taking a list of donors from one organization to another doesn’t work.

First let us look at the ethical considerations of the act.

The Guidelines for Standard No. 18 read, in part:

a. Members do not physically or electronically remove or transmit information from the possession of a nonprofit organization or client without prior explicit consent.

d. Members do not imply information about specific prospects and donors they have learned in the course of work for one organization that would be a benefit to another as a consequence of their employment.

These two guidelines underline the proprietary rights the first organization has regarding prospect and donor information. The information was generated while the employee was working for the first employer and was therefore, work-generated materials. We can liken it to the engineering breakthrough created by an employee of Westinghouse whereby the breakthrough becomes the property of the corporation.

The guideline does allow for information that is in the public domain. (Guideline f) There is no prohibition from gathering information afresh from public records.

Now, we noted that carrying donor information from one organization to another is not only contrary to the professional code of ethical standards, it doesn’t work.

To understand why that is, we have to look at why people donate.

Generally speaking, people donate to a particular organization because they have a commitment to that organization or the cause for which it stands. The adage, “People give to people” carries only so far. In reality, people give to people when they have a basic commitment to the cause underlying the request. Further, “People give to people” has been refined to “Peers give to peers.” Few development professionals are seen as peers by major gift donors regardless of their social standing. The nature of being an employee changes that relationship.

So, if people make donations to charitable organizations because they have a basic level of commitment to the organization’s cause, having a “salesperson” whom they know and even trust, approach them for the benefit of another organization does not ipso facto ensure that the donor will make a gift to the new organization.

Where the relationship can be of benefit is by “opening the door;” creating an opportunity for the salesperson/fund raiser to introduce the donor to the new organization. But for that to work, the organization does not need to hire a salesperson who will “bring her client list with her.” It merely needs to hire an aggressive, go-getter, someone who will do the basic gumshoe work of identification, qualification, cultivation and solicitation.

So, how do we respond to our board members or CEO when they think all the organization needs is a person who has a good Rolodex? We respond with education and knowledge.

Betsy was directed by her manager to not reveal some facts about her organization’s finances which, if brought to the attention of the board or accountants, would show that the organization did not raise the amount of money it claimed to have raised in the previous year. Should she hide the truth?

The direct mail vendor Jonathan is working with offers a discount to Jonathan if he will allow the vendor to include his donors’ records as part of their broader mailing list, to be sold to other organizations. This is in contradiction to his organization’s stated policies. Should he sell his list? The vendor promises to not reveal the agreement to anyone.

Catherine has been told by her boss that her annual bonus is conditioned upon her refusal to reveal to a board investigatory committee compromising information about her boss and another employee. It was implied to her that if she fails to “get along by going along” her future at the organization will be in jeopardy. Should she “keep her mouth shut” and protect her job?

In the course of our careers, it is likely that we will be asked to do something which we consider unethical. The request may come from our managers, trustees or donors. It may come from a family member, friend or colleague. There are many ways we can find ourselves in compromising situations. The way we handle them will define who we are and whether we are, and are recognized as, ethical professionals.

The Association of Fundraising Professionals has created The Code of Ethical Principals and Standards to which each one of us has agreed to abide as members of AFP. The authors of the Code have tried to lay out the range of situations which might lead to an ethical conundrum and provide us with guideposts directing us on how to respond ethically and professionally.

Acting in an ethical manner is not easy. Often, we find our ethical choice to be in direct conflict with the facile and expedient. Betsy may not have an obligation to reveal her organization’s finances to her board. Maybe it should be the CEO’s or CFO’s obligation. But does that mean it is right to be complicit?

Receiving a discount from a vendor may, in the short term, be financially beneficial to Jonathan’s department. And, anyway, who would know that the names got on the vendor’s list from his list? Does the likelihood of not getting caught outweigh the breach?

And, Catherine. Wouldn’t it be better for her to not get involved in a matter in which she was not a direct party?

Failing to acquiesce may have personal repercussions. We may lose our jobs. We may lose our reputations. We may lose our careers. Often times it seems as if our lives are in the balance.

It takes strength of character to do the right thing in these situations. Recognizing that doing the right thing is right no matter the consequences is hard to see. While the AFP Code of Professional Conduct and Standards of Ethical Behavior and governing laws and regulations are guideposts, it is not easy applying them to the immediate and specific circumstances of our lives.

First, we recommend that you review the guidelines regularly. Think about circumstances in your career when you were confronted with choices and see if any of the guidelines would have helped you come to a decision.

In addition, we recommend you speak with people you believe practice ethical behavior. That may be a colleague, a spiritual leader, friend, spouse or mentor. While we don’t advocate you confess to a crime to a non-privileged third party, talking out an ethical dilemma often reveals the correct path to take.

Finally, remember that as members of AFP we have taken a pledge to act in the highest professional manner. Sometimes to do so will be painful. However, it is incumbent upon us to look past the immediate pain and recognize that we will be better for making the hard choice.

Know that you are not alone. There are good people – your family, colleagues and friends – who are willing to help you.

Many of you know Dave Coplan, Executive Director of Human Services Corporation; and an adjunct professor at the University of Pittsburgh Graduate School of Public and International Affairs. As a faculty member, Dave teaches introduction to fund raising. The course teaches students the basics of fund raising including the importance of ethics in fund raising.

Recently, Dave invited me to share with you the results of a class assignment. His students were asked to analyze one of a group of scenarios which posed ethical questions. They were to decide whether they believed the actions taken in their chosen scenario was ethical or not and to justify their conclusions by relying on their course materials. In particular, the students referred to Kim Klein’s book, Fundraising For Social Change (Chardon Press Series, Josey-Bass, John Wiley & Sons, Inc., 2007). I have selected one representative discussion for your enjoyment. I think you will find the scenario and answer provocative.

Scenario: The Chicano Pride Coalition of a large city organizes the annual Cinco de Mayo parade. They seek corporate sponsors and give them a lot of publicity. Last year a beer company that has a reputation for racial discrimination in the workplace offered to be the sole sponsor of the parade in exchange for very large advertising banners and other promotion. The Coalition agreed and the beer company paid for the promotion as well as the parade. The Chicano Pride Coalition got flack from people who felt it was inappropriate to promote a beer company to this extent, especially one with its reputation. On the other hand, most people enjoyed the parade and the company’s underwriting saved the organization a lot of time finding sponsors. It was easy to work with the company and they were very generous. This year, the company wants to sponsor the parade again. What should the group do and why? What are the ethical issues?

The students’ response:

“We would not have the beer company sponsor the parade again because we do not believe that it is worth risking the Coalition’s reputation just to save time finding sponsors.

“As Kim Klein says on page 404: ‘what is the price of your own integrity?’ Taking the sponsorship again goes against the organization’s mission and does not make the Coalition look good to the public, which could have a negative impact on future donations.

“We do not believe that this situation withholds the ‘vomit test.’ Klein states on page 386 [of Fundraising for Social Change] that if someone in the organization feels that ‘taking money from such-and-such makes me want to vomit’ than the organization should not take the money. It feels wrong to accept the sponsorship from the beer company because their reputation for racial discrimination does not coincide with the Coalition’s mission.

“The ethical issues involved in this case include three tenants of the AFP Code of Ethical Principals and Standards:

“1. According to the AFP code, member organizations should: ‘foster cultural diversity and pluralistic values and treat all people with dignity and respect.’ The Chicano Pride Coalition is a cultural organization and should not accept money from a company that is known for their racial discrimination practices.

“2. The AFP code on solicitation states that: ‘members shall take care to ensure that all solicitation and communication materials are accurate and correctly reflect their organization’s mission and use of solicited funds.’ By advertising and promoting the beer company, which is known to be discriminatory, they are not reflecting their organization’s mission appropriately.

“3. The AFP code states that members should: ‘act according to the highest goals and visions of their organization, professions, clients, and consciences.’ By working with the beer company, the Chicano Pride Coalition is betraying their mission of diversity and acceptance.”

I commend Dave and his class for considering the ethical side of the work we do. Too often we or our leadership choose to look beyond the ethical pitfalls in certain decisions and only see the financial reward. However, once you begin to breach the ethical guidelines, it is a slippery slope leading to greater and greater unethical behavior.

Ethical Scenario

Congratulations, you were recently hired by State University as its new Vice President for Institutional Advancement and charged with launching its $100 million capital campaign.

In the course of learning about the university’s fund raising history, you begin to review the institution’s previous campaign. While comparing the Institutional Advancement’s historical records with those from the university’s finance office, you notice that a major gift was posted by the Finance Department but not booked for the campaign.

You are about to draft the gift acceptance policies for the upcoming campaign. Should you draft the policies so as to include the previously received gift?

Some thoughts:

This scenario was more common in the “old days” when institutions did not have database software systems which automatically transferred information between the two departments. Institutional Advancement (IA) staff would receive gifts, book them into their proprietary software systems and send hard-copy information to the finance office. Finance would then post the gifts into their discrete system and hold the information over for audit. If everything was working well, the auditor would find both systems had the same information.

Today, many organizations use cross-department database software systems. When a gift is received by IA, it is booked into the donor’s file and a report is electronically generated and distributed to the Finance Department. Finance posts the gifts immediately and all files are reconciled electronically daily, weekly and often, quarterly. Some organizations even have all gifts being directed first to the finance office, posted, then distributed to IA. (We don’t recommend that. IA has time-sensitive actions it must take when a gift is received. In addition, there may be a need to contact the donor to confirm or modify the gift prior to its being posted.)

But, today’s scenario is still likely.

So what are the ethical issues which arise and how do we address them?

If the gift was posted by the Finance Department but not booked by Institutional Advancement, is the gift a new gift in that it never was recognized as part of the campaign?

Can you draft a campaign policy which “looks back” and captures a previously received gift?

Standard No. 20 of the AFPs Code of Ethical Principles and Standards, reads, “Members shall, when stating fundraising results, use accurate and consistent accounting methods that conform to the appropriate guidelines adopted by the appropriate regulatory body for the type of organization involved.” In the United States, that means members must conform to the guidelines adopted by the American Institute of Certified Public Accountants (AICPA).

Section a. of the guidelines for Standard 20 reads “Members recognize that fundraising results are recorded both for external financial and audited statement purposes, and for reporting and donor recognition purposes. Recording for external audited financial purposes must be in accordance with the appropriate AICPA guidelines.”

In other words, not only do we post gifts for the “soft” purpose of acknowledging the generosity of our donors, but we must be aware that there is the “hard” purpose of financial auditing. Failure in accurately posting our gifts will either alienate our donors or put our organizations in trouble with the Internal Revenue Service. Or both.

Clearly, if a gift was recognized for a previous campaign, it cannot be recognized for a subsequent one. This type of double-dipping undervalues the amount of funds raised and will reduce the amount available to the institution for its stated campaign purposes. Such action violates Ethical Standard No. 1, “Members shall not engage in activities that harm the members’ organizations, clients, or profession.”

In addition, recognizing a gift in a subsequent campaign but received by a donor in an earlier campaign may raise confusion in the donor and may forestall a subsequent gift from the donor for the latter campaign.

Finally, such action will cause havoc between IA and Finance.

OK, so what about grandfathering gifts which were received before the campaign began?

Many organizations do this within established parameters. For example, some organizations will grandfather gifts one year as long as the gift was not recognized for any other purpose. This is especially useful for unrestricted bequest gifts.

What do you think? Would you include a gift to a current campaign which was received but not booked in the previous campaign? What about capturing gifts which were received before a campaign began?

One of our colleagues recently sent me the following scenario.

Some years ago Ms. Donor informed the School “you’re in my will.” This prompted her to be included in the Heritage Society.

Several months later Ms. Donor wrote to say the School was still in her will but directed that the School was not to send her any mail of any kind. Apparently, the School had failed to keep its pledge. At that time, however, Ms. Donor did indicate that the School representative was allowed to call her. A few years later Ms. Donor restated her directive regarding mail.

Now, you have been hired as the new planned giving officer for the School. While reviewing the list of Heritage Society members you come across Ms. Donor’s file. You would like to call and introduce yourself but are cognizant of the notes. Should you invite Ms. Donor to Heritage Society events, send newsletter and the like?

The AFP Ethics Guidelines and Standards is clear on this one. Guideline c. of Standard No. 1 states, in relevant part, “Members shall respect the wishes and needs of constituents….” The Standard reads that Members shall not engage in activities that harm the members’ organizations, clients or profession.

I would argue that while sending a donor mail does not rise to the level of “harm” as required in the Standard, it does fail to meet the donor’s wishes.

But is that the end of the story? Our colleague has a reasonable desire to provide her donor with on-going information about the good work of her School. We know that donors are more likely to drift away from our organization if we fail to keep in touch. While it is less likely that a person would remove a charity from his or her will than it is he or she will fail to pay off a pledge, should our colleague reduce that chance by keeping in close contact through mail?

Ms. Donor has been both clear and gracious regarding her desire to not receive mail from the School. She has repeatedly asked to be removed from the mailing list. I know some people who might have given the School one chance and then removed the School from their list of testamentary beneficiaries. By not doing that, Ms. Donor has demonstrated her loyalty.

One option for our colleague is to use the mail pieces as an opportunity to visit Ms. Donor. Maybe our colleague can ask Ms. Donor if she would allow for a visit on a regular basis? Our colleague may bring Ms. Donor a copy of the latest School newsletter or the Annual Report.

Another option is that Ms. Donor may be willing to accept some mail, such as invitations to Heritage Society events. Again, this is an opportunity for our colleague to build a closer relationship with her donor.

So, while it is vital to act within the parameters of our Ethical Standards, there may be ways for us to respect our donors wishes and still build close, lifelong relationships.

Mary Worth, chief development officer for GoodWorks Charity just met with Bertram McFine. Mr. McFine agreed to create a charitable remainder unitrust for $100,000 with GoodWorks and has asked Mary to take the next steps in making that happen. Mary has a charitable remainder unitrust agreement template at her office. She drafts up the agreement in light of her conversation with Mr. McFine, has her organization’s attorney review it to ensure it meets the organization’s gift acceptance policies, and schedules a meeting with Mr. McFine to have him sign it.

Is this ethical?

I recently attended the Florida AFP Caucus’ Planet Philanthropy Conference in Boca Raton. During a session on planned giving, this scenario was presented. Many of the attendees who had planned giving experience felt that it was inappropriate for the development director to draft and present for signing to a donor a trust agreement. Why? They noted that the director is an employee of the charity and in this situation the charity and donor are two parties to a contract negotiation. The charity may have interests which are not in alignment with those of the donor. The attendees felt that it would be best for the director to recommend that the donor seek out his own legal advisor and have his lawyer draft a CRUT agreement listing the charity as the remainder beneficiary.

What could happen if Mary Worth recommends that Mr. McFine contact his own attorney then steps away from controlling the closure of the gift?

First, Mr. McFine may forget to call his attorney. It may be less important for him to take the action now than it is for the charity. Good intentions without concomitant action will not lead to a gift.

Second, Mr. McFine’s attorney may recommend against the creation of the trust. This can happen if (1) the attorney does not understand Mr. McFine’s commitment to making the gift, (2) the attorney does not know how to create a charitable trust and he is too embarrassed to admit it (believe me, I’ve seen this happen!) or the attorney does not believe it is in the best interest of his client to make the gift.

Finally, the attorney may add conditions to the trust agreement which are unfavorable to the charity. For example, while Mr. McFine may wish to support the GoodWorks Charity exclusively, the attorney may recommend that he divide the remainder interest among a variety of charities. Or, he may recommend Mr. McFine use a corporate trustee which will diminish the value of the trust through fees and expenses.

The AFP Code of Ethics provides us with guidelines on how to address this conundrum.

Guideline 2, paragraph a. states “Members shall take care to assure that all legally binding gift planning obligations they propose are prepared or approved by qualified legal counsel.”

Guideline 2, paragraph a. allows nonprofits to “propose” gift planning obligations. Therefore, AFP supports the production and presentation of trust agreements (called “obligations” in the Guidelines) by members. The obligations must be prepared or approved by qualified legal counsel. (The use of in-house legal counsel would also assure that Mary is not “engaging in the practice of law without a license,” a violation of state law.) So, if Mary Worth had her organization’s legal counsel review or draft the CRUT, she has met the terms of the Guidelines.

Guideline 2, b. states that “Members shall urge their clients to seek independent, qualified counsel in regard to any legal or fiduciary obligation that a member proposes.” Mary’s obligation is to urge Mr. McFine to seek counsel regarding the creation of the CRUT. It is Mr. McFine’s obligation to do so if he wishes. If he chooses not to seek counsel, Mary has no responsibility to demand he do so.

Of course, Mary is also under an obligation to act with the highest ethical standards and shall “effectively disclose any potential and actual conflicts of interest” (Standard No. 3). But if Mary engages in an open and ethical conversation with her donor, she can manage the gift solicitation process from start to finish, producing a CRUT agreement for Mr. McFine’s review and signing.