Those who work on issues of
ethics are among the few professionals not suffering from
the current economic downturn. The last decade has
brought an escalating supply of moral meltdowns in both
the for-profit and the nonprofit sectors. Corporate misconduct
has received the greatest attention, in part because the
abuses are so egregious and the costs so enormous. Chief contenders for most ethically challenged include former Merrill
Lynch & Co. CEO John Thain, who spent $1.22 million in 2008 to
redecorate his office, including the purchase of a $1,400 trash can
and a $35,000 antique commode, while the company was hemorrhaging
losses of some $27 billion.1
Still, the corporate sector has no monopoly on greed. Consider
EduCap Inc., a multibillion-dollar student loan charity. According
to Internal Revenue Service records, the organization abused its
tax-exempt status by charging excessive interest on loans and by
providing millions in compensation and lavish perks to its CEO and
her husband, including use of the organization’s $31 million private
jet for family and friends.2
Unsurprisingly, these and a host of other scandals have eroded
public confidence in our nation’s leadership. According to a CBS
News poll, only a quarter of Americans think that top executives are
honest. Even executives themselves acknowledge cause for concern.
The American Management Association Corporate Values Survey
found that about one third of executives believed that their company’s
public statements on ethics sometimes conflicted with internal
messages and realities. And more than one third of the executives
reported that although their company would follow the law, it would
not always do what would be perceived as ethical.
Employee surveys similarly suggest that many American workplaces
fail to foster a culture of integrity. Results vary but generally
indicate that between about one-quarter and three-quarters of employees
observe misconduct, only about half of which is reported.3
In the 2007 National Nonprofit Ethics Survey, slightly more than
half of employees had observed at least one act of misconduct in
the previous year, roughly the same percentages as in the for-profit
and government sectors. Nearly 40 percent of nonprofit employees
who observed misconduct failed to report it, largely because they
believed that reporting would not lead to corrective action or they
feared retaliation from management or peers.4
Public confidence in nonprofit performance is similarly at risk.
A 2008 Brookings Institution survey found that about one third
of Americans reported having “not too much” or no confidence in
charitable organizations, and 70 percent felt that charitable organizations
waste “a great deal” or a “fair amount” of money. Only 10
percent thought charitable organizations did a “very good job” spending
money wisely; only 17 percent thought that charities did a “very
good job” of being fair in decisions; and only one quarter thought
charities did a “very good job” of helping people.5 Similarly, a 2006
Harris Poll found that only one in 10 Americans strongly believed
that charities are honest and ethical in their use of donated funds.
Nearly one in three believed that nonprofits have “pretty seriously
gotten off in the wrong direction.” These public perceptions are
particularly troubling for nonprofit organizations that depend on
continuing financial contributions.
Addressing these ethical concerns requires a deeper understanding
of the forces that compromise ethical judgment and the most
effective institutional responses. To that end, this article draws on
the growing body of research on organizational culture in general,
and in nonprofit institutions in particular. We begin by reviewing
the principal forces that distort judgment in all types of organizations.
Next, we analyze the ethical issues that arise specifically in
the nonprofit sector. We conclude by suggesting ways that nonprofits
can prevent and correct misconduct and can institutionalize ethical
values in all aspects of the organization’s culture.
Causes of Misconduct
Ethical challenges arise at all levels in all types of organizations—for-profit, nonprofit, and government—and involve a complex relationship
between individual character and cultural influences.
Some of these challenges can result in criminal violations or civil
liability: fraud, misrepresentation, and misappropriation of assets
fall into this category. More common ethical problems involve gray
areas—activities that are on the fringes of fraud, or that involve
conflicts of interest, misallocation of resources, or inadequate accountability
and transparency.
Research identifies four crucial factors that influence ethical
conduct:
- Moral awareness: recognition that a situation raises ethical issues
- Moral decision making: determining what course of action is
ethically sound - Moral intent: identifying which values should take priority in
the decision - Moral action: following through on ethical decisions.6
People vary in their capacity for moral judgment—in their ability
to recognize and analyze moral issues, and in the priority that they
place on moral values. They also diff er in their capacity for moral
behavior—in their ability to cope with frustration and make good
on their commitments.
Cognitive biases can compromise these ethical capacities. Those
in leadership positions often have a high degree of confidence in
their own judgment. That can readily lead to arrogance, overoptimism,
and an escalation of commitment to choices that turn out to
be wrong either factually or morally.7 As a result, people may ignore
or suppress dissent, overestimate their ability to rectify adverse consequences,
and cover up mistakes by denying, withholding, or even
destroying information.8
A related bias involves cognitive dissonance: People tend to suppress
or reconstrue information that casts doubt on a prior belief
or action.9 Such dynamics may lead people to discount or devalue
evidence of the harms of their conduct or the extent of their own
responsibility. In-group biases can also result in unconscious discrimination
that leads to ostracism of unwelcome or inconvenient
views. That, in turn, can generate perceptions of unfairness and
encourage team loyalty at the expense of candid and socially responsible
decision making.10
A person’s ethical reasoning and conduct is also affected by organizational
structures and norms. Skewed reward systems can lead
to a preoccupation with short-term profits, growth, or donations at the expense of long-term values. Mismanaged bonus systems and
compensation structures are part of the explanation for the morally
irresponsible behavior reflected in Enron Corp. and in the recent
financial crisis.11 In charitable organizations, employees who feel
excessive pressure to generate revenue or minimize administrative
expenses may engage in misleading conduct.12 Employees’ perceptions
of unfairness in reward systems, as well as leaders’ apparent
lack of commitment to ethical standards, increase the likelihood of
unethical behavior.13
A variety of situational pressures can also undermine moral conduct.
Psychologist Stanley Milgram’s classic obedience to authority
experiment at Yale University offers a chilling example of how readily
the good go bad under situational pressures. When asked to administer
electric shocks to another participant in the experiment, about
two-thirds of subjects fully complied, up to levels marked “dangerous,”
despite the victim’s screams of pain. Yet when the experiment was
described to subjects, none believed that they would comply, and the
estimate of how many others would do so was no more than one in
100. In real-world settings, when instructions come from supervisors
and jobs are on the line, many moral compasses go missing.
Variations of Milgram’s study also documented the influence of peers
on individual decision making. Ninety percent of subjects paired with
someone who refused to comply also refused to administer the shocks.
By the same token, 90 percent of subjects paired with an uncomplaining
and obedient subject were equally obedient. Research on organizational
behavior similarly finds that people are more likely to engage
in unethical conduct when acting with others. Under circumstances
where bending the rules provides payoff s for the group, members may
feel substantial pressure to put their moral convictions on hold. That
is especially likely when organizations place heavy emphasis on loyalty
and off er significant rewards to team players. For example, if it is
common practice for charity employees to inflate expense reports or
occasionally liberate office supplies and in-kind charitable donations,
other employees may suspend judgment or follow suit. Once people
yield to situational pressures when the moral cost seems small, they
can gradually slide into more serious misconduct. Psychologists label
this “the boiled frog” phenomenon. A frog thrown into boiling water
will jump out of the pot. A frog placed in tepid water that gradually
becomes hotter will calmly boil to death.
Moral blinders are especially likely in contexts where people lack
accountability for collective decision making. That is often true of
boards of directors—members’ individual reputations rarely suffer,
and insurance typically insulates them from personal liability. A
well-known study by Scott Armstrong, a professor at the Wharton
School of the University of Pennsylvania, illustrates the pathologies
that too often play out in real life. The experiment asked 57 groups of
executives and business students to assume the role of an imaginary
pharmaceutical company’s board of directors. Each group received
a fact pattern indicating that one of their company’s most profitable
drugs was causing an estimated 14 to 22 “unnecessary” deaths a year.
The drug would likely be banned by regulators because a competitor
offered a safe medication with the same benefits at the same price.
More than four-fifths of the boards decided to continue marketing
the product and to take legal and political actions to prevent a ban.
By contrast, when a different group of people with similar business
backgrounds were asked for their personal views on the same hypothetical,
97 percent believed that continuing to market the drug
was socially irresponsible.14
These dynamics are readily apparent in real-world settings. Enron’s
board twice suspended conflict of interest rules to allow CFO
Andrew Fastow to line his pockets at the corporation’s expense.15
Some members of the United Way of the National Capital Area’s
board were aware of suspicious withdrawals by CEO Oral Suer over
the course of 15 years, but failed to alert the full board or take corrective
action.16 Experts view the large size of some governing bodies,
such as the formerly 50-member board of the American Red Cross,
as a contributing factor in nonprofit scandals.17
Other characteristics of organizations can also contribute to
unethical conduct. Large organizations facing complex issues may
undermine ethical judgments by fragmenting information across
multiple departments and people. In many scandals, a large number
of professionals—lawyers, accountants, financial analysts, board
members, and even officers—lacked important facts raising moral
as well as legal concerns. Work may be allocated in ways that prevent
decision makers from seeing the full picture, and channels for
expressing concerns may be inadequate.
Another important influence is ethical climate—the moral meanings
that employees give to workplace policies and practices. Organizations
signal their priorities in multiple ways, including the content
and enforcement of ethical standards; the criteria for hiring, promotion,
and compensation; and the fairness and respect with which they
treat their employees. People care deeply about “organizational justice”
and perform better when they believe that their workplace is treating
them with dignity and is rewarding ethical conduct. Workers also
respond to moral cues from peers and leaders. Virtue begets virtue,
and observing integrity in others promotes similar behavior.
Ethical Issues in the Nonprofit Sector
These organizational dynamics play out in distinctive ways in the
nonprofit sector. There are six areas in particular where ethical issues
arise in the nonprofit sector: compensation; conflicts of interest; publications and solicitation; financial integrity; investment policies;
and accountability and strategic management.
Compensation. Salaries that are modest by business standards can
cause outrage in the nonprofit sector, particularly when the organization
is struggling to address unmet societal needs. In a March 23,
2009, Nation column, Katha Pollitt announced that she “stopped
donating to the New York Public Library when it gave its president
and CEO Paul LeClerc a several hundred thousand-dollar raise so his
salary would be $800,000 a year.” That, she pointed out, was “twenty
times the median household income.” Asking him to give back half a
million “would buy an awful lot of books—or help pay for raises for
the severely underpaid librarians who actually keep the system going.”
If any readers thought LeClerc was an isolated case, she suggested
checking Charity Navigator for comparable examples.
The problem is not just salaries. It is also the perks that officers
and unpaid board members may feel entitled to take because their
services would be worth so much more in the private sector. A widely
publicized example involves William Aramony, the former CEO of
United Way of America, who served six years in prison after an investigation
uncovered misuse of the charity’s funds to finance a lavish
lifestyle, including luxury condominiums, personal trips, and payments
to his mistress.18 Examples like Aramony ultimately prompted
the IRS to demand greater transparency concerning nonprofit CEO
compensation packages exceeding certain thresholds.19
Nonprofits also face issues concerning benefits for staff and volunteers.
How should an organization handle low-income volunteers
who select a few items for themselves while sorting through noncash
contributions? Should employees ever accept gifts or meals from
beneficiaries or clients? Even trivial expenditures can pose significant issues of principle or public perception.
Travel expenses also raise questions. Can employees keep frequent
flyer miles from business travel? How does it look for cash-strapped
federal courts to hold a judicial conference at a Ritz-Carlton hotel, even
though the hotel offered a significantly discounted rate? The Panel on
the Nonprofit Sector recommends in its Principles for Good Governance
and Ethical Practice that organizations establish clear written policies
about what can be reimbursed and require that travel expenses be
cost-effective. But what counts as reasonable or cost-effective can
be open to dispute, particularly if the nonprofit has wealthy board
members or executives accustomed to creature comforts.
Conflicts of Interest. Conflicts of interest arise frequently in the
nonprofit sector. The Nature Conservancy encountered one such
problem in a “buyer conservation deal.” The organization bought
land for $2.1 million and added restrictions that prohibited development
such as mining, drilling, or dams, but authorized construction
of a single-family house of unrestricted size, including a pool,
a tennis court, and a writer’s cabin. Seven weeks later, the Nature
Conservancy sold the land for $500,000 to the former chairman of
its regional chapter and his wife, a Nature Conservancy trustee. The
buyers then donated $1.6 million to the Nature Conservancy and
took a federal tax write-off for the “charitable contribution.” 20
Related conflicts of interest arise when an organization offers preferential
treatment to board members or their affiliated companies.
In another Nature Conservancy transaction, the organization received
$100,000 from SC Johnson Wax to allow the company to
use the Conservancy’s logo in national promotion of products, including
toilet cleaner. The company’s chairman sat on the charity’s
board, although he reportedly recused himself from participating
in or voting on the transaction.21
These examples raise a number of ethical questions. Should
board members obtain contracts or donations for their own organizations?
Is the board member’s disclosure and abstention from a
vote enough? Should a major donor receive special privileges, such
as a job or college admission for a child? In a recent survey, a fifth
of nonprofits (and two-fifths of those with more than $10 million
in annual expenses) reported buying or renting goods, services, or
property from a board member or an affiliated company within the
prior two years. In three-quarters of nonprofits that did not report
any such transactions, board members were not required to disclose
financial interests in entities doing business with the organization,
so its leaders may not have been aware of such conflicts.22
Despite the ethical minefield that these transactions create, many
nonprofits oppose restrictions because they rely on insiders to provide
donations or goods and services at below-market rates. Yet such
quid pro quo relationships can jeopardize an organization’s reputation
for fairness and integrity in its financial dealings. To maintain
public trust and fiduciary obligations, nonprofits need detailed,
unambiguous conflict of interest policies, including requirements
that employees and board members disclose all financial interest in
companies that may engage in transactions with the organization.
At a minimum, these policies should also demand total transparency
about the existence of potential conflicts and the process by
which they are dealt with.
Publications and Solicitation. Similar concerns about public trust
entail total candor and accuracy in nonprofit reports. The Red Cross
learned that lesson the hard way after disclosures of how it used the
record donations that came in the wake of the 9/11 terrorist attacks.Donors believed that their contributions would go to help victims and their families. The Red Cross, however, set aside more than half of the
$564 million in funds raised for 9/11 for other operations and future
reserves. Although this was a long-standing organizational practice,
it was not well known. Donor outrage forced a public apology and
redirection of funds, and the charity’s image was tarnished.23
As the Red Cross example demonstrates, nonprofits need to pay
particular attention to transparency. They should disclose in a clear
and non-misleading way the percentage of funds spent on administrative
costs—information that affects many watchdog rankings of
nonprofit organizations. Transparency is also necessary in solicitation
materials, grant proposals, and donor agreements. Organizations
cannot afford to raise funds on the basis of misguided assumptions,
or to violate public expectations in the use of resources.
Financial Integrity. Nonprofit organizations also face ethical dilemmas
in deciding whether to accept donations that have any unpalatable
associations or conditions. The Stanford Institute for Research
on Women and Gender, for example, declined to consider a potential
gift from the Playboy Foundation. By contrast, the ACLU’s Women’s
Rights Project, in its early phase, accepted a Playboy Foundation gift,
and for a brief period sent out project mailings with a Playboy bunny
logo.24 When Stanford University launched an ethics center, the
president quipped about what level of contribution would be necessary
to name the center and whether the amount should depend on
the donor’s reputation. If “the price was right,” would the university
want a Ken Lay or a Leona Helmsley center on ethics?
Recently, many corporations have been attempting to “green”
their image through affiliations with environmental organizations,
and some of these groups have been entrepreneurial in capitalizing
on such interests. The Nature Conservancy offered corporations
such as the Pacific Gas and Electric Co. and the Dow Chemical Co.
seats on its International Leadership Council for $25,000 and up.
Members of the council had opportunities to “meet individually
with Nature Conservancy staff to discuss environmental issues of
specific importance to the member company.” 25
There are no easy resolutions of these issues, but there are better
and worse ways of addressing them. Appearances matter, and it
sometimes makes sense to avoid affiliations where a donor is seeking
to advance or pedigree ethically problematic conduct, or to impose
excessive restrictions on the use of funds.
Investment Policies. Advocates of socially responsible investing argue
that nonprofit organizations should ensure that their financial
portfolio is consistent with their values. In its strongest form, this
strategy calls for investing in ventures that further an organization’s
mission. In its weaker form, the strategy entails divestment
from companies whose activities undermine that mission. The issue
gained widespread attention after a Jan. 7, 2007, Los Angeles Times
article criticized the Bill & Melinda Gates Foundation for investing
in companies that contributed to the environmental and health
problems that the foundation is attempting to reduce.
Many nonprofit leaders have resisted pressure to adopt socially
responsible investing principles on the grounds that maximizing
the financial return on investment is the best way to further their
organization’s mission, and that individual divestment decisions
are unlikely to affect corporate policies. Our view, however, is that
symbols matter, and that similar divestment decisions by large institutional
investors can sometimes influence corporate conduct. Hypocrisy,
as French writer François de La Rochefoucauld put it, may
be the “homage vice pays to virtue,” but it is not a sound managerial
strategy. To have one set of principles for financial management and
another for programmatic objectives sends a mixed moral message.
Jeff Skoll acknowledged as much following his foundation’s support
of Fast Food Nation, a dramatic film highlighting the adverse social
impacts of the fast-food industry. “How do I reconcile owning shares
in [Coca-Cola and Burger King] with making the movie?” he asked.26
As a growing number of foundations recognize, to compartmentalize
ethics inevitably marginalizes their significance. About a fifth of
institutional investing is now in socially screened funds, and it is by
no means clear that these investors have suffered financial losses as
a consequence.27
Accountability and Strategic Management. By definition, nonprofit
organizations are not subject to the checks of market forces or
majoritarian control. This independence has come under increasing
scrutiny in the wake of institutional growth. In 2006, after a
$30 billion gift from Warren Buffet, the Gates Foundation endowment
doubled, making it larger than the gross domestic product
of more than 100 countries. In societies where nonprofits serve
crucial public functions and enjoy substantial public subsidies
(in the form of tax deductions and exemptions), this public role
also entails significant public responsibilities. In effect, those responsibilities
include fiduciary obligations to stakeholders—those
who fund nonprofits and those who receive their services—to use
resources in a principled way. As a growing body of work on philanthropy
suggests, such accountability requires a well-informed
plan for furthering organizational objectives and specific measures
of progress. A surprising number of nonprofits lack such
strategic focus. Many operate with a “spray and pray” approach,
which spreads assistance across multiple programs in the hope
that something good will come of it. Something usually does, but
it is not necessarily the cost-effective use of resources that public
accountability demands.
Money held in public trust should be well spent, not just
well-intentioned. But in practice, ethical obligations bump up
against significant obstacles. The most obvious involves evaluation.
Many nonprofit initiatives have mixed or nonquantifiable
outcomes. How do we price due process, wilderness preservation,
or gay marriage?
Although in many contexts objective measures of progress are
hard to come by, it is generally possible to identify some indicators
or proxies. Examples include the number and satisfaction of people
affected, the assessment of experts, and the impact on laws, policies,
community empowerment, and social services. The effectiveness of
evaluation is likely to increase if organizations become more willing
to share information about what works and what doesn’t. To be sure,
those who invest significant time and money in social impact work
want to feel good about their efforts, and they are understandably
reluctant to spend additional resources in revealing or publicizing
poor outcomes. What nonprofit wants to rain on its parade when that might jeopardize public support? But sometimes at least a light
drizzle is essential to further progress. Only through pooling information
and benchmarking performance can nonprofit organizations
help each other to do better.
Promoting Ethical Decision Making
Although no set of rules or organizational structures can guarantee
ethical conduct, nonprofits can take three steps that will make
it more likely.
Ensure Effective Codes of Conduct and Compliance Programs.
One of the most critical steps that nonprofits can take to promote
ethical conduct is to ensure that they have adequate ethical codes
and effective compliance programs. Codified rules can clarify expectations,
establish consistent standards, and project a responsible
public image. If widely accepted and enforced, codes can also reinforce
core values, deter misconduct, promote trust, and reduce the
organization’s risks of conflicting interests and legal liability.
Although the value of ethical codes and compliance structures
should not be overlooked, neither should it be overstated. As empirical
research makes clear, the existence of an ethical code does not of
itself increase the likelihood of ethical conduct. Much depends on how
standards are developed, perceived, and integrated into workplace
functions. “Good optics” was how one manager described Enron’s
ethical code, and shortly after the collapse, copies of the document
were selling on eBay, advertised as “never been read.” 28
A recent survey of nonprofit organizations found that only about
one third of employees believed that their workplace had a well implemented
ethics and compliance program. This figure is higher
than the corresponding figure for the business (25 percent) and government
(17 percent) sectors, but still suggests ample room for improvement.
29 Part of the problem lies with codes that are too vague,
inflexible, or narrow. Only about half of nonprofit organizations
have conflict of interest policies, and fewer than one third require
disclosure of potentially conflicting financial interests.30 A related
difficulty is compliance programs that focus simply on punishing
deviations from explicit rules, an approach found to be less effective
in promoting ethical behavior than approaches that encourage
self-governance and commitment to ethical aspirations.31
To develop more effective codes and compliance structures, nonprofit organizations need systematic information about how they
operate in practice. How often do employees perceive and report
ethical concerns? How are their concerns addressed? Are they familiar
with codified rules and confident that whistle-blowers will
be protected from retaliation? Do they feel able to deliver bad news
without reprisals?
Promote Effective Financial Management. Another step that nonprofits can take to foster ethical behavior and promote public trust is
to use resources in a socially responsible way. In response to reports
of bloated overhead, excessive compensation, and financial mismanagement,
watchdog groups like Charity Navigator have begun rating
nonprofits on the percentage of funds that go to administration
rather than program expenditures. Although this rating structure
responds to real concerns, it reinforces the wrong performance measure,
distorts organizational priorities, and encourages disingenuous
accounting practices. Groups with low administrative costs may not
have the scale necessary for social impact. The crucial question that
donors and funders should consider in directing their resources is
the relative cost-effectiveness of the organization. Yet according to
a 2001 study by Princeton Survey Research Associates, only 6 percent
of Americans say that whether a program “makes a difference”
is what they most want to know when making charitable decisions.
Two-thirds expect the bulk of their donations to fund current programs
and almost half expect all of their donations to do so. Such
expectations encourage charities to provide short-term direct aid at
the expense of building long-term institutional capacity.
Moreover, the line these donors draw between “overhead” and
“cause” is fundamentally fl awed. As Dan Pallotta notes in Uncharitable,
“the distinction is a distortion.” All donations are going to
the cause, and “the fact that [a dollar] is not going to the needy
now obscures the value it will produce down the road” by investing
in infrastructure or fundraising capacity. Penalizing charities
for such investments warps organizational priorities. It also encourages
“aggressive program accounting,” which allocates fundraising,
management, and advertising expenses to program rather
than administrative categories. Studies of more than 300,000
tax returns of charitable organizations find widespread violation
of standard accounting practices and tax regulations, including
classification of accounting fees and proposal writing expenses as
program expenditures.32
To address these issues, nonprofit organizations need better institutional
oversight, greater public education, and more transparent
and inclusive performance measures. Ensuring common standards
for accounting and developing better rating systems for organizational
effectiveness should be a priority.
Institutionalize an Ethical Culture. In its National Nonprofit Ethics
Survey, the Ethics Resource Center categorizes an organization as having
a strong ethical culture when top management leads with integrity,
supervisors reinforce ethical conduct, peers display a commitment to ethics, and the organization integrates its values in day-to-day
decision making. In organizations with strong ethical cultures, employees
report far less misconduct, feel less pressure to compromise
ethical commitments, and are less likely to experience retaliation
for whistle-blowing.33 This survey is consistent with other research,
which underscores the importance of factoring ethical concerns into
all organizational activities, including resource allocation, strategic
planning, personnel and compensation decisions, performance evaluations,
auditing, communications, and public relations.
Often the most critical determinant of workplace culture is
ethical leadership. Employees take cues about appropriate behavior
from those at the top. Day-to-day decisions that mesh poorly
with professed values send a powerful signal. No organizational
mission statement or ceremonial platitudes can counter the impact
of seeing leaders withhold crucial information, play favorites with
promotion, stifle dissent, or pursue their own self-interest at the
organization’s expense.
Leaders face a host of issues where the moral course of action
is by no means self-evident. Values may be in conflict, facts may be
contested or incomplete, and realistic options may be limited. Yet
although there may be no unarguably right answers, some will be
more right than others—that is, more informed by available evidence,
more consistent with widely accepted principles, and more responsive
to all the interests at issue. Where there is no consensus about
ethically appropriate conduct, leaders should strive for a decision making
process that is transparent and responsive to competing
stakeholder interests.
Nonprofit executives and board members also should be willing
to ask uncomfortable questions: Not just “Is it legal?” but also “Is it
fair?” “Is it honest?” “Does it advance societal interests or pose unreasonable
risks?” and “How would it feel to defend the decision on
the evening news?” Not only do leaders need to ask those questions
of themselves, they also need to invite unwelcome answers from
others. To counter self-serving biases and organizational pressures,
people in positions of power should actively solicit diverse perspectives
and dissenting views. Every leader’s internal moral compass
needs to be checked against external reference points.
Some three decades ago, in commenting on the performance of
Nixon administration officials during the Watergate investigation,
then-Supreme Court Chief Justice Warren Burger concluded that
“apart from the morality, I don’t see what they did wrong.”34 That
comment has eerie echoes in the current financial crisis, as leaders
of failed institutions repeatedly claim that none of their missteps
were actually illegal. Our global economy is paying an enormous
price for that moral myopia, and we cannot afford its replication in
the nonprofit sphere.
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