Top Tips 25
The Ethical Considerations of a Financing Strategy
When designing a financing strategy, it is important to have a clear policy on who to accept or decline donations from. The policy must balance the needs of the organisation with its values and principles.
This Top Tip covers some key questions to ask when assessing a potential financial supporter and will help to clarify your ethical policy relating to acceptance of support.
It is important to recognise that sometimes we do have to say ‘no thank you’.
1. Are the donor’s objectives in line with your mission?
There is a risk of ‘mission drift’ if you accept funding to follow activities that are not in line with your objectives. It is important to be true to your mission or you could lose support from the community and existing supporters.
2. Would existing supporters object to you accepting support from this new donor?
Some donors may have their own ethical objections to working alongside certain companies, faith-based organisations or government agencies. The result could be less financial support in the future.
3. Would the communities you work with be happy to accept support from that donor?
Some communities might object to donations from certain companies or external government agencies, due to previous bad experiences or security fears.
4. Are there any conditions attached to the donation which are difficult, risky or costly to meet?
Eg If they request a plaque on a building or a vehicle could this put the asset at risk? The cost of administering the donation or grant should not be disproportionately high.
5. For corporate sponsors, what is their record on ethical practices?
For example, do they have any history of using child labour, poor working conditions, poor environmental practices, supporting the arms trade, etc?
6. For corporate sponsors, do their products conflict with your work in any way?
For example, there could be a conflict of interest if an environmental NGO accepted funds from an oil company or an NGO supporting victims of domestic abuse accepted support from a brewery.
7. Can you be sure the funds have not come from criminal activity?
If the donor is not well known to you or does not have a record of regular giving, you need to satisfy yourself that donated funds are not linked to money laundering or corrupt practices.
8. How does the donor plan to publicise their support for your NGO?
For example, are you willing to have your NGO’s name and project images included in publicity materials and media events? This is especially important if you work with vulnerable communities.
And a final thought...
Do remember that the ethics of fundraising also extends to how you apply for and manage donated funds. It is important to be honest about what you can achieve when asking for funds and to submit realistic budgets, and then to faithfully use the funds for the purpose intended.
Want to learn more?
Mango’s Training Course Financial Sustainabiiity Essentials: How to Build a Financing Strategy (FM2) is a must for NGO managers and their advisers.
View our calendar of courses around the world here: www.mango.org.uk/Training/Calendar
See Mango’s Guide to Financial Management for NGOs for free advice and tools, including Mango's Health Check and a sample risk register. See: www.mango.org.uk/guide.
Mango: international specialists in financial management for NGOs
Mango inspires NGOs to make more of their money by: running training courses, recruiting finance staff, advising NGOs and publishing free tools & guides: www.mango.org.uk