14.8 Ethics in the Profession

Preventing the Misuse of Funds

While most nonprofits operate with integrity, ethical failures can have serious consequences. Mismanagement or corruption in community development organizations can undermine trust, divert resources away from those in need, and harm the very communities they aim to serve. A case that underscores the importance of ethical leadership is the Buckeye Shaker Square Development Corporation (BSSDC) scandal in Cleveland. Former Cleveland City Councilman Kenneth Johnson, who represented Ward 4, was convicted in 2021 for his role in a corruption scheme involving BSSDC.

Johnson and his associates, including his executive assistant Garnell Jamison and BSSDC Executive Director John Hopkins, were found guilty of embezzling federal funds meant for community development and neighborhood services. Between 2010 and 2018, they allegedly submitted fraudulent expense reports and timesheets for services that were never provided, diverting approximately $127,200 in federal funds. In October 2021, Johnson was sentenced to six years in prison and ordered to repay $746,839.38 in restitution to the IRS and the Department of Housing and Urban Development.

Cases like this highlight the need for transparency, oversight, and strong ethical standards in nonprofit housing organizations. Strong board governance, external audits, and ethical leadership are important for preventing fraud and ensuring that housing nonprofits fulfill their mission to serve residents. Upholding legal and ethical standards is not just about compliance—it is about ensuring that housing nonprofits remain trusted institutions that genuinely serve the communities they seek to uplift.

Displacement and Gentrification 

Housing nonprofits often face complex ethical dilemmas as they work to improve communities and provide affordable housing. One of the most significant challenges is balancing development with the risk of displacement. While efforts to revitalize neighborhoods can bring new housing, businesses, and amenities, they can also lead to gentrification, where rising property values push out longtime residents who can no longer afford to live in the area.

There is a difference between community-led neighborhood revitalization and gentrification. Community-led neighborhood revitalization focuses on improving housing, infrastructure, and local economies while prioritizing the needs of existing residents. The goal is to make sure community members benefit from investment without being displaced. In contrast, gentrification often leads to rising costs that push out long-time residents as wealthier individuals move in, shifting the cultural and economic makeup of the neighborhood.

Nonprofits must carefully consider the impact of their projects to ensure that they benefit the current residents, rather than unintentionally displacing them.  

For example, CDCs in Northeast Ohio have addressed this challenge by focusing on affordable housing development. These organizations work to create new housing options that are affordable for residents with lower incomes to try to make sure people aren’t forced out as neighborhoods improve. Burten Bell Carr Development Inc. (BBC), for example, has developed affordable housing in Cleveland’s Central and Kinsman neighborhoods while also engaging with residents to ensure their needs are prioritized. By involving the community in the planning process, CDCs can help avoid displacement and create solutions that benefit both new and existing residents.  

Ensuring that housing developments are accessible to people of different income levels, races, and backgrounds is critical to fostering diverse, inclusive communities. Some organizations in Northeast Ohio, like Habitat for Humanity, address this by offering housing opportunities based on need, ensuring that families from all walks of life can access safe and stable homes.  

Other local nonprofits also promote homeownership programs that allow longtime residents to stay in their neighborhoods as property values rise. Programs that help residents afford necessary home repairs or provide financial education are key to empowering individuals to remain in their communities. This approach helps maintain the fabric of the neighborhood while still allowing for positive development.  

In the nonprofit housing field, ethical decision-making is essential to ensuring that development benefits all members of the community. By addressing concerns about displacement and working to provide equitable access to housing, local organizations are creating sustainable, inclusive neighborhoods for the future.