Archive for the ‘philanthropy’ Category

Hiring the Donor’s Daughter

Nonprofit and charitable organizations face many of the same ethical challenges that other organizations face, but they may also bump into a few special problems from time to time.

As an example, consider the following HR dilemma, which was posed to me recently.

I work for a nonprofit organization in health research, and I’ve recently been told that I will be hiring and supervising a new individual whose parents are donating her salary for one year (it’s to be a one-year, limited-term position) in addition to making a sizeable donation. The hope is that, in time, the donors will make a significantly larger gift of a million dollars or more. The arrangement presents numerous challenges to me as a manager, since everyone in the upper levels of the organization agrees that the true nature of the arrangement can’t be revealed, but many employees will realize that the situation is unusual and will have serious questions about it.

I’ve presented my concerns to those involved, but the decision-makers are rationalizing their actions (they tell me it’s “for the good of the organization”), and asking me to embrace this “opportunity.”

Clearly, the mid-level manager here is in a tough position, caught between a rock and a hard place. The manager is being told, by those higher up, that this is the way things are. But the manager also has a team to manage, and the unorthodox hiring of this new “employee” may cause trouble.

Here are what I think are the relevant considerations:

1) I don’t think the basic arrangement itself is obviously unethical. The “employee,” here, is essentially a volunteer, being bankrolled by her father. A bit lame, for her, but if she provides the organization with some value, that in itself could be a good thing, in addition to the donation that her father is making and may later make.

2) Point #1 above assumes that this person will actually do some work, rather than just be padding her CV by means of this one-year position with a reputable nonprofit organization. If she’s just going to take up space, then her presence is inevitably going to be resented and hence disruptive.

3) Then there’s the question of whether this “hire” is affecting anyone else’s job. From what I understand, no one is being fired to make room for this new person. But even if no one’s job is immediately in jeopardy, it may have implications for who gets hired over the next year, who gets overtime, whose job is expanded in interesting ways, and so on. So other employees do have reason to be concerned.

4) The fact that senior management sees a need to hide what’s really going on, here, seems to be where the ethical problem lies. That part seems highly problematic. If this is a good “hire”, why not be transparent about it?

5) At a certain level, this is as much a “wise management” question as it is an ethics question. If (as seems to be the case) the current plan is bad for morale, then wise senior managers should realize that, and think this through more carefully.

All in all, I would suggest that the situation, as it is being handled by senior managers, represens a significant lapse in leadership. Their motives in accepting the deal — hiring this woman in return for a big donation — are reasonable enough. The mere fact that her hire wouldn’t go through the usual processes isn’t itself damning, provided that the net value to the organization is positive, and as long as no one’s rights are violated. Perhaps the ends here do justify the means — after all, we’re talking about the potential for a very large donation. But the fact that senior managers feel the need to keep the deal secret is a major red flag. Wise organizational leaders should work hard to make sure that, when compromises are being made, they are at very least compromises that they are able to defend, and about which they are willing to be transparent.

Business Obligations During Natural Disasters

As Hurricane Sandy bears down on Atlantic City, New York, and (eventually) parts of eastern Canada, thousands of businesses large and small are faced with dilemmas related to doing business before, during, and after a potential state of disaster. Certainly some businesses won’t have a choice, as flooding either wipes them out or makes access impossible. The NYSE and Nasdaq have both made the unusual move of staying closed for the day today (Monday).

But others will have hard choices to make, and no easy formula for making such choices is at hand.

Choice #1 pertains to the basic issue of staying open. Here, business owners need to balance the safety and security of their employees and buildings, on one hand, with the needs of their customers on the other. The weight given to the needs of customers must of course depend on just what you’re selling. If you sell water and flashlight batteries, a sense of social obligation ought to keep you open ‘as long as possible.’

The second choice has to do with the closely related question of whether businesses should require employees to work before, during, and after a natural disaster. Sometimes being at work will pose risks to health and safety, and sometimes the risk lies in getting to work. The transit closures that go with severe weather are a factor here, too. Lack of access to public transit can make it difficult, and sometimes dangerous, for employees to get to work. But then again, in some cases employees — especially ones earning an hourly wage — will prefer to work, in which case telling them to go home may be overly paternalistic.

The third question is about prices. In a reasonably free market, prices tend to go up when goods are scarce and when demand is high. And natural disasters have a way of both limiting supply and raising demand. As supply chains get cut off, it may be reasonable for businesses to raise prices somewhat in order to cover additional costs. But stores need to be careful to stay on the right side of the law — most jurisdictions have anti-price gouging laws that put limits on just how much you can raise prices in the wake of disaster.

All three choices involve difficult decisions about how to balance the competing interests of various groups. But in terms of fundamental motivation, it’s also worth pointing out that staying in business as long as possible can be a great way to build goodwill. A business that is there for its community in times of crisis is likely to reap rewards for a long time to come.

The business I happen to work for — Ryerson University — is an unusual kind of business when it comes to questions like these. I asked our VP Administration & Finance, Julia Hanigsberg, about the criteria Ryerson uses to decide whether and when to close.

“The safety of our community is the primary consideration on whether to close the university or cancel classes during extreme weather conditions or other emergency situations,” Hanigsberg told me. “Our Integrated Threat and Risk Assessment team monitors the situation by scanning publicly available sources and consulting with expertise available in the broader public sector about road conditions, availability of public transit, information from Emergency Services etc.”

One particularly interesting point that Hanigsberg made had to do with the fact that, really, the university never fully shuts down. Hanigsberg says: “Unlike most businesses, even when we ‘close’ the university is operational 24/7 with students in residence, research labs operational etc.”

The same is true for hospitals, of course, as well as other public services like shelters. But the same is true for businesses such as hotels and kennels and airports. Anything charged with the 24/7 sheltering and feeding of humans or animals — is unlikely to shut down entirely. The same obviously goes for essential services, such as police, fire, and ambulance. They’re not businesses in the traditional sense, but they face the same dilemmas, albeit with a much stronger public service impetus pushing them to keep the wheels turning.

The inability to shut down entirely brings special obligations, of course. For starters, it puts a premium on planning for disasters. Businesses that can’t shut down need to have plans in place, and need to train employees both in safeguarding their own health and safety, and in looking out for the customers who may be entrusted to their care in the most trying, and ethically challenging, of circumstances.

How Can Business ‘Give Back’ to Society?

A recent story quotes Fred Green, the CEO of the Canadian Pacific Railway, as saying that he won’t sacrifice safety in pursuit of profits. In his words, he won’t violate the terms of his company’s unwritten ‘social licence’ to operate.

The notion of a ‘social licence to operate’ reflects the notion that in order for a business to be successful, in the long run, the support and goodwill of society is essential. This includes everything from the willingness of a local community to walk into your store to buy things, to the willingness of neighbours to put up with the noise of your trucks driving past, to the willingness of duly elected representatives of the people to pass the kinds of legislation that makes modern commerce possible.

This raises the question: just how does a company earn, and maintain, its social licence to operate? How, in other words, can — or should — a business show its gratitude, or pay its debt to society?

There are a number of ways, and they are not mutually exclusive.

One option is through charitable donations. Corporate philanthropy is as old as the hills, but is generally pooh-poohed by proponents of modern CSR, who favour instead things like collaborative efforts to build local skills and capacity.

Another way is by paying special attention to social impacts, beyond what is required by law. For example: selling junk food is perfectly legal, and arguably fully ethical, at least on a case-by-case basis. But a food seller that looks to the aggregate social consequences of its junk-food sales, and tries to mitigate negative impacts, might be said to be doing so as part of its social licence to operate.

Another way is by paying its taxes. That might seem trivial, a mere matter of following the law. But given the complexity of the tax code, the number of loopholes, and the size of some companies’ accounting departments, a commitment to paying your fair share is probably non-trivial.

Another way a company can earn and keep its social license to operate is by a commitment to looking for ‘win-wins.’ In this category, we could place various efforts at seeking energy efficiency and waste reduction. Of the many ways a company can look to save money, some are socially valuable, and opting to pursue those over others might be seen as supportive of a company’s social licence.

And finally, there’s the old (and true) point made by Milton Friedman years ago, which is that companies contribute socially by making goods and services that people want. What does Merck ‘give back?’ It gives us pharmaceuticals that relieve pain and suffering. What does BP contribute? It finds and refines the oil without which our economy would literally grind to a halt. What does my local coffee shop do for the community? It provides a place to get in out of the rain, have a cup of coffee, and chat with a friend.

Now it’s quite likely that no one of these is sufficient. Each of them is a plus, and counts towards a company’s social licence, but likely some combination is necessary. From this range of options, each company chooses how it thinks it can best earn and keep its social licence to operate. Different mixes will make sense for different companies in different industries. There’s no one right combination that will let a company merit its social licence. Innovation and variety are a good thing, here. Let a hundred flowers blossom!

Ice Cream, OxyContin, and the 3 Big Questions of Business Ethics

Sometimes it takes a really minor story to illuminate the basic issues at stake in business ethics. Like, for instance, a recent story about a guy selling both ice cream and serious street drugs out of his New York city ice cream truck. Here’s the story, by Jonathan Allen for Reuters: Ice cream vendor gets prison for selling drugs with treats.

That story highlights nicely one of three really fundamental questions that must be asked by anyone seriously interested in business ethics.

The three big questions of business ethics are as follows:

  • 1) What may I do, and what may I not do, in attempting to make a living?
  • 2) In what ways do my obligations change when I act on behalf of others, including employers, shareholders, etc.?
  • 3) What should I do when I see inappropriate business practices that don’t directly affect me?

Each of these “big” questions can of course be subdivided into an entire category of questions. Question 1, for instance, implies a whole range of more specific questions — not just questions about the basic ethics of commerce (Can I lie, cheat or steal? No. Can I exaggerate, or put important details in fine print? Not so clear!) but also questions about Corporate Social Responsibility and corporate philanthropy. The second question covers all the issues that crop up once businesses are staffed by more than a single individual. And the third concerns third-party critique, the work of consumer advocates, and government regulation.

The news story cited above illustrates beautifully Question 1, the question of what you can and cannot do to make a dollar. Louis Scala was, after all, just trying to make a living. There’s nothing wrong with that, of course. The catch was the method he chose.

Scala chose to sell two products. One was soft-serve ice cream, a dessert treat sold primarily to kids, who just can’t get enough of the stuff. The other was OxyContin, a highly-addictive narcotic, sold primarily to adults who just can’t get enough of the stuff. Selling the former is considered a reputable way to make a living. Selling the latter (out of the back of a truck!) is what earned Mr. Scala three and a half years in jail. But then, neither of those products is uncontroversial. Ice cream isn’t exactly healthfood, and child obesity rates are on the rise. But on the other hand, it’s a harmless treat, when consumed in moderation. But on the other hand, it’s not always consumed in moderation. But on the other hand…you get the point.

Figuring out what constitutes a legitimate way to make a living — taking into consideration all reasonable details — is far from straightforward. But realizing that the questions we want to ask about business ethics all fall under one or another of the fundamental headings listed above is, I think, a useful bit of mental bookkeeping, which is increasingly important in a world where criticisms, and defences, of business practices are becoming more and more diverse.

How Should Companies Memorialize 9/11?

The day has passed, but it’s a question that’s sure to arise again — just under a year from now, and the year after that, and so on.

What can, or should, businesses do with regard to a relatively recent tragic event like 9/11? The cultural significance of an event like 9/11 is hard for anyone to ignore, especially on the tenth anniversary of that fateful day. And companies thrive on raising their profiles, a feat that can most readily be accomplished by riding the coattails of cultural significance. But when the culturally-significant event in question is a tragic one, corporations need to tread carefully.

This general topic can be split into two more specific questions:
1) Can or should companies use references to an event like 9/11 in their advertising?
2) Can or should companies do something to memorialize such events?

The pure advertising question seems easy. Using references to 9/11 in ads is tacky, if not outright unethical. (For some examples, see this nice slideshow by Jim Edwards for Bnet: “10 Advertisers Exploiting the Sept. 11 Attacks to Push Their Brands”.) Profiting from other people’s pain and grief just isn’t a socially-constructive business strategy.

The problem of course is that it’s hard to separate questions 1 and 2. Naturally, any effort on the part of a company to memorialize an event is likely to be seen as an attempt by that company to raise its own profile.

But memorializing an event like 9/11 in some way seems unobjectionable, and perhaps even obligatory. The hard question is what form such memorializing should take. The best ways, perhaps, are the small-scale and personal ones. Giving employees time off work to attend memorial services, for example. The same principle applies to expressions of sentiment: small and local seems best. A simple sign on your front window that says “Never Forget 9/11″ seems to make the point best — better than, say, splashing that same slogan across millions of product packages — and is much less liable to engender suspicions that the expression of sentiment is self-serving.

As an final point, notice that this is precisely the kind of question for which the term “corporate citizenship” provides the right fulcrum. Some people try to use that term to cover all questions of corporate right-and-wrong , but that’s a mistake. Not all obligations or rights are rooted in a weighty concept like citizenship. But this one is. How we respond to national and international tragedies is clearly an issue of citizenship, in the full political sense of that word, the sense that implies a set of rights and responsibilities related to participation in public life. An alternative word like “sustainability,” which some people take to encompass all ethical questions, just doesn’t cut it here. How companies choose to respond to the anniversary of an event like 9/11 says a lot about how they see themselves as corporate citizens, as participating members of a still-grieving community.

Charity: Does Apple Do its Share?

Forget what your accountant tells you is tax-deductible. What counts as a charitable donation, ethically?

There have been a few rumbles around the internet recently about the lack of corporate philanthropy at Apple Computers, and about now-retired CEO Steve Jobs’ own lack of philanthropic donations. See for instance by John Cary and Courtney E. Martin, on CNN: Apple’s philanthropy needs a reboot

Apple’s…charitable identity — or egregious lack thereof — disappoints us. It’s time for Apple to start innovating in philanthropy with the same ingenuity, rigor and public bravado that it has brought to its every other venture….

Cary and Martin acknowledge Apple’s participation in the Product Red program (which has raised tens of millions for relief of AIDS in Africa, and for which Bono recently praised Jobs). But Apple made $14 billion in profits last year, and Cary and Martin think it’s pretty clear that Apple is obligated to give some of that away. They’re not so clear on where that obligation comes from, except to point to precedent within the computer industry. Both Google and Microsoft have well-established philanthropy programs — both of which, as Cary and Martin note, have drawn fire. Hmmm.

The interesting thing here is that Cary and Martin’s criticism implicitly raises interesting questions about what counts as philanthropy.

Take, for example, Apple’s sizeable donation to the fight against Proposition 8, California’s anti-marriage-equality effort. Was that a charitable donation, or a piece of political activism? Is there a difference?

Apple has also been known to donate computers to schools, and regularly gives students (and, ahem, professors like me) a discount on computer purchases. Of course, critics will propose that those are really marketing gimmicks. But then, no sane person thinks that corporate philanthropy stops being ethical when it’s a win-win proposition.

But then, back to the issue of why. Why are corporations obligated to give to charity? One group of critics is fond of pointing out that profits belong to shareholders, and so when corporate execs donate corporate funds to charity, they’re giving away other people’s money. And even within the modern Corporate Social Responsibility movement, the saner folks are at pains to emphasize that CSR isn’t about charity. It’s about making some sort of social contribution, preferably one that makes use of a company’s special capacities and core competencies.

And as a recent piece in The Economist pointed out that, if you’re talking about doing good in the world, you really must look at what Apple has done to put beautiful, highly-functional, productivity-enhancing devices in the hands of millions of consumers. That’s not exactly the same as feeding the world’s starving masses, but then neither is a corporate donation to build an opera house, or to get your company’s name on a plaque in the lobby of the local business school. The questions we ought to be concerned with are questions about a corporation’s net impact on the world, and the methods it uses along the way. A focus on corporate philanthropy risks obscuring both of those questions.

Should a Catholic Charity Take Money from Hooters?

This is twice in two weeks that I’ve blogged about Hooters. I swear it’s a coincidence.

From MSNBC: Catholic charity says ‘no’ to Hooters fundraiser

St. Patrick Center, a Catholic charity that provides assistance to homeless people, has canceled a Thursday fundraising “Dine and Donate” event with a downtown Hooters restaurant after drawing complaints that such a collaboration wasn’t in keeping with the Christian faith….

This is not exactly an isolated incident. Charities of all kinds have to decide, on a pretty much constant basis, who they’ll accept money from and who they want to associate with. In some cases, the struggle is an internal one; in other cases, it’s the result of external criticism. (Just look at the criticism UNICEF faced for making a deal with Cadbury.)

It’s worth pointing out that a charity faces two different issues, here. One is simply the source of money. A charity might consider money from certain sources as ill-gotten gains. In such cases, the money from certain sources is going to be unwelcome, even if donated very discretely. In other cases, the issue is publicity. Some charities might be willing to take money from anyone, in principle, but worry about the impact of having their name associated with — well, with Hooters for example. These two issues (dirty money and a dirty reputation) are separable, at least in principle. But secrets are pretty hard to keep secret, especially in an era in which transparency is valued and in which corporate donors are relatively eager to publicize their good deeds to spit-shine their image. So really, the key concern is liable to be reputation.

And in terms of reputation, the anything-goes strategy seemingly suggested by some idealists is likely to be fatal to just about any charity. Those who think it’s “obvious” that St. Patrick Center, for example, should be happy and eager to take Hooters’ money should ask themselves: if Hooters is OK, how about the local strip club? How about a hardcore porn magazine? I’m not at all saying those various enterprises are all alike, in all morally-relevant ways. I’m just pointing out that most people will see some place where they would like a line drawn. And ethics bleeds into prudence here. Most charities have reputation and goodwill as their only real capital. A company that makes cars can recover from scandal by, well, making good cars. You don’t have to love the company to love the cars. But an organization whose only real asset is its reputation — well, sully the reputation and you’re pretty much sunk.

But then, neither can your typical cash-strapped charity afford to be too prissy about sources of cash. Look too closely at any donor and you’re very likely to find skeletons in the closet.


Thanks to Tara Ceranic for showing me this story.

Charity Porn

Some people think the kind of consumer-driven charity represented by the (Product) Red Campaign is a bad thing. “Consumerism isn’t the answer,” they say, “It’s the problem.” You can’t (or shouldn’t?) help those less fortunate by pandering to Western culture’s base, consumerist instincts, say the critics. Well, if you’re one of those critics, brace yourself: a Japanese porn production company (Natural High) is now making “charity porn.” According to the folks at Jezebel:

[T]he Natural High performers have sex with impoverished local Africans on film. The director gave about $11,000 to a Kenyan charity, distributed some corn and free T-shirts to the locals in the area and then — reportedly — gathered up a few local men to have sex on tape with their performers…. For every DVD they sell, the company plans to give another $10 to the same charity.

Just about everyone I’ve read seems to find this project distasteful, but at least some are uncertain why they feel that way. Others think the wrong here is obvious — but they don’t necessarily do a good job of explaining that. The most common charge seems to be “exploitation,” though as I’ve said here before, it’s much easier to launch a charge of exploitation than it is actually to state clearly what that means. There are worries about playing to cultural stereotypes about the dangerous sexual potency of the ‘naked savage,’ etc. But, just to play devil’s advocate, here, there’s also an infusion of cash happening that wouldn’t be happening otherwise. It’s not clear how we should weigh the kind of diffuse harm (or insult?) done by such portrayals with the small-but-real benefits of these cash donations.

One last point: surely some regular readers will have noted by now the parallel between this story and last week’s blog entry Burger King’s “Whopper Virgins” campaign. (See: Advertising, Documentaries, and Cultural “Exploitation”.) In both cases, someone from a developed nation visited a less-developed nation, perhaps bringing some benefit but with the primary mission of deriving benefit, for themselves, precisely from the “primitive” image of the locals. It’s food for thought.
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Found via Marginal Revolution who got it from Wronging Rights who got it from Jezebel, etc.

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