Whether it is in the business, government, or non-profit sector, ethics seem to be on everyone’s minds these days. To ensure your supporters and community understand your organization’s values and the policies that uphold them, a formal code of ethics is essential.

Rules of conduct

You probably already have a mission statement that explains your values and goals. So why would you also need a code of ethics? Think of it as a statement about how you practice ideals. A code of ethics not only guides your organization’s day-to-day operations, but also your employees’ and board members’ conduct.

The first step in creating a code of ethics is determining your values. Start by reviewing your strategic plan and mission statement to identify the ideals specific to your organization. Next, look at peer non-profits to see which values you share with them, such as:

• Fairness and justice
• Commitment to the community
• Public accountability
• Adherence to the law

Also consider ethical and successful behaviors in your industry. For example, if your staff must be licensed, you may want to incorporate those requirements into your written code of ethics.

You may also want to include practical standards that address current issues or behaviors common to your workplace, such as cooperativeness and promptness. Although these principles are not ethical in nature, they are relevant to your organization’s image.

Formalizing policies

Now you are ready to document your expectations and the related policies for your staff and board members. Most non-profits should address such general areas as mission, governance, legal compliance, and conflicts of interest (such as paying board members for their services).

Depending on the type and size of your organization, also consider addressing the responsible stewardship of funds; openness and disclosure; inclusiveness and diversity; program evaluation; and professional integrity (including in fundraising and grant writing). For each topic, discuss how your organization will abide by the law, be accountable to the public, and responsibly handle resources. When the code of ethics is final, your Board of Directors needs to formally approve it.

Communicate and train

Next, it is time to communicate and implement the code of ethics. Training employees and board members can be particularly helpful because every non-profit faces issues that may result in illegal or unethical behavior. With a thorough understanding of the code of ethics, your staff and board members will find it easier to make the right decisions.

Be sure to present examples of situations that they will encounter. For example, what should an employee do if a board member exerts pressure to use his or her company as a vendor? You can integrate your ideals in your policies and procedures by addressing real-life scenarios and how your organization handled them. And if your organization does not already have one, put in place a mechanism, such as a confidential tip line, that staff, board members, and others can use to raise ethical concerns. If multiple complaints suggest that your organization has some serious ethical issues, create an open forum for stakeholders to discuss such issues without repercussions.

Review and revise

Your organization should review and revise its code of ethics once a year. Ask board members and employees how they think policies are working, and then brainstorm ideas for improving policies that aren’t. Also ensure that your organization continues to follow the law and act ethically by asking staff and board members to read and sign the code of ethics every time it is revised.

For more information, please contact Principal Todd Hamilton, CPA via e-mail or phone (502.882.4458).