2.1. PROPOSED BENEFICIARY BILL OF RIGHTS
Beneficiary Bill of Rights
Philanthropy is based on longstanding global traditions of offering assistance and support to people and causes beyond oneself. It is a human activity that brings individuals together around common concerns that seek to enhance the quality of life for all. To ensure that philanthropy best serves those intended to benefit from charitable giving, we declare that all beneficiaries of philanthropy have these rights:
1 To be assured that donors and philanthropic and nonprofit organizations are acting in good faith to serve the best interests of the community.
2 To inform leaders of philanthropic organizations, plus donors and fundraisers, of community needs, concerns, and customs by engaging with, listening to, and being responsive to beneficiaries.
3 To be informed of and have access to the leadership of philanthropic and nonprofit organizations engaged in work designed to benefit the community.
4 To expect organizations to embrace an inclusionary practice of community development through collaborative governance that gives agency to all stakeholders.
5 To be at the center of community conversations and involved in framing issues, making plans, taking action, and evaluating outcomes through collaborative decision‐making.
6 To have access to philanthropic and nonprofit organizations' most recent financial statements.
7 To be treated with dignity and respect, with opportunities for direct engagement and a voice in the decision‐making process, which may include board or committee service.
8 To be free to ask questions and offer commentary without reprisal and to receive timely, honest responses.
9 To have the opportunity to participate anonymously, with personal information protected to the extent provided by law.
10 To be appropriately acknowledged for one's community advocacy, if desired.
Beneficiaries are defined as individuals or a group of people who receive direct benefit from philanthropic or nonprofit organizations working on their behalf to serve the public trust.
Source: Anne Bergeron and Eugene R. Tempel 2021. All Rights Reserved.
Conclusion
Fundraisers play a pivotal role in the nonprofit organizations they represent. Beyond securing the philanthropic resources needed to further institutional missions, fundraisers also serve as moral compasses for their organizations. By embodying moral character, observing the AFP Code of Ethical Standards, being transparent, and embracing accountability (Pribbenow 2013), fundraisers build the very trust that is needed to ensure the public good. Doing so takes discipline, courage, and principled action, but the rewards of living and working ethically justify the commitment.
Discussion Questions
1 Explain three philosophical approaches to ethics.
2 Describe the differences between an illegal act, an unethical one, and an ethical dilemma.
3 What are some differences between the Donor Bill of Rights and the Beneficiary Bill of Rights?
4 Identify and discuss at least three overlapping ideas between Josephson's values framework and Independent Sector's Obedience to the Unenforceable.
Application Exercises
1 Find an ethical issue concerning fundraising or nonprofits in the news and summarize how it might be resolved by applying the Markkula Center approach.
2 Describe a difficult conversation with a donor based on the Beneficiary Bill of Rights. Identify which ethical principles guide your response. Role play the conversation with a colleague.
CHAPTER THREE LEGAL ASPECTS OF FUNDRAISING
By Philip M. Purcell
Fundraising excellence requires adherence to the letter and spirit of legal and ethical standards. The importance of the law in fundraising is evident by the attention given to charitable organizations and their fundraising practices by the U.S. Congress, Internal Revenue Service (IRS), state attorneys general, nonprofit boards of directors, and donors. The IRS lists abuses in fundraising and management by nonprofits or donors in its annual list of tax scams.
This chapter highlights the most significant legal issues. After reviewing it, readers will be able to:
Explain the legal duties of prudent care, obedience, and loyalty relative to fundraising responsibilities and understand how to fulfill these duties.
Identify legal issues and be aware of practices that emanate from state law such as the oversight role of the attorney general, enforcement of gift restrictions, and others.
Identify ramifications for fundraising that emanate from federal law such as completion of the IRS 990 form, distinctions between public benefit charities, member benefit organizations and private foundations, and others.
Describe legal considerations relative to international philanthropy, donor privacy, and confidentiality.
Background
The law that governs fundraising is a complex partnership of federal and state statutes, administrative regulations, and judicial decisions. It is dynamic and subject to change. Sources of current and accurate legal information include qualified legal counsel, independent auditors, updated reference works, consultants, and state or federal government offices.
Many legal issues are not “black and white.” Resolution of a legal dilemma, similar to an ethical challenge, requires considerable discernment. First, all facts and circumstances must be accurately clarified and understood in detail. Next, applicable laws must be identified and examined. Discussion must take place with all appropriate parties as circumstances warrant: fundraisers, staff leadership, board of directors, legal counsel, and auditors, as well as volunteers, donors, and their professional advisors (e.g., legal counsel, accountant, financial advisor). Finally, a decision must be made, implemented, and monitored or modified for similar circumstances in the future.
Governance
Pursuant to state law, charitable organizations may be unincorporated associations, nonprofit corporations, charitable trusts, or other forms such as limited liability corporations. Governance structure is determined under state law by articles of association, constitution, or bylaws; trust instruments and governing statutes; or articles of incorporation and bylaws for nonprofit corporations (Fishman, Schwarz, and Mayer 2015). Nonprofit corporations are the most popular governance structure since they offer a valuable balance of liability limitation for directors and effective governance.
Once organized under state law, a charitable organization usually seeks qualification for tax exemption by the IRS as a public charity (for public or mutual benefit) or as a private foundation. For more detailed information, see IRS Form
