Integrity in Business?

Integrity in Business? 

By Kim Byrd-Rider

The media is truly a governing force in all areas important to American society. Nonprofit organizations are not exempt from this. The free press format of America is not only unique worldwide but ensures that eventually all public domains must come to ethical transparency which promotes integrity. The multitude of information reporting venues make news reporting competition fierce. Many television news stations report the news 24 hours a day. They struggle to find enough diverse stories, evident by the large amount of story repetition seen on their venues. As a result, in the last two decades reporters have had to go deeper, look further and find more things to report on. Hence, media information steadily flows from a plethora of subjects. Also assisting this phenomenon are millions of mobile devices recording videos which are given to the media to report on. The dawn of new technology also enables reporters to find information quickly and easily. What once took them months to figure out, now might only take an hour. A free press format ensures accountability for all and a positive ethical transparent change for American businesses including the nonprofit sector. 

Nonprofit business scandals have blanketed the media for the last three decades. The scandalous nonprofit businesses of the recent past included such events as the NAACP scandal, that UNICEF scandal and the Dark Money scandal. The NAACP scandal included power strategies within its board of directors to manipulate and hoard money and leverage authority for personal gain. Most notably this occurred at the highest levels in the NAACP; the chairman of the board and the chief executive officer (Harvard Business School, 1997). The media reported on this activity and expose it, forcing the NAACP to rectify the situation. UNICEF has been plagued with media scandals including a 1987 link to child pornography which lead to 14 arrests in Belgium, France, Great Britain and Switzerland and accusations. UNICEF’s board member appointment processes was scrutinized by the media in 2015, which lead to multiple resignations (Russell, 2015). According to the media, dark money scandals have also been happening for decades. Dark money occurs when large organizations donate big sums of money to political nonprofit organizations in order to hide their identity while receiving a tax write off (Morrison, 2018). Due to media reporting, two state court systems now mandate the political nonprofit organizations to reveal their donors’ names to district attorneys for auditing political donations.  

According to the author of A Crisis in the Nonprofit Sector, ethical and integrity problems with nonprofit organizations generate from within the organization (2007). The internal problems include a lack of public accountability, excessive compensation packages received by many nonprofit executives, unethical behavior, the absence of oversight and enforcement mechanisms governing the nonprofits (Eisenburg, 2007). Integrity represents equality, strong moral principles, honor, ethics, virtue, fairness, sincerity, truthfulness and trustworthiness. In a day of Ponzi schemes, illegal environmental abuse and government fraud, integrity is hard to find, which provides the media with ammunition. Knowing how nonprofits can achieve integrity is imperative to a nonprofit’s survival. Otherwise, the media will make sure it becomes defunct and disbanded. 

Colleagues Strickland and Vaughan from Public Integrity Journal have outlined a formula because they agree that an ethical organization’s culture resides within the organization itself (2008). Their formula is based on the famous and well-established Maslow’s theory. Maslow’s theory is a psychological framework of the hierarchy of needs in the human condition. The theory has been transferred to different areas of human behavior. For instance, it has been applied to business ethics, organizational behavior, motivation, organizational resource allocation information technology management, dispute resolution, and even to terrorism (Strickland, & Vaughan, 2008).  These are examples of the multidisciplinary application abilities of Maslow’s theory. Maslow’s theory was published in 1943 but has withstood the test time in psychology circles and is a primary reference for human behavior and motivation studies. 

Maslow’s theory lays out five primary levels of human psychological needs which occur in progressive order. Even though people are predicted to develop from level one up to level five, they can be driven back and forth between the levels by events in their life. The motivational needs of Maslow are as follows: 1. physical needs; 2. Safety; 3. love/belonging; 4. self-esteem; and 5. self-actualization. Maslow argues that a person cannot move to the next level unless he has accomplished the previous level.  

Colleagues Strickland and Vaughan make the argument of same thing occurring in nonprofit organization cultures. Their topics parallel as follows: 1. financial competence for managing resources and assets (physical needs); 2. accountability or transparency (safety); 3. reciprocity or maintaining a mutually beneficial investment relationship with donors to meet the needs of targeted constituencies (love/ belonging); 4. respect or incorporating the perspective of employees, volunteers, and donors into all organizational activities (self-esteem); and 5. integrity (self-actualization), preserving incorruptibility and competent in a commitment to the mission (Strickland, & Vaughan, 2008). From this perspective, integrity cannot be reached until the other four areas have been achieved first and usually in the order from one to four. Of course, disruptions in the organization will cause the leaders to return to previous levels to address them in order to maintain level 5. integrity. 

Table 1. Hierarchy of Ethical Values for Nonprofit Organizations (Strickland, & Vaughan, 2008). 

Maslow’s hierarchy of human needs makes logical sense as does Strickland and Vaughan’s (2008) hierarchy of ethical values for nonprofit organization. It also outlines a doable course of action for nonprofits to be able to exude integrity. Additional examination of these categories is needed to understand what the nonprofit needs to do. 

Financial competence (Maslow’s physical needs) includes not only physical accuracy but recruitment and retention of donors, volunteers, staff and clients. Core audits concerning the misuse of donor monies, excessive compensation for executives and misleading financial reporting must also be in place. Once this is accomplished, the organization can begin to work on accountability issues making them less vulnerable to scandal providing Maslow’s safety of level 2. Accountability to whom, how and for what are important questions. Internal accountability is to the board the directors’ governance procedures. An organization also needs to be internally accountable to their donors, members, staff, clients, contract managers, volunteers. External accountability must be given to the Internal Revenue Service and to taxpayers for federal grants. 

Reciprocity (Maslow’s love/belonging) demands the organization to serve in a manner which increases acceptance and trust. Aligning the donors’ interests with the organization’s mission is a strong strategy to develop acceptance and trust. Without aligning, many nonprofit organizations will diverge from their mission in order to recruit funds instead of building mission aligned partners. Diverging from the mission to procure donor money disables integrity. The organization must adhere to its mission and purpose at all times. Reciprocity is the authentic alignment between the donor and the nonprofit organization with the mission. 

Respect (Maslow’s self-esteem) is achieved by building a team culture unifying the donors, volunteers, clients, board members and the employees. All most feel worthwhile and appreciated. It is difficult to make sure the donors believe they are members of the team when they are not physically present but it must be developed for authentic and total organizational respect to exist.  

Once all four of these areas have been achieved, integrity results. In order to maintain integrity, commitment to ethical behavior must be the priority of the nonprofit organization. This creates an ethical and moral culture internally. Stewardship becomes the goal and priority when integrity is in place. 

Ethics can be taught but it cannot be demanded from an organization or business. It is the duty of the nonprofit organization to build a morally ethical culture with integrity internally from the ground up. The media may never report on the attributes of a healthy, ethical and well-functioning nonprofit organization but that is okay. If the media only focuses on the negative scandals caused by faulty adherence to the aforementioned hierarchy, the effect is the same. The nonprofits with integrity will thrive and the ones without integrity will be slaughtered by the media. Nonprofits are expected to police themselves but the media, with its ability to ruin an organization’s reputation and kill incoming donor revenue, is the entity that makes sure they do. 

References 

Eisenburg, P. (2018). A crisis in the nonprofit sector. Journal Recommendation Service. Retrieved on 8 October 2018 downloaded from https://onlinelibrary.wiley.com/doi/abs/10.1002/ncr.4100860409 

Harvard Business School (1997). The NAACP. Harvard Business School, 398– 934. 

Lewis, P. (1987). Child sex scandal rolls UNICEF unit. The New York Times. Retrieved on 8 October 2018 download it from https://www.nytimes.com/1987/06/25/world/child-sex-scandal-roils-unicef-unit.html 

Morrison, P. (2018). Dark money is smashing our system of political openness. How one state is fighting back and winning. The Los Angeles Times. Retrieved on 8 October 2018 downloaded from http://www.latimes.com/opinion/op-ed/la-ol-patt-morrison-kimberly-reed-dark-money-20180801-htmlstory.html 

Russell, G. (2015). UNICEF tech chief quits after Fox News inquiry. Fox news Channel. Retrieved on 8 Maurice and Tina October 2018 downloaded from https://www.foxnews.com/world/unicef-tech-chief-quits-after-fox-news-inquiry 

Strickland, A., & Vaughan, S. (2008). The hierarchy of ethical values in nonprofit organizations: A framework for an ethical self-actualized organizational culture. Public Integrity (10), 3, 233-251.