Nonprofit Sector Ethical Summary

Introduction The nonprofit sector is made up of over 1.5 million tax-exempt organizations in the United States (NCCS, 2016). These tax-exempt organizations consist of public charities, private foundations, and other types of nonprofits. In 2014, nonprofit share consisted 5.3 percent of the GDP (NCCS, 2016). The tax-exempt organizations that receive the greatest share of charitable contributions were religious organizations, followed by education institutions, and the human service organizations (NCCS, 2016). The most pressing ethical issue for tax-exempt organizations that receive federal funding is fraud.
Summary and Definition of Issue Currently over a million “nonprofits and religious organizations are charged with delivering many
The first component deals with moral sensitivity. The underlying ethical issue being confronted by tax exempt nonprofits who use federal funds for their operations is fraud. Fraud is an ethical problem that affects the organization, its customers, and tax payers. The second component of Rest’s model involves a moral judgement. Moral judgement addresses the right and wrong way to handle the issue at hand (Kachiroubas, Week 8, 2016). The right way in addressing this issue is to mandate nonprofits that rely on federal funding to create internal structures that will identify and discourage fraud. The wrong way of handling this ethical issue is by not addressing the problem. Letting fraud continue to be prevalent in the nonprofit sector prevents nonprofits from delivering services greatly needed by those individuals that depend on
Using Greenleaf’s Ethical Test doesn’t provide much guidance in helping to develop a policy that will address the ethical issue at hand. The Test does not push an individual to identify the core root of the issue or to define the problem appropriately. However, the test does serve to keep the in mind the consequences of putting into effect a particular policy. Nash’s 12 Question Model was also taken into account in developing a policy solution. Some of the advantages of using this Model are that it enables an individual to reflect on the core of the issue. An aspect not addressed in Greenleaf’s Ethical Test. Furthermore, it prompts an individual to think of how to include affected parties as part of the decision making process. Although Greenleaf’s Ethical Test is thorough in gathering facts, encouraging dialogue of individuals with different perspectives the Test fails in ignoring implementation of a policy. Developing a policy that will address an ethical issue is important. However, developing an implementation process is just as important due to the different consequences each action may have on different