JLBC: Leadership

JLBC: Leadership

Staff members is only facilitated when their comments and concerns are given legitimate concern before the need to blow the whistle. An ethical culture within a nonprofit organization means employees are encouraged to blow the whistle, not merely protected once they have done so. Therefore, external control is insufficient to embody respect and achieve Level 4 within a nonprofit organizational culture.

Achieving Integrity (Level 5)

Identifying examples of nonprofits that have achieved in- integrity is more challenging than identifying those that achieve financial competence, accountability, and reciprocity. Because external controls are more applicable to ensuring these types of ethical behaviors by organizations, monitoring their successful accomplishment is more feasible. Also, as with other issues, bad behavior makes the news, whereas good behavior usually does not. Numerous watchdog groups, such as Charity Navigator and the American Institute of Philanthropy, have developed rating scales for top nonprofits, evaluating organizations based primarily on financial competence, transparency, and protection of donor interests. The nonprofits that consistently rate high on these elements are most likely to achieve integrity (based on the hierarchy of ethical values proposed herein). These ratings may provide a good starting point for identifying the level of moral culture development in nonprofit organizations.

Boys & Girls Clubs of America, the Nature Conservancy, the Mayo Clinic, and the American Red Cross are well known, and their names are brands. Branding represents a promise of organization principles, operational values, and the benefit the organization seeks to deliver to society (Wymer et al. 2006). Staff, volunteers, donors, clients, and the general public feel a sense of pride in what the organization has accomplished and, more important, trust how the organization conducts its work. In addition, each of these organizations made Charity Navigator's top-ten list of the "Best Charities Everyone's Heard Of" (Charity Navigator 2006).

Achieving Level 5 means possessing a brand of integrity whereby relevant stakeholders and the general public believe that the organization has fulfilled the elements at each of the lower levels—financial competence, transparency of operations, affiliation/alliances, and genuine respect for everyone involved in the organization's work. Nonprofit organizations of integrity exhibit a stewardship approach to management and administration. According to stewardship theory, stewards place higher value and priority on collectivist rather than individualistic behaviors, that is, on cooperation rather than defection (Davis, Schoorman, and Donaldson 1997). Because the organization's performance is the primary focus, stewards can maximize the satisfaction of all stakeholders (including the stewards) by acting in the organization's best interests.

An ethical organizational culture in the nonprofit sector is essential to stewardship. Stewards must be vested with a high degree of trust, and therefore an internalized ethical culture is crucial to developing staff, volunteers, and board members into stewards. External controls, such as legal mandates for reporting, rules and regulations regarding financial management, independent watchdog groups, and so on, can only influence ethical behavior to a certain degree. Unless the individuals within the nonprofit work to ensure that the organization's culture facilitates ethical conduct, integrity will not be achieved. For example, McCabe and Trevino (1996, 29) suggest that the key to curbing cheating in academia may be to "create an environment where academic dishonesty is socially unacceptable." Disapproval of affairs among peers is a chief determinant of whether students change their cheating habits between high school and college (Hen- Hendershott et al., 2000).

The importance of culture is also reflected in what Frumkin (2002) terms the expressive rationale, whereby nonprofits exist due to the desire of stakeholders to express their values and faith. The concept of stewardship is probably the most prevalent among faith-based and environmental nonprofits. For example, the National Chris- tian Foundation—number 1 on Charity Navigator's list of "10 Best Charities Everyone's Heard Of"—defines faithful stewards as "people who understand what they hold be- longs to God" (NCF 2006). Likewise, Conservation International (number 5 on the list) "believes that Earth's natural heritage must be maintained if future generations are to thrive spiritually, culturally and economically" (CI 2006). Each of these statements implies placing individual interests secondary to the community (and organization).


Simply following the letter of the law does not mean that an organization is ethical; external controls can only take an organization part way to develop an ethical culture. Many nonprofits caught up in scandal broke no laws. However, sexual misconduct by staff, excessive compensation packages for executives, drift from the organization's mission, and questionable fundraising practices erode public confidence in the nonprofit sector—internalization of ethics through the development of an ethical.

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