Nonprofit institutions often face difficult decisions when their donors or donations become tainted as a result of a scandal. Charities, hospitals, universities and other non-profit organizations occasionally face the ethical challenge of what to do when one of their donors becomes tainted. A donor’s negative reputation easily taints a gift. A ‘tainted donor’ is one who was previously a clean benefactor but has become socially unacceptable after a scandal. An example is David Radler who made donations of $1 million to Queens University in Kingston. The University apparently returned the amount after Radler pleaded guilty to committing fraud in the Hollinger case in the Chicago court. Money given in donation that was actually derived illegally or through a socially unacceptable manner is ‘tainted donation.’
Once a gift becomes tainted, the institution must make the decision whether to refuse or to keep the gift. Nonprofit organizations have three options to tackle the situation of tainted gifts. One option is to keep the donor’s money and name. The second option is to return the donation and remove the name. The third option is to adopt a compromise position, i.e., to do nothing. A popular suggestion to tackle such a situation is to have a strong institution policy. Many institutions tend to follow the step to return the money when the nature of the charges involving their donor is highly incompatible with its core values, beliefs, and activities. It becomes more or less an ethical obligation to return the money. Still there are many institutions that choose to keep the money because the nature of the charges is not against what they stand for. Universities top the list of having received the most number of donations from individuals with current, future or implied legal difficulties. Many Universities have returned tainted donations and donations from tainted donors, whereas there are many who have kept the money with themselves in favor of their own needs.
Non-profits should carefully screen and examine the donors and their background before accepting any kind of donations, grants or gifts. This can reduce the dilemma of the institutions although the institutions will be left with the three options if the donor gets tainted subsequently.
Sources:
The Globe and Mail
Nonprofit Quarterly
