Do You Launder "Tainted" Donations?

Is there any donation for which the source of would require your nonprofit to refuse? What do you consider tainted money? Gambling, soft or hard liquor sales, non-PC investments....? When would you say "no thank you" to a donor? Or does it matter, and why or why not? When should the nonprofit responsibly scrutinize the source of charitable donations?

Nonprofits need to ask these questions.

Usually it is the Christian or other organization that takes a moral stand on issues, or serves at-risk clients, that questions the source of their funding. Some foundations limit allocating investments to those funds they consider socially responsible. Boards are now developing donor policies that prohibit investments and/or donations perceived as not being in alignment with the organization’s core values. However, in this season of economic decline, can nonprofits afford to be picky? As a nonprofit CEO whose organizations serve those affected by addictions, I’ve had to wrestle with this question.

During a round-table discussion with other homeless shelter executives, this topic came up and the responses were from both extremes: While one CEO based in California’s wine country readily accepted the lead donation for a capital campaign from a famous vintner, a fellow CEO denounced that, stating in no uncertain terms that he would never accept such a tainted gift.

A personal experience came after giving a tour of our homeless shelter ministry to a local businesswoman who owned a high-end restaurant and custom jewelry and art gallery on upscale El Paseo Drive in Palm Desert, CA. Upon exiting our aging women’s’ shelter, with her eyes misting over, she exclaimed she was going to help the Mission build a new shelter. She created a fundraiser titled “Winefest: Celebrating Wine, Food, and Art.” She flew in top restaurateurs, vintners, and art for one night in her art gallery; and invited her clientele, including Stephanie Powers and Clint Eastwood . . . and underwriting the total cost of the event. At $500 a head, and exotic auction items from celebrity clients, she raised $750,000 in three years – enough to purchase 8 acres for a new shelter campus! How could we not accept such heartfelt charity, especially as it was her event, with little participation from Mission staff or board!

Or the call I got from Jesse James’ executive assistant asking if my organization would like to be the recipient of the annual West Coast Choppers charity motorcycle rally. Should I accept a $5000 gift from such an infamous character? (I did readily accept it, but that was prior to his life hitting the fan). These are examples of donor-owned and directed events – of which we were the recipient. I would not have necessarily created either event, nor sought out these donors to do so for us.

Have we considered what service and ministry we provide to donors in accepting their donations? Realistically, each nonprofit will have their own limit to undesirable funding. At some point that decision will have to be made – and such a decision should be made prior to having to make it. What should constrain donations to your organization: your mission, core values, media coverage that construes ill will with a major portion of your donor base – or that triggers community sensibilities? Does the questionable donation seek to control your program services or pull you off core purposes, or does it provide public notoriety to the donor?

I sometimes wish we had such a problem more often, as deciding whether to accept large donations . . . but somewhere in the midst of our policy and practices, we are making that decision daily without realizing it. There is a limit to what scrutiny we can provide into our donors’ charitable intentions. However, where there is clear intent of a donor to personally benefit or control, nonprofit executives and boards need to be willing and able to “just say no.” Otherwise, don’t look a gift horse in the mouth.