Fluent Essays

Instructions are attached Discussion 1 Fixed versus Flexible/Variable Expenses Evaluate how fixed and variable costs can differ based upon the industry. Which would you prefer to have more of in terms of expenses (fixed or flexible)? Provide rationale for your choice. Your initial post should be at least 300 words. · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 2 Justifying Fixed and Flexible Expenses Discuss how you would justify a budget’s fixed and flexible expenses to a board of directors or grant funding agency. What negotiation or conflict resolution strategy would you recommend if the board or agency does not accept the initial justification? Your initial post should be at least 300 words. · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 3 Payment Differences Discuss rationale as to why there are vast differences in payment for the same services (by CPT-treatment code) by various payer sources (e.g., private pay, grant, Medicare/Medicaid, traditional insurance like Blue Cross/Blue Shield, or managed care). How does this practice impact the profession and budgeting? Provide rationale for your choice. Your initial post should be at least 300 words.  · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 4 Justifying Budget Loss Not every operating budget must show a profit. For example, there are many examples of successful mental health and other health related programs that are referred to as “lost leader” programs because they show a loss. This is common with grant funded programs, or benevolent foundation funding. Discuss how you would continue to justify a budget loss to a board of directors or grant funding agency. What negotiation or conflict resolution strategy would you recommend if the board or agency does not accept the initial justification? Your initial post should be at least 300 words. · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 5 Zero-Based Budgeting Zero-based budgeting is very common in non-profit agencies. Discuss the pros and cons of this type of budgeting related to mental health service provision based on answering the five ZBB questions on page 92 of your text. · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 6 Capital-Equipment Budgeting Capital-equipment budgeting is typically related to the expansion of current services. This type of budget must be justified and requires a viability or return on investment analysis. Evaluate the advantages and disadvantages of financing options (e.g., mortgages and loans; lines of credit, leases; bond financing) for a specified capital improvement or equipment project.  · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 7 Forecasting Forecasting is a very difficult part of budgeting. Discuss what sources of data (e.g., cost of living, inflation, housing market changes, unemployment rates, federal loan interest rates, gross domestic product changes, etc.) would you use to help forecast budget changes for year 2+? Provide rationale for your choice(s). Your initial post should be at least 300 words. · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Discussion 8 Monitoring Budget Goals Sometimes things happen that we cannot predict or have control over that negatively impacts our budget. Consequently, monitoring budget goals on a quarterly basis is most common. If a quarterly budget goal is off (less than 20\%) of its’ intended target, modifications and corrective action is generally needed. Discuss what modifications and corrective action you would make if your budget was 20\% less than projected for quarter 2 of a fiscal year. Make sure to provide rationale. Your initial post should be at least 300 words.  · Support your initial and subsequent posts by citing at least two academic resources, preferably from the Ashford University Library. · Points you receive on discussions will reflect the quality of your initial post and responses. Required Textbook Dropkin, M., Halpin, J., & LaTouche, B. (2007).  The budget-building book for nonprofits  (2nd ed.). Jossey-Bass.  Required Resources In order to view the closed captioning of any video in this course, simply click on the cc link on the bottom right of the video (in red), click on transcribe video and then OK and the closed captioning will appear throughout your video. American Counseling Association, (n.d.). 2014 ACA Code of Ethics Resources. American Counseling Association. Retrieved from  https://www.counseling.org/knowledge-center/ethics/code-of-ethics-resources (Links to an external site.) . This site is the American Counseling Association (ACA) Code of Ethics Website related to Course Learning Outcome 4 “Apply ethics to the successful implementation of financial management and fundraising efforts of mental health care systems.” American Psychological Association. (2017). Ethical Principles of Psychologists and Code of Conduct: Including 2010 and 2016 Amendments. American Psychological Association. Retrieved from  http://www.apa.org/ethics/code2002.html (Links to an external site.) . This site is the American Psychological Association (APA) Code of Ethics. Section 6 relates to record keeping and fees. BlueCross BlueShield of Tennessee. (n.d.) Behavioral Health Specific Billing Guidelines. Retrieved from  http://www.bcbst.com/providers/behavioral_health/billing_guidelines.pdf. (Links to an external site.)  This site will be used for part of budget (profit) related assignments. BoardSource, [BoardSource]. (2012, April 3). Responsibilities of Nonprofit Boards - 6 of 10 - Ensure Adequate Financial Resources [Video File]. Retrieved from  https://youtu.be/9w9myx-5xok (Links to an external site.) BoardSource, [BoardSource]. (2012, April 5). Responsibilities of Nonprofit Boards - 7 of 10 - Protect Assets and Provide Financial Oversight [Video File]. Retrieved from  https://youtu.be/7NhRLNo6AEU (Links to an external site.) BPMSG, [BPMSG]. (2010, February 23). 06 Operating Expenses Fixed and Variable (Business Performance Management) [Video File]. Retrieved from  https://youtu.be/Xc6F5rMCM40 (Links to an external site.) Calley, N. (2009). Comprehensive program development in mental health counseling: Design, implementation, and evaluation. Journal of Mental Health Counseling, 31(1), 9-21. Chevarley, F., Owens, P.L., Zodet, M.W., Simpson, L., & et al. (2006). Health care for children and youth in the United States: Annual report on patterns of coverage, utilization, quality, and expenditures by a county level of urban influence. Ambulatory Pediatrics, 6(5), 241-64. Final budget for fiscal year 2006 changes Medicaid and Medicare rules, cuts funds for mental health programs. (2006). Psychiatric Services, 57(3), 432-3. financevideos, [financevideos]. (2008, October 2). What is the income statement? [Video File]. Retrieved from  https://youtu.be/tDc3KulcE9Q (Links to an external site.) Hornor, J, [eHow]. (2009, May 26). Small Business Basics : How to Understand a Profit-Loss Statement [Video File]. Retrieved from  https://youtu.be/1gI25MuIXkw (Links to an external site.) McCarthy, J., [goldstarjimmccarthy]. (2010, September 1). Difference Between Fixed and Variable Costs - Quick Draw with Jim McCarthy, Goldstar CEO [Video File]. Retrieved from  https://youtu.be/wBBfA9q8FSQ (Links to an external site.) Murphy, D., [Abila]. (2017, January 4). 2017 Predictions: Biggest Trends Impacting Nonprofit Finance and Accounting [Video File]. Retrieved from  https://youtu.be/gN3mkq83TXg (Links to an external site.) National Institute of Health (NIH). (2015). Grants and funding: NIHs centra resource for grants and funding information. National Institute of Health (NIH). Retrieved from  http://grants.nih.gov/grants/oer.htm (Links to an external site.) . This site will assist with the Budget Creation assignments. Part of budget (profit) related assignments to Course Learning Outcome 3 “Demonstrate an understanding of fundraising and grant application processes.” Office of Budget (OB), (2017). HHS FY 2017 Budget in Brief. U.S. Department of Health & Human Services. Retrieved from  https://www.hhs.gov/about/budget/fy2017/budget-in-brief/index.html (Links to an external site.) Office of Budget (OB), (2017). HHS FY 2018 Budget in Brief. U.S. Department of Health & Human Services. Retrieved from  https://www.hhs.gov/about/budget/fy2018/budget-in-brief/index.html (Links to an external site.) Rae, W, [ehowfinance]. (2009, February 6). Making a Budget : How to Create a 0-Based Budget [Video File]. Retrieved from  https://youtu.be/4HNFnNrSNjA (Links to an external site.) Roberts, P, [eHow]. (2008, November 1). Business Advice : How to Determine Profit [Video File]. Retrieved from  https://youtu.be/4Z4HK2uctQE (Links to an external site.) Sperling (2015, February 20). President Obama’s 2016 budget: What does it mean for mental health?  https://www.nami.org/About-NAMI/NAMI-News/2015/President-Obama-s-2016-Budget-What-Does-It-Mean-f (Links to an external site.) The Substance Abuse and Mental Health Services Administration (2015). The Substance Abuse and Mental Health Services Administration operating plan for FY2016.  https://www.samhsa.gov/sites/default/files/fy2016-samhsa-operating-plan.pdf (Links to an external site.) Tuck, A., (2011, February 9). Succeeding Through Tough Times. The Bridgespan Group. Retrieved from  http://www.bridgespan.org/Publications-and-Tools/Strategy-Development/Managing-in-Tough-Times/Succeeding-Through-Tough-Times.aspx#.UTZphNZOTmd (Links to an external site.) Practitioner’s Guide to Ethical Decision Making | 1 American Counseling Association | The Center for Counseling Practice, Policy, and Research Introduction Counselors are often faced with situations that require sound ethical decision-making ability. Determining the appropriate course to take when faced with a difficult ethical dilemma can be a challenge. To assist American Counseling Association (ACA) members in meeting this challenge, the authors have developed the Practitioner’s Guide to Ethical Decision Making as a framework for sound ethical decision making. This document addresses the guiding principles that are globally valuable in ethical decision making and presents a model that professionals can use as they address ethical questions and dilemmas in their work. Foundational Principles Several foundational principles are the underpinnings of best ethical practice and are viewed as central to the process of ethical decision making within the helping professions (Beauchamp & Childress, 2012; Coughlin, 2008; Kitchener, 1984; Kitchener & Anderson, 2011). Beauchamp and Childress (1979) identified four principles that are at the core of ethical reasoning in health care: autonomy, justice, beneficence, and nonmaleficence. Kitchener (1984) added a fifth principle— fidelity. She viewed these five principles as the cornerstone of ethical guidelines for counselors. Ethical guidelines cannot address all situations that a counselor is forced to confront. Reviewing these ethical principles, which serve as the foundation of the guidelines, often helps to clarify the issues involved in a given situation. The five bedrock principles of autonomy, justice, beneficence, nonmaleficence, and fidelity are each vital in and of themselves to a healthy counseling relationship. By exploring an ethical dilemma with regard to these principles, a counselor may come to a better understanding of the conflicting issues. A description of each of the five foundational principles follows. Autonomy is the principle that addresses respect for independence, and self-determination. The essence of this principle is allowing an individual the freedom of choice and action. It addresses the responsibility of the counselor to encourage clients, when appropriate, to make their own decisions and to act on their own values. There are two important considerations in encouraging clients to be autonomous. First, helping clients to understand how their decisions and their values may be received within the context of the society in which they live, and how they may impinge on the rights of others. The second consideration is related to the client’s ability to make sound and rational decisions. Persons not capable of making competent choices, such as children and some individuals with mental disabilities, should not be allowed to act on decisions that could harm themselves or others. Practitioner’s Guide to Ethical Decision Making Holly Forester-Miller, Ph.D. and Thomas E. Davis, Ph.D. The Center for Counseling Practice, Policy, and Research [email protected] | 703-823-9800 x321 Practitioner’s Guide to Ethical Decision Making | 2 American Counseling Association | The Center for Counseling Practice, Policy, and Research Justice, as Kitchener (1984) points out, is “treating equals equally and unequals unequally but in proportion to their relevant differences” (p. 49). Justice does not mean treating all individuals the same. If an individual is to be treated differently, the counselor needs to be able to offer a rationale that explains the necessity and appropriateness of treating the individual differently. An example of justice is that a counselor would give a person who is blind a form that is in braille, or would go through the form with that individual orally, instead of giving him or her a standard written form to fill out. But the counselor would treat him or her the same as any other client in all other regards. Beneficence reflects the counselor’s responsibility to contribute to the welfare of the client. Simply stated, it means to do good, to be proactive, and also to prevent harm when possible (Forester-Miller & Rubenstein, 1992). Beneficence can come in many forms, such as prevention and early intervention actions that contribute to the betterment of clients. Nonmaleficence is the concept of not causing harm to others. Often explained as “above all, do no harm,” this principle is considered by some to be the most critical of all the principles, even though theoretically they are all of equal weight (Kitchener, 1984; Rosenbaum, 1982; Stadler, 1986). This principle reflects both the idea of not inflicting intentional harm, and not engaging in actions that risk harming others (Forester-Miller & Rubenstein, 1992). Weighing potential harm against potential benefits is important in a counselor’s efforts toward ensuring “no harm.” Fidelity involves the notions of loyalty, faithfulness, and honoring commitments. Clients must be able to trust the counselor and have faith in the therapeutic relationship if growth is to occur. Therefore, the counselor must take care not to threaten the therapeutic relationship or to leave obligations unfulfilled. When exploring an ethical dilemma, the counselor needs to examine the situation and how each of the above principles may apply to that particular case. At times, this examination alone will clarify the issues so that the means for resolving the dilemma becomes clear. When an initial review of the five foundational principles does not provide direction, it is helpful to be able to work through the steps of an ethical decision-making model. The following sections describe the steps of the ethical decision-making model. Ethical Decision-Making Model We have incorporated the work of Forester-Miller and Rubenstein (1992), Haas and Malouf (1989), Kitchener (1984), Stadler (1986), and Van Hoose and Paradise (1979) into a practical, sequential, seven-step, ethical decision-making model. A description and discussion of the steps follow. We encourage counselors to consider the worldview of their clients and others who may be affected in each step of the decision-making model (Luke, Goodrich, & Gilbride, 2013). 1. Identify the problem. Gather as much information as you can that will illuminate the situation. In doing so, it is important to be as specific and objective as possible. Writing ideas on paper often helps provide clarity. Outline the facts, separating out innuendos, assumptions, hypotheses, or suspicions. There are several questions to ask yourself: Is it an ethical, legal, professional, or clinical problem? Is it a combination of more than one of these? If a legal question exists, be sure to seek legal advice. Other questions that may be useful to ask yourself are: Is the issue related to me and what I am or am not doing? Is it related to a client and/or the client’s significant others and what they are or are not doing? Is it related to technology in the provision of services or of storing Practitioner’s Guide to Ethical Decision Making | 3 American Counseling Association | The Center for Counseling Practice, Policy, and Research records? Is it related to the institution or agency and their policies and procedures? If the problem can be resolved by implementing a policy of an institution or agency, you can look to the agency’s guidelines. It is important to remember that the dilemmas counselors face are often complex; therefore, a useful guideline is to examine the problem from several perspectives and avoid searching for an overly simplistic solution. 2. Apply the ACA Code of Ethics. After having clarified the problem, refer to the ACA Code of Ethics (ACA, 2014) to see if the issue is addressed. Also consider any other state or professional codes that may apply to you (Bradley & Hendricks, 2008; Brennan, 2013). When reviewing the ethical codes, be sure to consider any multicultural perspectives of the particular case (Frame & Williams, 2005). Remember to examine all the nuisances that exist when technology is involved. If there is an applicable standard or several standards and they are specific and clear, following the course of action indicated should lead to a resolution of the problem. To be able to apply the ethical standards, it is essential that you have read them carefully and that you understand their implications. If the problem is not resolved by reviewing the ACA Code of Ethics, then you have a complex ethical dilemma and need to proceed with further steps in the ethical decision-making process (Bradley & Hendricks, 2008; Forester-Miller & Davis, 1996). Levitt, Farry, and Mazzarella (2015) indicated that decision-making models can be time consuming. If it is a complex ethical dilemma, then you should take time to thoroughly analyze and assess all aspects of the situation and its potential solutions 3. Determine the nature and dimensions of the dilemma. There are a few steps to follow to ensure that you have examined the problem in all of its various dimensions: • Examine the dilemma’s implications for each of the foundational principles: autonomy, justice, beneficence, nonmaleficence, and fidelity. Decide which of the principles apply to the specific situation, and determine which principle takes priority for you in this case. In theory, each principle is of equal value, which means that you will need to use your professional judgment to determine the priorities when two or more of them are in conflict. • Review the relevant professional literature to ensure that you are using the most current professional thinking and are aware of the diversity issues involved in the particular situation. • Consult with experienced professional counselors and/or supervisors who also abide by the ACA Code of Ethics. As they review with you the information you have gathered, they may help you to see other issues that are relevant or provide a perspective you have not considered. They may also be able to identify aspects of the dilemma that you are not viewing objectively. • Consult your state or national professional associations to see if they can provide help with the dilemma. Practitioner’s Guide to Ethical Decision Making | 4 American Counseling Association | The Center for Counseling Practice, Policy, and Research 4. Generate potential courses of action. • Brainstorm as many potential courses of action as possible. Be creative and list all of the options you can think of, even ones that you are not sure will work. • In this brainstorming phase, you want to generate as many potential solutions as possible. Do not worry about judging and eliminating solutions; you will evaluate them in the next step. • Whenever possible, consult with at least one colleague who subscribes to the ACA Code of Ethics to help you generate options. 5. Consider the potential consequences of all options and determine a course of action. • Considering the information you have gathered and the priorities you have set, evaluate each option, being sure to assess the potential consequences for all of the parties involved. Ponder the implications of each course of action for the client, for others who will be affected, and for yourself as a counselor. • Eliminate the options that clearly do not give the desired results or that cause even more problematic consequences. • Review the remaining options to determine which option or combination of options best fits the situation and addresses the priorities you have identified. 6. Evaluate the selected course of action. • Review the selected course of action to see if it presents any new ethical considerations. • Apply three simple tests to the selected course of action to ensure that it is appropriate: justice, publicity, and universality (Stadler, 1986). Justice: In applying the test of justice, assess your own sense of fairness by determining whether you would treat others the same in this situation. Publicity: For the test of publicity, ask yourself whether you would want your behavior reported in the press. Universality: The test of universality asks you to assess whether you could recommend the same course of action to another counselor in the same situation. • If the course of action you have selected causes any new ethical issues, then you’ll need to go back to the beginning and reevaluate each step of the process. Perhaps you have chosen the wrong option or you might have identified the problem incorrectly. • If you can answer in the affirmative to each of the questions suggested by Stadler (1986; thus passing the tests of justice, publicity, and universality) and you are satisfied that you have selected an appropriate course of action, then you are ready to move on to implementation. 7. Implement the course of action. • Strengthen your resolve to allow you to carry out your plan. Just because it is the right decision does not mean it will be easy to implement. Taking the appropriate action in an ethical dilemma is often difficult. • After implementing your course of action, it is good practice to follow up on the situation to assess whether your actions had the anticipated effect and consequences. Practitioner’s Guide to Ethical Decision Making | 5 American Counseling Association | The Center for Counseling Practice, Policy, and Research The Ethical Decision-Making Model at a Glance 1. Identify the problem. 2. Apply the ACA Code of Ethics. 3. Determine the nature and dimensions of the dilemma. 4. Generate potential courses of action. 5. Consider the potential consequences of all options and determine a course of action. 6. Evaluate the selected course of action. 7. Implement the course of action. Conclusion It is important to realize that different professionals may choose different courses of action for the same situation. There is rarely one right answer to a complex ethical dilemma. However, if you follow a systematic model, you can be assured that you will be able to give a professional explanation for the course of action you chose. You should always document your decision-making process in the client file (Brennan, 2013). Van Hoose and Paradise (1979) suggest that a counselor “is probably acting in an ethically responsible way concerning a client if (1) he or she has maintained personal and professional honesty, coupled with (2) the best interests of the client, (3) without malice or personal gain, and (4) can justify his or her actions as the best judgment of what should be done based upon the current state of the profession” (p. 58). Following this model will help to ensure that all four of these conditions have been met. References American Counseling Association (2014). Code of Ethics. Alexandria, VA: Author. Barnett, J. E., & Johnson, W. B. (2015). Ethics desk reference for counselors (2nd ed.). Alexandria, VA: American Counseling Association. Beauchamp, T., & Childress, J. F. (1979). Principles of biomedical ethics. New York, NY: Oxford University Press. Beauchamp, T. L., & Childress, J. F. (2012). Principles of biomedical ethics (7th ed.). New York, NY: Oxford University Press. Bradley, L. J., & Hendricks, C. B. (2008). Ethical decision making: Basic issues. The Family Journal, 16, 261–263. Brennan, C. (2013). Ensuring ethical practice: Guidelines for mental health counselors in private practice. Journal of Mental Health Counseling, 35, 245–261. Coughlin, S. (2008). How many principles for public health ethics? The Open Public Health Journal, 1, 8–16. Forester-Miller, H., & Davis, T. (1996). A practitioner’s guide to ethical decision making. Alexandria, VA: American Counseling Association. Forester-Miller, H., & Rubenstein, R. L. (1992). Group counseling: Ethics and professional issues. In D. Capuzzi & D. R. Gross (Eds.), Introduction to group counseling (2nd ed., pp. 307–323). Denver, CO: Love. Frame, M. W., & Williams, C. B. (2005) A model of ethical decision making from a multicultural perspective. Counseling and Values, 49, 165–179. Haas, L. J., & Malouf, J. L. (1989). Keeping up the good work: A practitioner’s guide to mental health ethics. Sarasota, FL: Professional Resource Exchange. Kitchener, K. S. (1984). Intuition, critical evaluation and ethical principles: The foundation for ethical decisions in counseling psychology. Counseling Psychologist, 12, 43–55. Practitioner’s Guide to Ethical Decision Making | 6 American Counseling Association | The Center for Counseling Practice, Policy, and Research Kitchener, K. S., & Anderson, S. K. (2011). Foundations of ethical practice, research, and teaching in psychology and counseling (2nd ed.). New York, NY: Routledge. Levitt, D. H., Farry, T. J., & Mazzarella, J. R. (2015). Counselor ethical reasoning: Decision-making practice versus theory. Counseling and Values, 60, 84–99. Luke, M., Goodrich, K. M., & Gilbride, D. D. (2013). Intercultural model of ethical decision making: Addressing worldview dilemmas in school counseling. Counseling and Values, 58, 177–194. Rosenbaum, M. (Ed.). (1982). Ethics and values in psychotherapy: A guidebook. New York, NY: Free Press. Stadler, H. A. (1986). Making hard choices: Clarifying controversial ethical issues. Counseling and Human Development, 19, 1–10. Van Hoose, W. H., & Paradise, L. V. (1979). Ethics in counseling and psychotherapy: Perspectives in issues and decision making. Cranston, RI: Carroll. Citation Forester-Miller, H., & Davis, T. E. (2016). Practitioner’s guide to ethical decision making (Rev. ed.). Retrieved from http://www.counseling.org/docs/default-source/ethics/practioner’s-guide-to- ethical-decision-making.pdf 1Ethics and the Nonprofit March 2013 Ethics and the Nonprofit March 2013 Table of ContentsEthics and the Nonprofit March 2013 Contents Introduction .................................................................... 1 Protecting the Most Important Asset of a Nonprofit ........ 3 The Code of Ethics .......................................................... 4 Implementation and Operation of Codes of Ethics ......... 7 Specific Ethical Issues in Tax Policy for Exempt Nonprofits .................................................................... 8 Conclusion .................................................................... 10 Authors Toni Boucher Director Commonfund Institute 15 Old Danbury Road Wilton, CT 06897 [email protected] Stephen Hudspeth Visiting Clinical Lecturer in Law Yale Law School P.O. Box 208215 New Haven, CT 06520 [email protected] About Commonfund Institute Commonfund Institute houses the education and research activities of Commonfund and provides the entire commu- nity of long-term investors with investment information and professional development programs. Commonfund Institute is dedicated to the advancement of investment knowledge and the promotion of best practices in financial management. In addition to teaming with NACUBO to produce the NCSE, Commonfund Institute provides a wide variety of resources, including conferences, seminars and roundtables on topics such as endowments and treasury management; proprietary and third-party research and publications, including the Higher Education Price Index (HEPI); and events such as the annual Commonfund Forum and Commonfund Endowment Institute. 1Ethics and the Nonprofit March 2013 Other Nonprofit Organizations 29\% Public Charities 8\% Private Foundations 64\% Other Nonprofit Organizations 41\% Private Foundations 53\% Public Charities 7\% 1999 1.3 Million Nonprofits (Allocation by Type) 2009 1.6 Million Nonprofits (Allocation by Type) 5.5\% 9.2\% 0\% 50\% 100\% GDP by Sector Wages and Salaries by Sector Nonprofits All Other Sectors Summary The American nonprofit sector is large, effective and influen- tial, but with influence comes responsibility. Ethical lapses, whether real or perceived, can draw the attention of regula- tors and the public, leading to financial and reputational damage that can impair an organization’s ability to carry out its mission. Written ethics and compliance policies, when consistently followed, can provide a first line of defense. This paper, written for nonprofit trustees and staff, outlines the major ethical issues facing U.S. nonprofits and describes policy norms and governance mechanisms designed to address them. It reviews the topics that a code of ethics should cover, includ- ing compensation, conflicts of interest, financial controls and disclosure. Compliance with applicable laws and regulations is an area of particular focus. The paper closes by describing the governance structures, including oversight by the organi- zation’s board and ongoing committee review, that form the foundation for implementation of a consistent and transparent ethics framework. Introduction Americans are a generous people. As of 2010, U.S. charities held $2.7 trillion in assets, an increase of nearly 90 percent from a decade before. The nonprofit sector currently represents 5.5 percent of America’s GDP, 9 percent of America’s wages and salaries (more than the financial services sector), and nearly a $1.5 trillion dollars worth of spending per annum. The number of new nonprofits created during the last de- cade is also remarkable. As of 2012 there were 1.57 million nonprofits in the U.S., over a 25 percent increase in 10 years. In states with high population growth rates, such as Florida Ethics and the Nonprofit Undermining the value of your good name can risk the very survival of your organization. Once lost, it can be costly and difficult, if not impossible, to regain. Growth of Nonprofits and Assets in the United States Source: The Urban Institute 2Ethics and the Nonprofit March 2013 and Nevada, the number of new nonprofits has doubled in that same period. Giving in 2011 reached $298 billion, up from $260 billion in 2005. In fact, donations in current dollars have grown each year since 1985 with the exception of the recessionary years of 1987, 2008 and 2009. And, the resources entrusted to nonprofits are predicted to continue to grow strongly in com- ing years. There is also an expectation of sizable further asset transfers to support philanthropic work as the baby-boom gen- eration ages, thereby continuing the expansion of nonprofits. This trend, along with recently enacted legislative incentives (e.g., The Pension Protection Act of 2006) that allow transfers from IRAs to tax-exempt organizations up to specified limits, lends credence to predictions of a transfer of wealth amounting to more than $40 trillion (measured in current dollars) in the half-century up to 2058. How Much Americans Donated to Charity 1988-2011 Source: Giving USA Foundation Quite apart from these financial statistics, nonprofit organiza- tions are key links in the efficient delivery of all manner of services — services that would otherwise have to be provided, at greater cost, by the government, or that might not be pro- vided at all. Thus, nonprofits are an integral part of the institutional fabric of our country. However, recent scandals in some prominent nonprofit organizations have attracted attention from the press, regulators and legislators. The results of this increased scrutiny have taken a number of forms, among them the federal legislation addressing governance issues at the Ameri- can National Red Cross and the Internal Revenue Service’s revised reporting requirements for exempt nonprofits on Form 990. Some observers have suggested that these scandals have been possible because nonprofits are not subject to the intense oversight that exists for publicly traded U.S. corporations, also noting that nonprofits by their nature do not have sharehold- ers to demand that management be held to certain standards of accountability, nor do they generally have the same public disclosure requirements as publicly traded for-profits. This trend of increased scrutiny is not completely new. In 2004, the Commissioner of Internal Revenue testified before the U.S. Senate Finance Committee hearings on charitable giving problems and best practices, stating: “We need to go no further than our daily newspapers to learn that some charities and private foundations have their own governance problems. Specifically, we have seen business contracts with related parties, unreasonably high executive compensation, and loans to executives. We at the IRS also have seen an apparent increase in the use of tax-exempt organizations as par- ties to abusive transactions. All these reflect potential issues of ethics, internal oversight, and conflicts of interest. As a result, the IRS is currently looking for greater transparency in revising Form 990 for tax- exempt organizations.” At the most extreme, the removal of nonprofits’ tax-exempt status in circumstances of significant ethical violations is a real threat. In addition, state attorneys general, especially in California and New York, are taking significant steps to address actual or perceived nonprofit malfeasance. In short, regulatory initiatives on issues relating to ethical practices of -10\% -5\% 0\% 5\% 10\% 15\% 20\% $0 $50 $100 $150 $200 $250 $300 $350 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Dollars ($) in billions Percent (\%) change from previous year Nonprofits are key players in our economy. They have become big enterprises that are attracting the attention of the press, legislators and the IRS Although small in relation to the nearly 1.6 million nonprofits in the US, a few bad examples of questionable practices have been uncovered and widely published by a scandal- hungry media. Simple compliance is not enough in a world where perception is reality and that perception can be shared around the world at the speed of light. Widespread and public demonstrations of misdeeds bring added regulatory and legislative scrutiny. 3Ethics and the Nonprofit March 2013 nonprofits are growing, as is public awareness of the gravity of these issues. Protecting the Most Important Asset of a Nonprofit: Its Reputation Warren Buffett has said, “It takes 20 years to build a reputa- tion and five minutes to ruin it. If you think about that, you’ll do things differently.” A nonprofit’s reputation is its single most valuable asset: its reputation lies at the very core of its ability to fulfill its mission. Clearly, the best time to address the protection of a nonprofit’s reputation is before problems arise. The best over- sight comes from within, using procedures carefully developed and tailored to the needs of the organization and faithfully followed. These procedures have two broad dimensions and are guided by best practices: the standards of conduct, most broadly described as the nonprofit’s code of ethics, and the in- ternal bodies that oversee the implementation and operation of those standards. In both of these dimensions, the watchword is transparency. The three steps to follow in developing an ethics program along these two dimensions are 1) establish a code of ethics, 2) institute a compliance process to ensure that the code is actually being followed, and 3) inform constituencies about the code and its provisions and the compliance process, and provide training to enable all involved to carry out the code’s letter and spirit.1 The steps recommended here proceed on multiple fronts. Not every organization will have the need or the resources to accomplish all of the steps outlined. For some nonprofits, especially smaller ones, a broad-based approach may seem overwhelming. However, even for smaller nonprofits, there are compelling reasons to move the actions outlined here to the top of the nonprofit’s to-do list. Among the key reasons is the fact that it is easier and less expensive to address ethical issues before a serious problem arises; once a crisis occurs, recovery of institutional reputation may be difficult, if not impossible. Taking those steps that are within the capability of a nonprofit of any size can pay enormous dividends and may prove as valu- able as anything a nonprofit can do to advance its work. Selecting the issues important to a nonprofit organization begins with identifying the specific areas that should be cov- ered by its ethics policies. Certain of these areas have general applicability such as executive compensation, interpersonal relationships, gifts, and expenses. Issues specific to individual nonprofits are the areas of potential or actual ethical weak- nesses or vulnerabilities that arise from the unique operations of each nonprofit. Scarce resources make it imperative that the organization identify its key risks and address them first through the implementation of policy and compliance controls in those areas. For smaller nonprofits, it may only be feasible to place controls at the end of the process, such as a review of expense reports submitted by staff at the time of annual audits. This may be less expensive than placing the backup checks and balances that are typically embedded in the processes of larger institutions. 1 While this paper deals primarily with ethical issues, a nonprofit’s gov- ernance framework provides the essential procedural and legal support for creating and enforcing its ethics policies. The Association of Governing Boards of Universities and Colleges (www.agb.org) has published a number of books specifically dealing with nonprofit governance issues, which can be ordered via its website. The betrayal of the public’s trust is among the greatest threats to an organization, particularly a nonprofit. A failure of trust can have long lasting effects that challenge the very mission of an institution. Ethics and good governance prac- tices can make the difference between success and failure. “The IRS is concentrating on good governance – is there a publicly stated mission, an active, independent, and engaged board overseeing the organization and the proper use and safeguards of its assets?” IRS Commissioner Ingram Underlying sources of the public’s eroding confidence: Financial Fraud, Misrepresentation, Misappropriation of Assets, Excessive Compensation, Self-Dealing, Inadequate Oversight and Transparency, Failure to Honor Donor Intent, Mission Drift The best time to address the protection of a nonprofit’s reputation is before a problem arises. 4Ethics and the Nonprofit March 2013 The key is immediately to review your nonprofit’s ethics poli- cies and compliance practices, to repeat the review on a regular basis, and to begin the process of addressing items lacking or in need of improvement. In some cases, it may only be neces- sary to reinstate practices that were once in effect but have slipped into disuse. We begin by addressing appropriate provi- sions for a nonprofit’s code of ethics. The Code of Ethics: The Front Line of Defense A nonprofit’s code of ethics should cover both board mem- bers and staff. If a nonprofit has a code of ethics but has not reviewed it recently, it should do so and institute a program of regular review. It is also a good practice for every nonprofit to publicize its code of ethics — by posting it on the entity’s website, for example, and summarizing its provisions in its annual report. Sample codes of ethics exist and can be used as a starting point, but the sample code’s provisions should be tailored to the specific needs of the organization. The code should contain a statement of the standards of conduct expected of those associated with the nonprofit and a description of the measures of training, oversight, and discipline that are in place to assure knowledge of the code and compliance with its terms. The code should also specify who has responsibility for seeing that each of these measures is carried out. A code of ethics should be tailored to a given nonprofit’s mission, needs and resources. So it is not possible to propose specific provisions or language that ought to be included in every code, or any single form of organization or presentation of a code. However, we propose that there are three substantive areas — compensation, conflicts of interest, and financial con- trols and compliance with laws — that ought to be covered in every nonprofit code of ethics (or related governance policies). We list below topics within each of these areas that we feel are important to consider when creating or revising a code. Compensation • Standards for executive compensation, bonuses, benefits and allowances. • Prohibition of the use of the nonprofit’s property for the personal benefit of officers or board and staff members. Conflicts of Interest • Required disclosure of any conflict of interest that has arisen or may be anticipated to arise based upon the financial or personal interests of a board member, officer or staff member related to the work of the nonprofit. Requirements for the recusal of the individual hav- ing the conflict from the decision-making processes of the nonprofit in the area of the conflict. Examples of conflicts for a nonprofit board, officer or staff member include direct or indirect financial interests or personal interests in a transaction with the nonprofit that may affect the objectivity of the member. • Specification of the appropriate relationships of officers or board and staff members with donors, consultants, and vendors. • Requirements governing the bidding process on con- tracts for goods or services bought by the nonprofit. • Prohibition on the solicitation and acceptance of gifts directed to a board member, officer or staff member from vendors, clients or donors, with appropriate definitions of what constitutes a gift. • Prohibition of political contributions by the nonprofit or of the use of its facilities or assets for the support of political campaigns. • Specification of conditions under which the nonprofit’s outside accountants, lawyers, or other paid advisers or consultants may serve on its board. Financial Control and Compliance with Laws • Procedures for approval and documentation of any expenditures of the nonprofit’s assets and for the incur- ring of any obligations by it, including requirements for the documentation and approval of expenses incurred by board members, officers and staff members and definitions of what types of expenses are reimbursable. A Code of Ethics states the key principles, values and stan- dards that define what is right and wrong behavior within the areas covered by the code and informs all of the nonprofit’s activities in these areas. It safeguards the nonprofit’s repu- tation and is an important reason why people trust nonprofits and donors give to them. The Chair of the Board of Directors and the Chief Executive Officer have primary responsibility for creating a culture of ethics. However, board members and staff all share the task of maintaining the highest ethical standards that help move missions forward. 5Ethics and the Nonprofit March 2013 • Requirements for accounting for donations, documen- tation of donors’ intentions (including regular review procedures to assure compliance with the terms of donations), fund-raising procedures, and use of donor lists. • Prohibitions on any conduct that violates the law, in- cluding laws on discrimination and harassment. • Requirements governing document retention and de- struction, including electronic files. When applicable to the specifics of its operations, a nonprofit’s code of ethics should also delineate the responsibilities of directors, officers and staff who serve affiliated but separately incorporated entities in the performance of their duties for each entity. This area can be particularly complex given the independent fiduciary duties that directors and officers have in serving each separately incorporated nonprofit with which they work. Their duty extends to seeing that each entity’s objectives are being carried out and also to knowing when they need to recuse themselves when matters affecting one of the entities are being considered by another. Conflicts of Interest: Disclosure and Recusal To reiterate the first bullet point under the Conflicts of Inter- est heading above, a nonprofit’s code of ethics should include a conflict of interest policy with provisions for disclosure and recusal from both the deliberations and the decision-making process when conflicts arise or may be present. Required dis- closure and recusal is one of the principal areas of ethics policy that can save a nonprofit from embarrassment and potentially serious reputational damage. As the IRS has noted, it should be a regular practice for the nonprofit to have its board, officers and staff members complete and sign a conflict of interest disclosure form. The forms should be reviewed for areas of concern and then filed in the long-term records of the nonprofit. The forms should include an inquiry about other nonprofit and for-profit boards on which the member serves as well as other business interests the member has. The significance of this inquiry relates to the following: It is not uncommon for nonprofit board members and senior officers to serve simultaneously on multiple boards, both nonprofit and for-profit, which may create real or appar- ent conflicts of interest in policy areas as well as in the financial areas discussed above. However, those multiple board member- ships may also provide valuable insights into best practices in the management of nonprofits derived from these multiple memberships. It is for that reason that review of responses in this area should be carefully conducted. After conflict of interest policies are developed, they should be updated and reviewed on an annual basis with the board, officers and staff. This updating and review process further deepens understanding and adherence to the ethical principles of the organization. Discussion of these policies should also become an integral part of annual board and staff orientations and evaluations, as a reminder and reinforcement tool. If a nonprofit can’t be trusted to hold itself to a higher standard, how can it be trusted to use a donor’s money for its stated purpose? Should it continue to receive a tax exemption? The IRS on Conflicts of Interest The Internal Revenue Service defines a conflict of interest this way: A conflict of interest occurs where individuals’ obliga- tion to further the organization’s charitable purposes is at odds with their own financial interests. For example, a conflict of interest would occur where an officer, director, or trustee votes on a contract between the organization and a business that is owned by the officer, director or trustee. Conflicts of interest frequently arise when setting compensation or benefits for officers, directors, or trust- ees. A conflict of interest policy is intended to help ensure that when actual or potential conflicts of interest arise, the organization has a process in place under which the affected individual will advise the governing body about all the relevant facts concerning the situation. A conflict of interest policy is also intended to establish procedures under which individuals who have a conflict of interest will be excused from voting on such matters.* The IRS indicates that board members should disclose an- nually their financial interests affecting the nonprofit and, more generally, that the nonprofit should inquire of its board members and senior staff annually whether any planned or actual transaction constitutes a conflict. *Form 1023 6Ethics and the Nonprofit March 2013 Compliance Steps, Annual Review and Training Consistent with general good practice and specific IRS require- ments, every board, officer and staff member should sign a statement that confirms receipt of a copy of the nonprofit’s code of ethics containing its conflict of interest policy and should acknowledge his/her obligation to abide by its terms. However, a code has little meaning if unaccompanied by regular training and monitoring of compliance with it. Regular training serves both to acquaint new board members, officers and staff members with the code and to refresh those who have already been trained in it. In addition, this training time, properly used, serves as a forum for answering any questions that may have arisen in connection with the actual application of the code to the operations of the nonprofit. Review of the code of ethics with board members on a periodic basis is also important for the insights that board members may have to offer on its provisions and their application based on their own experiences within and outside the nonprofit. An annual board self-evaluation, the completion of an an- nual disclosure form (as discussed above) and a questionnaire have now become commonplace among nonprofits and are other good ways to encourage regular review of the code. The questionnaire should include a request for board members to respond to questions such as these: “Is there anything else we should know about your personal or business interests that can or does affect your service as a board member? Are there provi- sions not included in our code of ethics that you feel should be added? If so, what are they?” Enforcement of the Code of Ethics and Due Process If there is reasonable cause to believe that a violation of the code has occurred, the board should provide an opportunity for the board member, officer or staff member who is the alleged violator to confront the accusation and, if the conduct is established, to offer any explanation they may have for their conduct. Depending upon the position of the alleged code violator, that type of hearing may best take place before senior officers or before the appropriate board committee such as the Governance/ Trusteeship or Audit Committees. The board should also adopt a policy that safeguards individuals reporting suspected violations from retaliation. Transparency and Reporting Issues Annual reports should outline the organization’s mission and goals, its financial position and accomplishments, as well as areas needing improvement and future challenges the institu- tion faces. A comprehensive and up-to-date website, as noted above, appropriately includes the organization’s mission, code of ethics and conflict of interest policies. Current law requires nonprofits to make their tax returns available to the public, and it is not uncommon for 501(c)(3) nonprofits to post their Conflict of Interest Policies* Other than on the Base: Total line, all numbers reflect percentages (\%) of the respondents in that category. Total Institutions Over $1 Billion $501 Million-$1 Billion $101-500 Million $51-100 Million $25-50 Million Under $25 Million Base: Total 831 68 71 250 164 128 150 Have conflict of interest policy 97 85 96 96 99 100 97 For board 34 13 14 34 43 38 41 For investment committee *** 1 1 0 1 0 0 For board and investment committee 62 69 80 63 56 62 55 Stricter standard applies to investment committee 5 18 11 5 2 1 3 Policy applies to senior staff 89 81 90 91 93 88 87 Allow board members to conduct busi- ness with organization 55 54 56 57 61 54 47 Have process for resolution of potential conflicts 55 54 56 57 61 54 46 Recusal and Disclosure 41 47 46 46 45 36 27 Recusal only 3 0 3 3 2 4 2 Disclosure only 10 4 7 6 13 13 17 Other process 4 10 3 6 4 2 1 *Multiple responses allowed Source: 2012 NACUBO-Commonfund Study of Endowments Conflict of Interest and excessive compensation scan- dals are picked up by the media and can take on a life of their own. Outrageous examples of individuals enriching themselves from funds donated to humanitarian causes are particularly egregious. They can cause irreparable damage to an otherwise respected institution. 7Ethics and the Nonprofit March 2013 Form 990s on their websites. Changes in board members and senior officers should also be publicly updated on a regular basis. Compensation Codes governing compensation for employees of nonprofits should describe the general standards used for determining levels of compensation, especially for senior staff. To the extent that there are performance-based bonuses included in com- pensation, they should be structured to avoid creating perverse incentives regarding such issues as the operating focus of the institution and the timing of expenses. Importantly, compensation codes also typically provide that any member of the governing board or compensation commit- tee who receives compensation from the organization, directly or indirectly, is prohibited from voting on that compensation and also from providing any compensation information or materials themselves to the board and its compensation com- mittee. Whether or not the board has a separate compensation committee, there should be regular periodic board review of the reasonableness of compensation and benefits to senior officers, and confirmation that they are the result of arm’s length negotiations. Implementation and Operation of Codes of Ethics The best ethics programs are implemented through strong oversight and review practices at both the board level and the officer and staff level. Some smaller organizations may be con- strained in their ability to implement the structures and pro- cedures described below because of their size. However, these practices are scalable and can be implemented in an expanding way as the nonprofit grows. While a compliance officer may oversee the implementation and enforcement of ethical codes at large nonprofits, at the great majority of institutions this function will be carried out via a committee of the board, typi- cally the Governance, Compensation or Audit Committee. Oversight at the Board Level The boards of larger nonprofits generally employ a committee structure. The key board committees for the ethics oversight role are the Governance/ Trusteeship, Compensation and Au- dit Committees. The Executive Committee of the board, often composed of the board’s committee chairs, can also play an important role in this area in conjunction with these specific board committees. Governance/Trusteeship Committee High profile ethical issues have focused more attention on the importance of having a Governance Committee, also some- times called a Trusteeship Committee. A key purpose of this committee is to oversee issues relating to governance policy for the nonprofit; as such, it is in an ideal position to oversee the nonprofit’s code of ethics and specifically its conflict of inter- est policy. The committee can be used as the clearinghouse, subject to full board review, for matters involving disclosed conflicts, recusal from decision-making and …