Wednesday, August 11, 2010

Accountability, Integrity, and Theories of Ethics

In my last several posts, I have raised several questions and thoughts to which I would like to return in this post
. The first is: The real question, it seems to me, is how is a charity, or some other NGO or CSO going to live and function with integrity in a society and in an era in which these challenges drive most of the thinking and acting in the world today? And recognizing that organizations are simply legal entities, how are we as leaders in the sector, including leaders of NGOs and CSOs, as well as of charity monitoring organizations, going to lead with integrity when there is so much that works against us. Does a focus on transparency and accountability, when those terms of devoid of any meaningful substance and understanding, undermine our consideration of what is really important in terms of ethical conduct in how an organization is governed, led, and managed? The second is related: When we speak of obligations to be transparent, accountable, and to act with integrity, are we really addressing the obligations of our public benefit organizations, or are we thinking that whatever obligations exist in such an organization, they exist derivatively?

There are three ideas that belong to the discipline of ethics. First, ethics always includes a theory of obligation. It is the basis on which a person or organization determines what it ought to do and what it ought not to do. In other words, theories of obligation concern the moral evaluation of actions as right or wrong, obligatory, permissible, or forbidden. Thus, the theory of obligation is what allows a person or organization to make moral judgments in a decisionmaking structure. Secondly, ethics always involves a theory of value. In other words, it answers the questions: What makes something good or valuable? What makes something bad? How does one place value or worth on something? What is the relationship between the values one holds and the decisions one makes? Third, ethics always deals with a theory of motivation. For example, what ought to be the self-conscious thoughts that go through a person’s mind as one does one’s duty, or as one applies one’s values in the moral decisonmaking.

In an earlier post, I raised the question as to whether "accountability" could be regarded as a moral virtue. Having said that, however, I don't mean to suggest that "accountability" should not be evaluated within the discipline of morality and ethics. It seems to me that if we are going to think of accountability in terms of morality or ethics, we should evaluate what makes up accountability on the basis of some theory of obligation, some theory of value, and some theory of motivation.

While there are different approaches, for example, to discerning the application of an appropriate theory of obligation, such an evaluation of accountability should at least account for a theory of obligation. Thus, it would make a difference if the theory of obligation, or duty theory, is one based on one of the categories of deontological theories on one hand, or on one of the consequentialist or utilitarian theories on the other.

Similarly, if one is to evaluate the reason for "accountability," it seems that there should be some consideration of the appropriate value theory that would require an organization to be accountable. Is accountability based on an intrinsic value, that is, on the basis that it is good in and of itself apart from any other consideration? Or rather, is it based on extrinsic or instrumental value, that is, on the basis that it has the capacity to produce something of value, such as, transparency, so that the decisionmaking process and operations of the organization can be clearly seen and understood by those outside the organization, and thereby increase the level of trust between donors and other stakeholders, and the charity itself?

What we often see missing in any discussion of integrity and accountability, whether in the case of governments, commercial or market organizations, or civil society organizations, is any discussion that addresses the theory of obligation. Rather, the discussion in the political and public discourse almost always centers around the use of the word, values, instead of the use of the words, ethics or morality. Thus, when we hear someone assert that the policy of a political candidate, a political party, or organization is based on certain values, does this have any meaningful ethical content?

Briefly, value theory, which is the philosophical discipline of axiology, addresses the various ways to understanding how, why, and to what degree humans should value things. Values are those things that are important and are valued by someone, who can be an individual or, collectively, an organization. In sociological terms, value theory is concerned with personal values that are held by a community or organization. Thus, different groups might hold to, or prioritize, different kinds of values that influence human behavior.

For example, I find listed on charity websites what are regarded as the core values of the charity, such as professionalism, caring, teamwork, loyalty, and the like. These are great values, but they don't say anything about an ethical duty to act, or refrain from acting in a certain way. They may be great goals, but they say nothing about whether the organization is acting with integrity, is transparent, is accountable, or whether or not there is any basis on which to judge whether what the organization has done is good or bad, is worthy of praise or is worth of opprobrium.

In the late 1980s and early 1990s, much of the political discourse in the United States addressed the subject of "family values," as something worthy to be advanced by the political campaigns or by the national or state governments. This platform essentially dealt with the role of the family in society, where the family was defined as a man and woman married to each other raising children within the family that were well-behaved, educated, and perhaps civically minded.

If values are the embodiment of what an organization values and stands for, they are also, or should also be, the basis for the behavior of all the members of that organization. If, however, the members of this organization do not share and have not internalized the values of the organization, there is a disconnect between the organizational values and the individual values. Assuming that an organization's integrity, transparency, and accountability are derivative, this disconnection between organizational values and individual values results in a dysfunctional organization in which there can be no real accountability, either internally or externally, and thus, no trust between the organization, as an organization, and its donors and stakeholders.

What is important to understand is that if ethics has to do with conduct and decisionmaking, the emphasis falls on the human will. It is the will, after all, that implements our choices. In fact, if we were to define “choice,” we might say that a choice is the mental discernment that predisposes us to a certain set of actions and that this predisposition will ultimately be implemented in an act of our will.

Once we have defined what belongs to the concept of conduct, and particularly, to the theory of obligation, it is important to decide what kind of methods are available in deciding what kind of ethic a person or organization should hold. There are a number of theories or methods available, especially in the philosophical literature.

The first is authoritarianism. In this case, all that one must decides is what authority one will accept. Thus, once an organization decides what authority, if any, it will accept, all it must do is check that authority to determine what that authority says that the organization can do, or cannot do, and then do it or refrain from doing it.

The problem is that there is a plethora of authorities that are available to us every day, all of which can assert claims on us in terms of our conduct. If the government is the authority, then all one must do is check the statutes, regulations, orders, administrative guidelines, government literature, and decisions of the courts and regulatory bodies, and do what these authorities say is required or refrain from doing that which is prohibited. Nothing else is required.

This reminded me of Aleksandr Solzhenitsyn's widely reported commencement address at Harvard University in June 1978, in which he described the legalistic life as follows:

Every conflict is solved according to the letter of the law and this is considered to be the ultimate solution. If one is right from a legal point of view, nothing more is required, nobody may mention that one could still not be entirely right, and urge self-restrain or renunciation of these rights, call for sacrifice and selfless risk: this would simply be absurd. Voluntary self-restraint is almost unheard of: everybody strives toward further expansion to the extreme limit of the legal limits . . . .

I have spent all my life under a Communist regime and I will tell you that a society without any objective legal scale is a terrible one indeed. But a society with no other scale is also less than worth of man . . . . Whenever the tissue of life is woven of legalistic relationships, this created an atmosphere of spiritual mediocrity that paralyzes man's noblest impulses.

Too often in our advanced Western societies, law defines the nature and limits of morality or ethics. As long as individuals follow what the law permits, or refrain from doing what the law prohibits, there are no other moral considerations or principles with which individuals should be concerned. There are no standards apart from the law to guide the individual or organization, nor are there standards against which conduct can be evaluated as being ethical, or morally justified.

Some of these same themes were woven into what Alexis de Tocqueville wrote over one hundred and fifty years ago in his Democracy in America, when he wrote:

The influence of legal habits extends beyond the precise limits I have pointed out. Scarcely any political question arises in the United States that is not resolved, sooner or later, into a judicial question. Hence all parties are obliged to borrow, in their daily controversies, the ideas, and even the language peculiar to judicial proceedings. As most public men are or have been legal practitioners, they introduce the customs and technicalities of their profession into the management of public affairs. The jury extends this habit to all classes. The language of the law thus becomes, in some measure, a vulgar tongue; the spirit of the law, which is produced in the schools and courts of justice, gradually penetrates beyond their walls into the bosom of society, where it descends to the lowest classes, so that at last the whole people contract the habits and tastes of the judicial magistrate.

As I wrote in a previous post, many regulatory schemes imposed by governments tend to work against the very purpose for the the existence and work of participants in the sector, or against the effectiveness of particular charities. Accordingly, if government is the ultimate authority to which we turn to define our theory of obligation, then moral precepts or ethical rules are nothing more or less than those dictated by government. Moral evaluation of what is right or wrong, obligatory or permissible, or forbidden is based on what the government proclaims and nothing else.

Moreover, the consequences of an organization's actions or inactions are legal. Therefore, administrative expenses increase as these organizations retain the services of accountants, lawyers, and direct mail fundraising or public relations consultants to avoid the legal risks flowing from the consequences of its actions or inactions..

However, more than that, accounting and accountability became the language used by experts to describe and evaluate the process of whether the money was treated in accordance with certain specific rules. In other words, the subject of accountability refers primarily as to whether the finances of an organization were disclosed as being in accordance with certain specific rules. Thus, if the only criteria to be disclosed with respect to whether an organization is accountable are the financial statements and tax returns or tax information, then a nonprofit organization may be accountable only with respect to those financial matters and whether or not they were reported in accordance with the specified standards and rules, and to nothing else.

Although perhaps not legally significant, a similar process would be applied with respect to other possible authorities. If the authority is a monitoring organization, such as one of the members of ICFO, for example, then all that is required is to examine the standards of ethical conduct issued by that ICFO member, and determine if the NPO in question has complied with those standards. Accountability here is often simply limited to certain disclosures of actions that are asserted to be in accordance with specified rules and procedures without regard to whether those actions are characterized by integrity.

The second method is a viewpoint that fits the scientific method very well. It is clear that the government or some regulatory monitoring body, such as a member of ICFO, may not have all the potential standards articulated that are relevant to the practice the charitable organization wants to follow. After all, the interpretation and application of standards is not simply a mechanical process in which certain clear rules or standards are applied to the situation in question, and the answer to the ethical question or dilemma quickly raises to the surface to provide definitive guidance for the direction that the charity should take. If, for example, a charity raises funds for a certain project, and the standard issued by the monitoring organizations specifies that no more than 25 percent of the funds raised may be used for fundraising expenses and overhead, it is a relatively simple process to determine whether the charity exceeded the ceiling for allocation of fundraising and overhead expenses.

Accordingly, in this scientific kind of system, one takes the ethical principle most applicable to the situation to see if it adequately explains the experience base upon which there has been moral decisionmaking in life. Where is the ethical principle weak and where is it strong? The problem is that this type of analysis is required for every ethical theory to see which best fits the moral phenomenon presented by the desired action or decision of the NPO. Once the analysis draws one's attention to a particular ethical theory, that is the ethical theory that one must choose. However, where the issue is one of how the solicitation for donations is worded, or whether the charity board exercised proper authority in approving a project, exact choice being made by the charity may not fit within clearly articulated standards.

I would like to suggest the nature of the moral dilemma today, and suggest how it relates to our topic of accountability. The only sanction that people seek today is individual approval for personal behavior, for doing one’s thing. Ethical imperatives have evaporated from one segment of life after another. Relative ethics is now the approved cultural ethical philosophy. And with it, we have experienced indifference to conscience, where a shocked conscience is now a minority phenomenon.

Too often, our major civil society organizations take their clues from this culture. How then are we to expect any level of accountability on the part of NPOs that really matters and that is based on transparency? Again, if accountability is regarded as merely disclosing the fact that certain acts or operations can be rationalized and justified on the basis that they conformed to specific rules and processes, such accountability would discourage thinking about integrity or the lack of integrity of the action or operations in question.

Secondly, there has been a loss of moral restraint. The loss of moral restraint has emptied life of meaning. It has destroyed a sense of destiny. It has resulted in a loss of conviction. It has produced a deep sense of futility, a sense of estrangement from society and community, and a penetrating national mood of cynicism in government and in government programs and in the direction of a nation.

Unfortunately, this sense of estrangement and cynicism may also be directed at NGOs, simply because they are recognized institutions in society. There may be some causal antecedents that help explain why we are where we are and what we in the third sector community interested in transparency and accountability should understand. Causality is not a simply notion. Too often there is more than one single cause. Nevertheless, there are a few that can be identified.

First, there has been a philosophical shift in the post-Renaissance world that emphasized two major ideas: the autonomy of human will, and the ideal of the ultimacy of process. If, indeed, the human will is autonomous and unconditioned, if it has no antecedents, if there are no standards by which it can be judged, if it is a law unto itself, then this obviously leads to moral relativism and to the kind of moral rebellion we have witnessed.

Secondly, in the case of the ultimacy of process, there is nothing fixed. Everything is in the midst of change and in process. There is a commitment to the fact that there are no fixed lodestars whereby we can evaluate anything that goes on. If everything is in process, then there can be no absolute obligations to act or refrain from acting in a certain way, no values by which we can determine whether something is good or bad, worthy or unworthy, and no absolute moral commands, because if something is absolute, then by definition it is unchanging. It is applicable to every culture, to all people, in all circumstances.

There is a third idea relevant to this moral revolution and that is the growth of scientific, psychological, and cultural anthropology. Humans are treated as nothing but machine-like animals to which one can apply certain technologies and thereby adapt human behavior and so that humans respond in certain ways. In cultural anthropology, we have seen how different value sets can be shown and that there are no fixed values or ethical absolutes.

The fourth idea comes from the instrumentalist educational philosophy espoused by John Dewey that divorced two things, values from facts that contributed strongly to an ethical relativity. According to Dewey, facts were objective and existed independent of the subject whereas values were subjective and chosen. Thus, if one were to affirm that he hates lying and deception, he would be expressing only his personal opinion, and according to this thinking, lying or deception cannot be ultimately wrong.

The fifth and final idea relates to the advancement of the scientific and technological revolution. The rate of rapid change in technology has caught our cultures breathless. There are no stable things anymore. The government knows you by a number on some identity card. The bank knows you by a coded number that computers read. We have become impersonal integers. Nobody asks whether one ought or ought not to do something; only whether it can or cannot be done.

What all this suggests is that the issue of accountability, even if we were able to define it as something good, is not an easy matter with which the government, the donor public, and the monitoring organizations must address. How does a government or a monitoring organizations establish Standards for Charity Accountability that are not merely arbitrarily imposed rules when there are no moral absolutes to back them up? How are NPOs to be accountable to the various stakeholders when there are no fixed standards based on some fundamental principles of integrity? This question become particularly difficult when one connects accountability to trust -- trust between the donor and the NPO. Maybe it also depends on whether we view the integrity and accountability of an NPO as derivative of the integrity and accountability of the individuals involved in its leadership.

The contemporary focus on institutional philanthropy has a secular cast that simply ignores any beliefs and attitudes that give rise to a culture of giving and to those ideas that are required to sustain it. Fewer than five percent of research projects on philanthropy dealt with religion, religious based charities, and religious motivations for giving. Yet, religious organizations are the largest recipients of giving, and religious motivation is one of the strongest impulses for giving. While not all religiously based charities operate with integrity and are as accountable as we might want, the religious impulses for giving and volunteering are real.

Whereas individual giving and support for charity stresses the efforts to help the poor and needy and work toward alleviating the present situation, supporters of philanthropy see their efforts directed toward society and the future, and in addressing long-term solutions. Philanthropy tends to be targeted to narrowly defined causes that address recognizable changes in social conditions. As such, these causes tend to require larger financial commitments, mainly from the wealthy and foundations. The recipients of philanthropy tend to be educational and arts institutions and organizations, medical research, and organizations that direct their activities toward promoting and improving the quality of human life. But, more about that in another post some day.

My observation over the years of working with monitoring organizations and serving on the boards of a number of NPOs bears out the fact that most donors give financial and in-kind donations, and volunteer time to those charities with objectives and programs matching the interests of the donors. Similarly, the vast majority of individual donors give to those organizations with which they have some ongoing relationship, either with the leadership of the organization, or with the charitable organization itself. While the vast majority of donors to these charities are loyal, those that drop off generally do so because their relationship with the organization or its leaders was not nurtured, or because of some change in their personal financial situation.

Giving always increases significantly when there are widely published reports of disasters, such as hurricanes, tsunamis, earthquakes, and fires, for example. The response in these cases tend to be more emotional than intellectual. Depending the level of publicity and the reputation of the charity soliciting funds for such major disasters, the existence of a monitoring organizations and the granting of a seal may have some influence on what charity is to receive the gift. The influence generally, however, is to merely confirm the legitimacy and accountability of the charity receiving the donation.

I am not sure that this is necessarily true in the case of how civil society organizations are funded by government grants, major foundations, and philanthropic grants.

What was interesting about a recent special report series in The Chronicle of Philanthropy on coping with the current economic situation was that almost all of the articles talked about the importance of developing trust between the charity, and by implication, between the public benefit sector and the larger general public. To do this, the sector must be transparent in its communications with the public and with donors.

But, I am convinced that it is more than simply being accountable in terms of the willingness to disclose financial information. It would seem that charity monitoring standards and independent, or self-regulation monitoring organizations, serve a useful purpose for engaging trust between donor and charitable organization, and might, therefore, have some role in promoting loyalty on the part of donors to their charities. More about this in a future post.

However, for now, let me just say that I have not found any strong data in the U.S. to support a correlation between independent monitoring of a public benefit organization such as would be done by one of the national members of ICFO, and the trust and loyalty between the donor and the charity. I think that the way in which accountability may serve the NPO community is that it is used to describe actions and activities which are in themselves moral, virtuous, and laudable. Nevertheless, I think too often we who are involved in the sector and who are part of the donor public, expect more from accountability than it can deliver.

Accountability will seldom legitimize the choices made by NPO leadership. Rather, it gives the leadership the opportunity to reflect on what it has done, to reflect on the leaders’ thoughts and motivations, words, deeds and omissions, and responses to internal and external forces, all essential features of human rationality.

At the core of its existence, the NPO and its leadership must be clear about its ethic, and act on that ethic. Otherwise, accountability will be nothing more than self-justification and rationalization for decisions made, too often decisions made on pragmatic reasons that have nothing to do with moral conduct.

While I believe that government does fill a useful purpose with respect to setting basic standards for the legitimacy of nonprofit organizations within the legal jurisdiction of that country, state, or province, I am not persuaded that governments are effective with respect to promoting accountability beyond a certain basic level of information required, such as for the disclosure of registration of nonprofit status and informational tax return forms, if required. Moreover, if accountability is to encompass transparency within specific charities so that the integrity or lack of integrity in all of its decisionmaking and operations is visible to those outside the organization, I am not persuaded that government is competent to address that nor that it is effective to ensure some level of trust based on that transparency and the integrity of the organization.

To illustrate my points here, on 28 May 2010, the U.S. Government Accountability Office (GAO) issued a report in response to a request from 31 Senators and Representatives from the U.S. Congress for information regarding federal funds provided for fiscal years 2002 through 2009 to selected organizations, involved in health-related activities, reproductive health care, routine examinations, screenings, contraception, abortion care, and testing and treatment for sexually transmitted infections. According to this GAO report, Planned Parenthood Federation of America and its affiliates had expended $657.1 million of federally granted funds during the period of 2002 through 2008. According to its annual reports and published reports, it received approximately $2.3 billion in federal grants and programs during the same period.

After weeks of investigation, the GAO was unable to account for $1.3 billion. Apparently the reason for this was that GAO could not account for the great majority of government money received by Planned Parenthood because that organization would not produce its internal audits for GAO to analyze. As a result, the GAO had to rely on reports filed by affiliates of Planned Parenthood Federation under the Single Audit Act, and those reports "grossly underreport the amount of money expended by Planned Parenthood." Planned Parenthood has not issued an annual report since annual report for 2007-2008.

It is difficult to understand the role of transparency and accountability, both with respect to the government's accounting for the funds provided Planned Parenthood through grants and programs, and with respect to Planned Parenthood's the apparent inability to meet some standards of accountability for all funds it received from the government, and its failure to produce its internal audits for GAO.

Charity Navigator has given Planned Parenthood Federation of America a four star rating, based in part of its ratios of fundraising expenses and administrative expenses to program expenses. It seems that if a substantial portion of its revenues are derived from government grants and programs without the usual expenses associated with fundraising, the ratios would be better than in the case of a charity that must raise funds from individual donors. Without drawing any conclusions concerning the transparency, accountability, and integrity through the application of theories of obligation, value theory, or motivations on the part of the leadership of Planned Parenthood Federation of America, my only concern here relates to the challenge to both government and sector have in promoting transparency and accountability when there are no fixed standards against which we can evaluate the actions of a nonprofit organization as right or wrong, permissible or discouraged, obligatory or forbidden, good or bad, valuable or worthless, worthy of praise or worthy of scorn.