In the last few months, high profile nonprofit institutions have come under intense scrutiny for ethical dilemmas pertaining to the stewardship of resources meant to support mission. In a three-part series of thought pieces, the Commonfund Institute will contemplate ever evolving ethical considerations among nonprofit institutions pulled right from current events. This is Part One in the series.
“No amount of charity in spending such fortunes can compensate in any way for the misconduct in acquiring them,” Theodore Roosevelt said after John D. Rockefeller proposed starting a foundation in 1909.
Recently, the Metropolitan Museum of Art announced it would no longer take donations from members of the Sackler family, the ultra-high net worth family that owns the large pharmaceutical company responsible for Oxycontin. The United States is currently in the throes of a national opioid crisis impacting millions of people across the county. Certain members of the Sackler family have been accused of suppressing knowledge of the addictive properties of the drug while still producing and promoting its use. In a statement from a New York Times report, Daniel H. Weiss, the President of the Met said, “On occasion, we feel it’s necessary to step away from gifts that are not in the public interest.”
Furthermore, New York State, in its civil complaint filed earlier this year against members of the Sackler Family noted “The Sacklers used their ill-gotten wealth to cover up their misconduct with a philanthropic campaign intending to whitewash their decades-long success in profiting at New Yorker’s expense.”
Although public scrutiny of trustees and politically driven protests of museums are not new, a mainstream museum or cultural institution outright refusing to accept a gift that is deemed misaligned with its values is exceptional. For many nonprofit boards, whether a community-based organization, a college, or a museum, philanthropic gifts— especially if they are connected to an influential patron or board member— are encouraged, coveted, and help to achieve the mission of the organization, supplying much needed resources to support operations. With that said, social media and the current socio-political climate have magnified scrutiny and increased the importance of ethical considerations of stewardship.
While gifts have historically been a way for the ultra-wealthy to accrue goodwill and reputational capital, today institutions that accept these gifts can be perceived as complicit if the donor is found to have engaged in bad behavior. Paying attention to how, and from whom, resources flow in to support the institution is the responsibility of the board as good and ethical stewards. Similar to how divestment and socially responsible investing focus on mitigating negative social impacts and promoting the positive ones in investment portfolios, vetting high profile and influential donors through an ethical lens is an important risk management consideration. From a governance standpoint, it becomes especially important when investment choices or the actions of a substantial and influential donor worsens or deepens the problem a nonprofit institution is trying to solve.
Cultural institutions are important actors in the promotion of cultural understanding, dialogue and diversity, and the transmission of culture and values to future generations. This is a noble and lofty calling, and for boards of trustees stewarding these institutional missions, it is time to consider ethical governance frameworks that serve as a lens and litmus test for any mission-related activities.
Is the duty of care, loyalty, and obedience to the material objects that make up the institution? To the donors? To the investment portfolio? Or to the mission that the institution espouses and works to advance? Given the recent controversies, cultural institutions should have processes in place to consider any person or investment allowed to support and fund the mission as an important expression of values.