** Developing an Ethics Program: A Case Study for Nonprofit Organizations

In 1991 1992, the United Way (UWA) system had a major scandal involving their president and CEO.  Charles E.M. Kolb, general counsel and secretary at UWA developed this 1999 case study designed to instruct nonprofits how to create and instill ethics programs.

In the introduction to "Developing an Ethics Program", Mr. Kolb notes that UWA's new code was significant for five critical reasons:

It was developed with significant early input from staff;

It applies to both staff and board volunteers;

Staff and board members are asked to sign the code annually;

Staff and board members are invited to review the code annually and recommend new language in light of recent experience; and

The code is reaffirmed annually and reflects any changes recommended by the staff and members of the board.

In the rest of his report, Mr. Kolb works through how to implement an ethics program, discussing the reasons for having a code of ethics as well as some of the critical components of an ethics program. Some excerpts follow:

On why to have a code of ethics -- "The principle rationale for having a code of ethics, regardless of what your business is, is to express a shared vision of the organization's beliefs, culture, and values."

On annual review -- "This critical step assures your organization that the language will continue to serve the expectations and needs of the organization."

On internal Implementation -- "An effective code of ethics reflects shared organizational values and, as such, expresses norms of conduct; it is not designed to be the organizational equivalent of a criminal code... careful thought should be given to how the code should be enforced..."

On governance review -- "No organization should tolerate what might be called the "no exit" situation -- when an employee feels trapped because he or she knows or believes that no one inside the organization is likely to hear his or her concern objectively. To address this situation, it is recommended that the organization's ethics program include an outside, independent audit, either annually or periodically."

On senior staff conflicts statements -- "Each year senior staff and key volunteers should be asked to sign a brief statement affirming that there are no conflicts of interests involved in carrying out their professional responsibilities."

On ethics Training -- "While staff may collaborate in developing the code, their work should be supplemented with formal training that explains the rationale behind having a code ... in the first place and explains how the specific language of the code relates to real-life problems experienced within the organization."

Mr. Kolb concludes by saying that for an ethics code to work, it must be taken seriously at all levels. "Taking the code seriously also means integrating its principles and rules into everyday behavior so that all people connected to the organization are guided by the code in their daily decision making." It is also important, he notes, to tell individuals outside the organization about the code.

**This study, which was published by BoardSource in 1999, is currently out of print.

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