Posted: February 4th, 2016

Suppose Tom offered to actually secure the donation if Prudence would give him 10 free tickets (face value: $ 10,000) to the institution’s forthcoming charity gala. Would it be a violation of the Code for Prudence to agree to the deal on these terms

Your help would be greatly appreciated again.

Post your analysis providing how you would handle the situation, your thoughts about the situation and any similar experiences you may have had.

Case Study 1: Finding Help with Big Donors

Prudence Goodall, CFRE, is vice president for development of a major community charitable institution . She is approached by Tom Dollar, an active financial planner who is well connected in the community. Tom tells her he has a client who is ready to make a major gift ($ 100,000) for tax purposes and is willing to make the gift to Prudence’s institution. Tom offers to reveal the name of the client to Prudence if she will ensure that the investments from the gift are made through Tom’s firm. A. Would it be a violation of the AFP Code of Ethical Principles and Standards for Prudence to agree with this deal? Answer: Generally, this scenario offends the aspiration section of the Code. Any member engaging in this quid pro quo behavior of agreeing to reward the source of a prospective major donor with future business is clearly not acting with integrity, honesty, and truthfulness. While the case does not fit into the narrow definition of “finder’s fees,” the same logic applies. The Guidelines under Standard No. 24 identify the three principles underlying the standard: (1) philanthropic giving is a voluntary action for the public benefit, (2) the seeking or acceptance of philanthropic contributions should not provide personal gain to anyone, (3) donors and potential donors must be protected from pressure or coercion. Paying Tom Dollar would amount to paying a fee for generating a gift. Agreeing to ensure that the funds were invested in Tom Dollar’s firm is an indirect form of personal inurement to Tom. B. Suppose that Tom offered to reveal the identity of his client if, in return, Prudence would list Tom as a benefactor donor (gifts of $ 5,000 or more) on the institution’s donor wall when the client makes the $ 100,000 gift. Would it be a violation of the Code for Prudence to agree to the deal on these terms? Answer: The analysis under section A applies to this scenario also, as it is another form of quid pro quo. By identifying a name of a prospective donor who ultimately gives a gift, Tom would be providing information, and this would be a violation of Standard No. 24, if the equivalent “value” of his information were treated as a gift-in-kind. Further, any recognition he would receive could be seen as a form of personal inurement. C. Suppose Tom offered to actually secure the donation if Prudence would give him 10 free tickets (face value: $ 10,000) to the institution’s forthcoming charity gala. Would it be a violation of the Code for Prudence to agree to the deal on these terms? Answer: Yes, whether Tom is compensated in cash, in future business dealings, in recognition, or in gala tickets, he is still expecting and receiving a perceived or real payment for finding the donor.