Who said fundraising isn't ethical?
James Underhill outlines the potential dilemmas for schools when it comes to fundraising, and offers advice on how to navigate them
You take your school’s ethical standards very seriously, and you know there are certain areas of school activity which might challenge these standards from time to time. So, when the development director comes into your office flushed with excitement to tell you they’ve just landed a pledge of £1m from Mr Sweatshop-Owner in Asia, and this donor wants his name on the building, you sadly shake your head. It’s a question of ethics.
Hang on. The school is already accepting £40,000 a year from this parent to educate his child. Where were the ethics when this application was accepted? Why are we suddenly getting uneasy about this? Let’s be consistent with our financial probity.
Ethics, morals and reputation
This is just one very obvious example of where ethics come to bear on fundraising. And in this instance, it would be fair to say the issue is not intrinsically about ethics. Because if we are going to turn down the offer, we do so not on ethical grounds but because we are worried about reputational damage.
Not all decisions relating to the acceptance, or not, of a donation are laced with inherent hypocrisy. Was the rejection by Winchester and Dulwich of the £1m from Sir Bryan Thwaites for white-only bursaries an ethical decision or a reputational one? It would be fair to say it was ethical insofar as the donor was applying a restriction which went against the ethos of the respective schools. Of course, we are all left pondering on moral relativism. And we have all noted the parallel drawn to Stormzy and his Cambridge, black-only bursaries. But enough has already been said on this.
So, let’s pose another question. What’s it like to fundraise in an ethical minefield?
Any development director reading the Sir Bryan Thwaites bursary story must have felt some pangs of sympathy for the fundraisers involved. For those of us continually challenged by targets and income/expenditure ratios these ethical decisions are very real. Raising money is hard enough at the best of times and there is a real temptation to ask those appraising our operations to go easy on applying the ethical brakes, because each new handicap makes an already challenging job that much harder.
How about screening?
Take wealth-screening: another ethical issue. Fundraisers desperately need to be able to identify their top donor prospects. But is it acceptable to employ an external agency to carry out wealth research? Is it even acceptable to treat one prospect differently to another on the basis of the intelligence gleaned? This is a hot topic because of GDPR and the ambiguities around its interpretation, and it would be easy to use this whole article solely to examine the ethical and legal issues that apply to wealth screening.
But if we are serious about raising money to do good things then perhaps we should be a bit more robust before we apply another handicap to our fundraisers. Once you can be confident that the Information Commissioner’s Office is not going to come knocking on your door (and there are ways effectively to mitigate against this), then it’s down to whether there is really anything ethically wrong with wealth screening.
When you look at the issue in detail, it’s hard to see how it is ethically reprehensible (provided you stick with publicly available information). So, it’s back to reputation again. How would your school look if it got out that you were carrying out wealth research? Surely the answer is an unabashed response along the lines of "we are in the business of cost-effective fundraising to achieve the maximum results”.
Perhaps it is natural to assume that it is the fundraisers who, understandably, driven by challenging targets, push a school for flexibility on ethics. However, in reality, it is often the other way around. Those on the fundraising front line need to be able to look a donor in the eye and tell them their donation will be used exactly as they intended. But this is not always the case.
Take the question of bursaries. Many donors who support bursaries do so because they believe in social mobility and they imagine that their generosity will enable a child who would not otherwise be able to dream of an education at an independent school to benefit from this life-changing opportunity.
Yet, with affordability now affecting an increasingly large proportion of independent school customers, the “business bursary”, or discount, for want of a suitable euphemism, is understandably ever more important to heads and bursars. So, unless there are very clear restrictions on a donation, it is quite possible that the money given may be used to help in a case that does not quite fit with the donor’s original intentions. Is that ethically acceptable? Possibly, if the communications have been open and honest. But there is obviously real scope here for some ethical ambiguity.
It is possible that while a school might carry out some high-profile ethical virtue- signalling by rejecting one donation, it might also be in danger of ethical transgression by accepting other donations and then not fully respecting the true wishes of the donors.
So far, it would be easy to read from this article an inherent tension on the question of ethics between a school and its fundraisers. One could assume that fundraising naturally pushes for a relaxation of ethics, while a school must hold the line. This is too simplistic.
In reality, a school’s ethics matter more in fundraising than anywhere else. Because, while it is one thing to pay for the fees for the education provided by a school, it is quite another to give. One is transactional, the other is altruistic. And trust in an institution and its ethos is critically important to altruism. Donors and legators often say that they give because they believe in the ethos of the school. And this takes us to what is possibly the crux of the whole issue around ethics and fundraising.
Putting to one side (but not ignoring) all of the other issues such as financial probity, interpretation of GDPR and respect for donors’ intentions, we are left with the central ethical issue of the cause itself.
How ethically admirable is the proposition we advance for fundraising? Because this has a fundamental effect on our fundraising results.
In the case of bursaries, notwithstanding the earlier point about levels of help, it is easy to admire the ethos behind this cause. Who cannot see the virtue in giving the life-changing opportunity of a top-class education to someone who combines genuine financial need with a hunger to learn?
But for facilities, we should also examine how each new project measures up to our ethical standards. If an expensive building project only gilds the lily for the already privileged, then not only might it be ethically questionable, it may also be harder to promote as a fundraising proposition to potential donors – many of whom run companies with enlightened environmental, social and corporate governance (ESG).
Trust is the key
So, fundraising and ethical standards work together. And weaving ESG into a development project actually adds to the credibility of the proposition. Most donors will be more likely to support a development project that is designed to be environmentally sustainable and that caters for some level of community benefit, beyond the immediate school.
At the level above specific fundraising projects, a school that has successfully integrated ESG into its operations will be more likely to garner the generosity of its stakeholders. Furthermore, a school that walks its talk on ethics is more likely to stimulate unrestricted donations and legacies, because people will trust and respect the institution suffciently to give with no questions asked.
This is a key point, because a high proportion of unrestricted fundraising income must be one of the most important goals for development. On this point, it is interesting to note that $12billion of Harvard University’s $40 billion endowment is unrestricted. Many of their alumni clearly trust their alma mater sufficiently to give to the overall cause.
So much of this is down to communication. But how can you keep promoting the ethos of your school and show that you are putting it into action? One obvious answer is to publish an annual report. These documents create helpful “background music” for fundraising, as well as serving as useful marketing tools.
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