Chapter 19 – Philanthropy & Grantmaking
19.7 Ethics in the Profession
Ethical Standards
Ethics in philanthropy and grantmaking play a critical role in maintaining public trust and ensuring positive community impact. Common ethical standards include transparency and community accountability. Transparency means that philanthropic organizations are open about their goals, funding sources, and decision-making processes. It involves clear communication with both donors and the community about where funds are going and how they are being used. Community accountability is equally essential, as it emphasizes that philanthropic initiatives should genuinely serve the needs and interests of the communities they aim to support, not just the preferences of the donors or the foundation’s board. When foundations prioritize these ethical standards, they build trust with the community, ensuring their work has a meaningful and lasting impact.
Ethical Challenges
However, professionals in Cleveland’s philanthropic landscape often encounter ethical dilemmas that can be difficult to navigate. One common challenge is managing donor influence on public policy. For example, a foundation may receive substantial donations from an individual or corporation with specific political or social views, and that donor might expect the foundation to fund projects aligned with those views. While these projects may support the donor’s goals, they may not fully align with the community’s broader needs or values. Philanthropy professionals must carefully balance donor intentions with the foundation’s mission and the community’s needs, which can sometimes lead to difficult choices and compromises.
Another ethical issue is the risk of overpromising to communities. To address pressing community challenges, foundations may announce ambitious projects or make commitments that require significant funding and resources. While the intentions are good, limited budgets and unforeseen obstacles can make it challenging to deliver on these promises. Overpromising and under-delivering can harm the community’s trust in the foundation, as residents may feel misled or disappointed if anticipated support doesn’t materialize. For instance, if a foundation pledges to revitalize a struggling neighborhood but doesn’t follow through due to funding cuts, the community might be left worse off than before, with broken trust and unmet expectations.
To address these ethical challenges, philanthropy professionals in Cleveland and beyond must set realistic goals, communicate openly with both donors and communities, and remain steadfast in prioritizing the community’s best interests. By fostering an ethical environment rooted in transparency and accountability, Cleveland’s philanthropic organizations can continue to serve as trusted allies and effective advocates for positive change.
Here are some additional ethical challenges often encountered in philanthropy and grantmaking:
- Conflicts of Interest – Professionals in philanthropy may encounter situations where personal relationships or affiliations could influence funding decisions. For instance, if a program officer has close ties to a nonprofit applying for a grant, it could create a conflict of interest that may skew objectivity. Ethical practices require that foundations have clear policies to manage and disclose conflicts, ensuring decisions are made based solely on merit and alignment with the foundation’s mission.
- Power Imbalance – Foundations hold considerable influence, as they control funding that many nonprofits rely on to sustain their programs. This creates an inherent power imbalance that can affect how openly nonprofits feel they can share challenges or push back against foundation expectations. For example, a nonprofit might feel pressured to adjust its programming to meet a foundation’s funding requirements, even if it means diverting from its mission. Maintaining open, respectful communication and valuing nonprofits’ input are essential for ethical grantmaking.
- Short-Term Funding with Long-Term Needs – Many community issues, such as poverty reduction or educational inequity, require sustained efforts. However, some philanthropic grants are short-term or project-based, leaving nonprofits with uncertainty about continued funding. When foundations withdraw support prematurely, nonprofits may struggle to maintain programs that communities have come to rely on. This can lead to disrupted services and unmet needs, particularly in vulnerable communities. Ethical philanthropy involves setting realistic timelines, supporting capacity-building, and considering long-term impacts before ending funding.
- Data Privacy and Consent – As foundations increasingly use data to measure impact, ethical considerations around data privacy have become more prominent. Foundations must respect the privacy of individuals served by funded programs, especially when handling sensitive information related to health, income, or other personal matters. Ethical data practices include obtaining informed consent, anonymizing data, and only collecting information directly relevant to the foundation’s mission. Mishandling data can erode community trust and may lead to privacy violations, which can be particularly harmful for vulnerable populations.
- Tokenism and Performative Actions – Foundations sometimes fund high-profile projects that garner public attention but may not significantly impact the community’s most pressing issues. This can be especially problematic if a foundation supports a popular initiative to appear responsive to community concerns but doesn’t follow through on deeper, more meaningful support. Ethical grantmaking requires that foundations prioritize authentic, sustainable impact over projects that may simply enhance their public image.
These challenges underscore the importance of ethical practices in philanthropy, as foundations navigate complex relationships and responsibilities. Addressing these issues thoughtfully strengthens foundations’ commitment to meaningful, community-centered work and enhances their reputation as reliable, ethical stewards of social impact.
