Article: Ethics and Nonprofits
Summary
This article addresses the ethical issues of non-profits about the misuse of funds. The writer has identified some examples of company executives who have misused funds while their organizations are struggling with massive debts. The article explains in detail, the causes of misappropriation and the methods that nonprofits can use to prevent misconduct. The article has identified financial integrity as a major ethical issue in nonprofits.
Ethical Issues
The ability to say no to fraud can be termed as financial integrity. This is the central moral issue that affects almost every institution. Some circumstances may arise where a person’s moral judgment in dealing with funds. Any lack of accountability in such a situation can lead to misuse of funds if that person lacks financial integrity.
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Most ethical challenges that have been identified revolve around fraud, conflicting interests, poor allocation of resources and lack of transparency. Research has been done to determine various factors that affect ethical conduct. These factors are; moral awareness, moral intent, moral decisions, and moral action was taken. The four factors lead to a moral judgment whose outcome varies differently among people.
Many people holding top leadership positions have a high level of confidence from their perspective. This level of trust can easily turn into arrogance and eventually poor decision-making. Such people are not able to quickly rectify their mistakes due to a sense of self-worth.
The moral behavior of employees can be affected by the structures and culture of the organization. Unequal systems of reward can propel an employee to concentrate on short-term revenues or growth without any consideration of the long-term goals. In nonprofits, the pressure to make revenues or reduce expenditure drives such employees in misappropriation of funds.
Huge salaries for the top management can also become a financial integrity issue especially if the employees are underpaid or if the organization is wobbling in debt.
The Impact
Mismanagement of funds poses significant challenges in the future when companies will be requesting for more resources. Their future funding will depend on the kind of image they portray now. Those who utilize their funds well will have a high probability of receiving more money and vice versa.
Some resources companies and nonprofits could receive will mostly be affected by the level of confidence they have among the general public or their sponsors. That level of trust is built around the way managers use their funds. Managers who are highly paid in the middle of a struggling organization risk lowering the reputation of the organization.
The transparency of a company or a nonprofit is also crucial if they will have any chance of increasing their budgets in the future. They have to be open in their operations to instill public confidence. Some sponsors require well-kept records of the activities before they can release their funds. Proper book-keeping of accounting records has to be done to maintain financial integrity.
The survival of a company or a nonprofit is only defined by its economic status. The consistent misuse of funds could lead to the end of some, and likewise, proper management of resources can help other companies and nonprofits to expand their operations. These organizations have to manage their finances properly to receive more funds in the future. Financial integrity will play a prominent role in the future when funding these institutions.
References
Rhode, D. L., & Packel, A. K. (2009). Ethics and nonprofits.
Jeurissen, R. (Ed.). (2007). Ethics & business . Uitgeverij Van Gorcum.
