A new report, “The Importance of Ethical Culture- Increasing Trust and Driving Down Risks” just  released by the Ethics Resource Center shows that organizations with strong ethical cultures find few employees feeling pressure to commit misconduct (4 % versus 15 % in organizations not found to have strong ethical cultures).  In addition, the report shows the rate at which employees observe misconduct by co-workers is nearly twice as high in weaker cultures (76 %) as it is in stronger cultures (39 %).  As the report asserts, “Study after study confirms it: the vast majority of people act based on the circumstances in their environment and the standards set by their leaders and peers, even if it means compromising their personal moral ideas.” While this report focuses on employees in for-profit organizations[1], nonprofit organizations can take their cue from these findings and embrace best practices for nonprofit ethics and accountability and work toward fostering a strong ethical culture. We’ve used this blog as a vehicle to encourage organizations to foster a strong ethical culture by utilizing tools such as:

• A strong whistleblower policy and confidential means for employees, board members, and volunteers to report financial improprieties  
• A code of ethics for your organization
• Grievance procedures, both for participants in the programs that you offer and the employees you hire
• A strong conflict of interest policy that is applicable to staff, volunteers, and board members
• Financial policies that are appropriate to your organization, particularly those for internal controls and purchasing

In addition, nonprofits should commit to the guiding principles of the Standards for Excellence® code. This is a requirement for all members of the Standards for Excellence Institute® and a step that any nonprofit organization can take.  But, we must remember that all of the best policies in the world will not ensure a strong ethical culture in any organization.  These policies and practices must be understood, used, and implemented day in and day out by the organization’s staff (at all levels), board  leadership and volunteers.  This report by the Ethics Resource Center points out that “actions and perceptions of top managers drive the ethical culture of the company and have significant impact on outcomes.” Organizations with strong ethical cultures are committed to strong ethical practices on an ongoing basis. They offer training and education to ensure that these practices are understood and followed and take great efforts to update their policies and practices when the need arises. Some even have special standing committees in place to focus on these and related issues.  People at all levels of the organization are consistently implementing these practices in their work and in their actions. Did you know? The Standards for Excellence Institute offers educational resource packages on topics to help foster a strong ethical culture in nonprofit organizations?  These packets are free and available to Standards for Excellence Institute® members through the members only section of our website. Hard copies are also available upon request. Not a member? Join now!

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[1] This report is based on the data and results of the Ethics Resource Center’s 2009 National Business Ethics Survey  which the Ethics Resource Center describes as “most exacting longitudinal research effort examining organizational ethics from the employee perspective.”  This longitudinal survey looks at national trends and tracks views of employees from all levels within organizations.  Responses for this survey included 2,852 employees in for-profit organizations.

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