ABSTRACT
Nonprofit organizations generally escape the kind of ethical scrutiny directed at government and business, presumably because non-profits have neither the power of the state nor the economic self-interest of the market. However, recent scandals involving United Way of America, NAACP, Goodwill Industries, and other non-profits have served as a reminder that ethics is an important issue for non-profits as well as for other types of organizations. One could even argue that non-profits, far from being ethically exempt, need ethics even more than business or government. While all organizations depend to some extent on constituency trust, non-profits critically depend on their trust relationships with clients, volunteers, donors, and other constituents, especially since it is often difficult to measure the quality and effect of non-profit services (religious, counseling, social work, health, education, advocacy). Hansmann (1980, 1987) argues that this “information asymmetry” helps explain why people seek such services from non-profit providers, which have little or no economic incentive to reduce quality. Fundraising experts (e.g., Mixer, 1993) report that long-time trust relationships are essential to soliciting major donations.
