Ethical Considerations in Grant Management

While most organizations attempt to follow good ethical standards regarding their funding, a few do not.
However, even a good agency every now and then hires a bad apple who strives to bend the rules or sabotage a
program. Ethical issues come in all shapes and sizes. They are dependent on the type of program and focus of
the funding. This article will explore the most common ethical issues related to grant funding and how to avoid
them.

Scenario 1 – Organizational or Personal Conflicts of Interest

An employee of an organization, who manages a subsidized caregiver program for homebound elderly, is
providing free services to an elderly family member who does not meet eligibility criteria for the program.
Organizational and personal conflicts of interest are an issue with any grant-funded program. Your organization
must have an agency policy prohibiting employees from personal gain associated with any funding source. A
“no tolerance” policy will provide the agency grounds for immediate termination if a conflict of interest
infraction occurs.

Scenario 2 – Evaluation Integrity

Suddenly realizing that not all clients have received client satisfaction survey, the supervisor responsible for
reporting the grant decides to inflate the number of responses to compensate for the low number of surveys
handed out.
Some would suggest that occurrences like the scenario are relatively rare; however, the misrepresentations of
evaluation data are usually compensating for someone’s large workload. It is common knowledge that non-
profit employees are over-worked and under-paid. Evaluation often becomes an afterthought next to service
provision. It is not a reasonable accommodation to misrepresent evaluation data in order to compensate for an
over-worked employee. Make sure the program staff have the capacity to perform the evaluations listed in the
grant proposal or grant requirements. If there is concern over organizational capacity, consider hiring an
evaluator or using volunteers, interns, or collaborate with another agency.

Scenario 3 – Procurement Standards

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An executive director is friends with another executive director of a local non-profit whose agency is having
budgetary difficulties. They strike a deal to form a partnership where the one non-profit will hire the other to
provide services to its clients for an inflated fee.
Procurement is an area where ethical issues are likely to arise. The most common infractions are favoritism in
awarding contracts, unfair solicitations, practices that limit competition, and failure to assist minorities in
gaining contract awards. If an agency is concerned about their procurement behavior, the agency can obtain a
copy of the OMB Circular A-110, which describes procurement standards for non-profits, at
http://www.whitehouse.gov/omb/circulars/a110/a110.html#40. An agency needs to have a policy on
procurement standards and they need to train staff to have an understanding of proper practices. It also may be
helpful to brief staff on special grant requirements that restrict certain procurement activities.

What to Do If You Discover an Unethical Practice

Upon discovering an unethical practice, report it immediately to a supervisor or the executive director.
Document the infraction, then an Ethics Committee should review the infraction and create an action plan to
address it as well as any future incidents. Action plans addressing unethical practices could include new agency
policies or procedures, quality assurance procedures, new hiring practices, and improved oversight. If your
organization does not have an ethics committee, it is not difficult to form one. The committee should include
staff, management, and board members. It may be helpful for the agency to adopt a Code of Ethics to guide the
decisions of the committee. Independent Sector.org provides a free copy of “The Statement of Values and Code
of Ethics for Nonprofits” at http://www.independentsector.org/members/code_main.html. This may be a good
starting point for developing your own.

Ethical issues do not need to become the monster under the bed, the things we fear but never see. Again, most
non-profits strive for ethical practices and as long as good people provide honest efforts, unethical practices will
be far and few. However, an agency needs to be prepared for the occasional unethical incident. Proper
oversight, quality assurance, grant compliance, and a thorough agency policy and procedure manual are good
proactive steps to ensure that your agency is ethical in practice.

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