Shocking Fundraising Behavior from Nonprofits Captures Media Attention

Nonprofit hospitals across the country have made disturbing news headlines recently. Sadly, while medical staff continue to provide heroic patient care, many of the recent news stories deal with unethical fundraising behavior that puts all nonprofits at risk. Consider these two items:

  • Hospitals across the country have given major donors special, early access to the COVID-19 vaccine.
  • In a story unrelated to the coronavirus, one hospital fundraising office has offered medical staff bonuses for referring “Grateful Patient” prospects.

While those news items involve healthcare organizations, all charities should be concerned. Let me explain. When some nonprofits behave badly, it reflects on the entire nonprofit sector with the potential to erode public trust and, therefore, support. There is ample research, as well as anecdotal evidence, that reveals that the fundraising efforts of virtuous charities can be harmed by the unethical behavior of unrelated nonprofit organizations.

Let’s look more closely at what has occurred recently:

MAJOR DONORS GIVEN EARLY ACCESS TO VACCINE

Initial excitement over the release of COVID-19 vaccines has given way to frustration as only 18 percent of the US population has received the first dose with confusing sign-up procedures and long lines greeting many people.

“But one group has gotten a head start in receiving the coveted shots: people who’ve donated money to hospitals distributing the vaccine,” according to a report in MarketWatch.

Ethical_Decision_Making_Article.28164930 AFP statement major donor vaccinations Feb 2021 final AFP Statement Grateful Patient Fundraising March 2021 final

According to reports, hospitals across the nation have been giving favorable treatment to major donors including Storment Vail Health (Kansas), Overlake Medical Center (Washington), Hunterdon Medical Center (New Jersey), MaineGeneral Health (Maine), and Garnet Health (New York).

Authorities in New York have launched a probe into Garnet’s actions to determine if any laws were broken. While evaluating whether or not laws were broken, it is important for us to also consider whether the actions of Garnet and other hospitals are ethical or unethical.

“As we see numerous reports of line jumping and favoritism, any situation that could lead to distrust in the fairness of the vaccine allocation process needs to be proactively managed. Redeploying staff to help with vaccination is reasonable, but care should have been taken to avoid [MaineGeneral Health] fundraising staff connecting with prior donors on this,” Holly Fernandez Lynch, an ethics professor at the University of Pennsylvania’s Perelman School of Medicine, told the Bangor Daily News.

The Bangor Daily News added, “Medical ethicists said there were many good reasons for MaineGeneral and other hospitals to test processes before opening wider clinics, but even well-intended efforts involving philanthropy staff and donors can be seen negatively.”

Medical ethicists weren’t the only ones to weigh-in on the situation. The Association of Fundraising Professionals, the largest community of charities and fundraisers in the world, has released the following statement from President and CEO Mike Geiger, MBA, CPA:

The idea of hospital systems, or any charity, ignoring protocols, guidance or restrictions—regardless of origin—and offering certain donors and board members the opportunity to ‘skip the line’ and receive vaccinations ahead of their scheduled time is antithetical to the values of philanthropy and ethical fundraising….[emphasis added]

Offering vaccinations to major donors, and not to populations with the greatest need … destroys public trust—to say nothing of the possible impact on constituents of the charity who don’t receive the appropriate vaccinations or medical attention in time.…

AFP, and the 26,000 members in our community around the world who represent nearly every charitable cause imaginable, condemn this activity in the strongest manner possible. It is unethical and inequitable, and we call on all health systems and all providers of vaccinations to deliver this service in a manner that is fair and equitable for the people they serve and consistent with procedures developed by the Centers for Disease Control and all applicable levels of government.”

Some hospitals around the country have behaved unethically, violated the law, or both. However, even those who may have a legitimate explanation for their actions and who have done nothing wrong may still be giving the appearance of having done something unethical involving their interactions with major donors. That’s still a big problem. As the AFP Code of Ethical Standards states clearly:

Avoid even the appearance of any criminal offense or professional misconduct.”

When hospitals give major donors special, early access to the COVID-19 vaccine, it can lead to any number of problems including:

  • erosion of the public’s trust in the vaccination process,
  • upsetting other donors who were not granted the special opportunity,
  • disturbing other donors who recognize the scheme as unethical,
  • creation of an atmosphere where donors expect a quid pro quo moving forward,
  • triggering probes by government authorities,
  • further erosion of public trust in the vaccination and fundraising processes as news of government investigations circulates,
  • putting the health of others at risk.

Another potential problem is that when one nonprofit breaks the law and/or acts unethically, it doesn’t just compromise the public’s trust in that organization. Instead, it can negatively affect trust and confidence in the entire nonprofit sector resulting in less giving. This phenomenon was well documented years ago during a charity scandal in Scotland.

To assist hospitals who have concerns about having awkward conversations with major donors, the Association of Healthcare Philanthropy has created a helpful guide for fundraisers to provide a starting point to help with such conversations. You can find the guide by CLICKING HERE.

BONUSES FOR REFERRING FUNDRAISING PROSPECTS

Another nonprofit hospital has made headlines recently for the wrong reason. While the news story involving Philadelphia’s Thomas Jefferson University Hospital has nothing to do with COVID-19 vaccination, it does raise the issues of fundraising ethics, patient privacy, and the nature of the doctor-patient relationship.

“Some doctors at Jefferson Health, one of the region’s largest medical networks, are pushing back after being asked to refer at least one ‘grateful’ patient each month to the system’s fund-raising office, a practice they said they were told could impact the size of their annual bonus,” The Philadelphia Inquirer reports.

The Inquirer further revealed:

Jefferson said in a statement that it does not require physicians to make referrals and does not penalize physicians for not participating, but that there are departmental goals. ‘Only department chairs (not every member of our medical staff) are asked to achieve department grateful patient referral targets in order to draw more funds for department use on research and education initiatives,’ said John Brand, Jefferson’s chief communications officer.”

When I phoned the fundraising office at Jefferson seeking clarification and information about whether the practice is continuing, I was told by Steve Smith, Senior Vice President, that he would have to route my information request through the communications office. I sent him a follow-up email with my questions as he instructed. In addition to my questions, I disclosed that I’m a Jefferson patient as well as a blogger. I have not received any reply.

After reviewing news reports, AFP’s Geiger issued the following statement:

Recent headlines about hospital systems offering bonuses for departments or doctors who refer patients as potential donors, or requiring a minimum number of referrals each month, create mistrust in charitable institutions and violate ethical fundraising standards.

…creating a system that requires a certain number of patient referrals by a doctor to the fundraising department each month or year, or that bases salaries or monetary rewards on such referrals, violates several standards of AFP’s Code of Ethics.”

While Grateful Patient campaigns are often an important, legitimate source of support for hospitals, Jefferson’s bonus system is problematic for a number of reasons because it:

  • violates patient privacy and trust,
  • alters the doctor-patient relationship,
  • pressures doctors to make referrals,
  • puts doctors into a potential conflict of interest,
  • risks alienating patients from their doctor and/or the hospital,
  • jeopardizes the public’s trust in the hospital as its actions are viewed as unethical.

While the news stories about hospitals are problematic, the ethical fundraising challenges are not unique to hospitals. Any charity can slip into unethical behavior if it offers inappropriate privileges to wealthy donors or if it provides bounties for the identification of donor prospects. It is every fundraiser’s responsibility to act ethically. Furthermore, fundraisers have an obligation to encourage their colleagues to act ethically. This is essential for the organization, donors, and those the organization serves. It’s also essential for the nonprofit sector at large.

Even if you are not a member of AFP, you are still ethically bound by its Code of Ethical Standards. As the largest international group of fundraisers, AFP sets the ethical map by which we all should be guided. Failure to do so can harm one’s own integrity, hurt fundraising efforts, harm all fundraisers, damage the entire nonprofit sector, and invite unwanted government intervention. We have a professional obligation to adhere to the highest ethical principles and to vocally speak out about those who fall short.

That’s what Michael Rosen says… What do you say?

UPDATE (May 9, 2020): Thomas Jefferson University Hospital announced that it is reversing its grateful-patient referral bonus program for physcians. Considered an unethical practice, according to the Association of Fundraising Professionals, a number of doctors had objected to the policy and the conflict of interest it created. To learn more about Jefferson’s policy reversal, click here.

2 Comments to “Shocking Fundraising Behavior from Nonprofits Captures Media Attention”

  1. Michael, thank you for keeping the focus on the importance of ethical fundraising. It’s more important than ever in these challenging times for the professionals in our profession.

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