Professional Ethics Shared Interest Group

You work in the finance function of a nonprofit organization. A major donor offers a significant contribution that could fund critical programs for the next year.

However, during informal discussions, you learn that the donor's wealth may be tied to:

• Environmentally harmful practices
• Potential labor violations
• Ongoing legal investigations (not yet proven)

Leadership's stance:

• "This funding will help thousands of people."
• "We are not responsible for how donors make their money."
• "If we don't accept it, another organization will."

There is no formal donor due diligence policy in place.

You feel conflicted:

• Accepting the donation supports the mission
• But it may compromise the organization's ethical integrity and reputation
  
  

  Discussion Questions

  1. Ethical Boundaries

  • Should nonprofits evaluate the source of funds, or only the impact of their use?
  • Where should organizations draw the line when accepting donations?

  2. Governance & Responsibility

  • What role should the board play in donor acceptance decisions?
  • Should there be a formal donor due diligence policy? What should it include?

  3. Reputation & Risk

  • What are the reputational risks if the donor's activities become public?
  • How might this impact other donors, partners, or beneficiaries?

  4. Mission vs Integrity

  • Is it ever justifiable to compromise ethical standards to advance a mission?
  • How should organizations balance short-term impact vs long-term trust?

  5. Transparency

  • Should the organization disclose controversial donors publicly?
  • How transparent should nonprofits be about funding sources?

  6. Finance Team's Role

  • What responsibility does finance have in raising concerns about donors?
  • Should finance teams be involved in donor vetting, or is this purely development/leadership?

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Tala Khalifeh CMA
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Hi Tala that's a great question and a dilemma faced by many NFP 

I think firms should really exercise due diligence when accepting money because it would be in appropriate to accept money from illegal activities like money laundering, it would comprises the vision of the firm and raise legal consequences, imagine a hospital that offers to cure cancer for free but accepts money from drug dealers, a huge irony!!

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Mina Abd El Malek CMA
Student
Cairo,Heliopolis
Egypt
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1. Ethical Boundaries

• Should nonprofits evaluate the source of funds, or only the impact of their use?
• Where should organizations draw the line when accepting donations?

Yes, Nonprofits should evaluate the source of funds.

2. Governance & Responsibility

• What role should the board play in donor acceptance decisions?
• Should there be a formal donor due diligence policy? What should it include?
   There should be a formal donor due diligence policy.

3. Reputation & Risk

• What are the reputational risks if the donor's activities become public?
• How might this impact other donors, partners, or beneficiaries?

If it comes to public about the unethical income of the donor organizations , there is a higher chances of reputation loss among public.

4. Mission vs Integrity

• Is it ever justifiable to compromise ethical standards to advance a mission?
• How should organizations balance short-term impact vs long-term trust?

Never ever it's justifiable to compromise ethical standards to advance a mission.

Short term impact will have temporary benefits but long term trust is the everlasting one.

5. Transparency

• Should the organization disclose controversial donors publicly?
• How transparent should nonprofits be about funding sources?

The organization should disclose the controversial donors publicly  if legally required.

Nonprofits Organization should  have  policy to  collect funds from ethical companies only.

6. Finance Team's Role

• What responsibility does finance have in raising concerns about donors?
• Should finance teams be involved in donor vetting, or is this purely development/leadership?
• Finance should have vigil over the source of funds from the donors.
• Finance Teams should be involved in donor vetting.

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Dr. Babu I.Razack, MBA,CMA,ACMA, PhD
Chief Financial Officer, Coromandel Engineering Company Limited,Chennai
India, Mobile + 91 7397454425
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Original Message:
Sent: 04-05-2026 11:47 AM
From: Mina Abd El Malek
Subject: Ethical Dilemma: Questionable Donor

Hi Tala that's a great question and a dilemma faced by many NFP 

I think firms should really exercise due diligence when accepting money because it would be in appropriate to accept money from illegal activities like money laundering, it would comprises the vision of the firm and raise legal consequences, imagine a hospital that offers to cure cancer for free but accepts money from drug dealers, a huge irony!!

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Mina Abd El Malek CMA
Student
Cairo,Heliopolis
Egypt
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Original Message:
Sent: 4/5/2026 11:47:00 AM
From: Mina Abd El Malek
Subject: RE: Ethical Dilemma: Questionable Donor

Hi Tala that's a great question and a dilemma faced by many NFP 

I think firms should really exercise due diligence when accepting money because it would be in appropriate to accept money from illegal activities like money laundering, it would comprises the vision of the firm and raise legal consequences, imagine a hospital that offers to cure cancer for free but accepts money from drug dealers, a huge irony!!

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Mina Abd El Malek CMA
Student
Cairo,Heliopolis
Egypt
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This case is really worth a thought, as more recently in the corporate world, prominence is being given to ESG, Compliance, Sustainability, Governance, Inclusivity, and where Ethics is now part of brand equity, not just compliance..... However, for non-profit organizations, ethical capital sourcing means shifting toward a dual-lens approach:

• Impact of funds (what the money enables)
• Integrity of source (how the money was generated)

Non-profit organizations should understand that in today's environment, perception risk travels fast and can become a strategic threat multiplier. Eg: Disclosure of one controversial donor can outweigh multiple positive contributions.

The finance function is uniquely positioned as a second line of defence, and forward-looking finance teams:

• Are Stewards of organizational sustainability
• Flag ethical and reputational risks early

A very good example of an ongoing controversy surrounding the Jeffrey Epstein revelations and the universities and non-profits that were funded by him received public backlash, reputational damage, leadership resignations, and the return or reallocation of funds.

Even if funding supports legitimate programs, association risk can retroactively damage credibility!

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Dr. Zaheda Daruwala, CMA, CFE
Associate Professor, UAE.
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Hi Tala,

I think this is a very important point to discuss, as someone who works in non-profit, it is essential for our Mission, Values, Ethics, etc., to be aligned with our donors. Top management should ensure that before proceeding with the signing of any agreement. No Harm should be caused in the name of helping others under any justification.

Finance can serve as a second checkpoint to flag any ethical issues and should not accept being part of harmful acts. 

It's generally preferable for NGOs to disclose their donors because it strengthens trust, accountability, and credibility, all of which are critical when you're working with the public or serving vulnerable communities.

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Nour Fayad CMA
Other
Metn
Lebanon
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