Rutgers professor discusses ethical donations in business

Joanne B. Ciulla, professor and director of the Institute for Ethical Leadership at Rutgers Business School, said sometimes an organization will turn down a donation from a company if it believes the company's ethical standards are questionable.
Photo by Rutgers.eduJoanne B. Ciulla, professor and director of the Institute for Ethical Leadership at Rutgers Business School, said sometimes an organization will turn down a donation from a company if it believes the company's ethical standards are questionable.

While businesses and individuals have long used charitable donations for public relations, ethics dictate they must ensure their intentions do not harm their recipient, according to a recent Rutgers Business Review article written by Joanne B. Ciulla, professor and director of the Institute for Ethical Leadership at Rutgers Business School.

Gift givers and receivers have a reciprocal relationship, Ciulla said in the article. Businesses and individuals usually get something from giving, such as social and psychological benefits. Corporations or other groups usually donate to non-profit organizations to contribute to society and create a positive image of themselves, according to the article.

“When an individual or a business gives money to a charity, they engage in an explicit or implicit exchange,” she said in the article. “Implicit or explicit reciprocity does not necessarily make a gift unethical. (But), the ethics of giving and receiving depends on what that reciprocity means and entails for both parties.”

The donor’s ethics affect the recipient and sometimes the public’s perception of the recipient’s ethics. One example is the Sackler family’s past donations to The Metropolitan Museum of Art. Upon learning of their involvement in the opioid crisis, the museum suspended acceptance of future donations from them, Ciulla said, according to the article.

“If the company or the donor is in trouble and they give to the organization, that looks bad for the organization,” Ciulla said. “That might affect their ability to raise more money in the future.”

Donating to a charity for public relations alone can also harm both parties if it becomes apparent to the organization or the public that the donor is merely using the organization, Ciulla said. She said businesses should make donations with the intention of supporting a worthy cause, although public relations is naturally part of donations from businesses.

“In business, you have to sort of think about (public relations) because you have to think about what people would say about your donation, right”? Ciulla said. “I'm not saying there's anything wrong with that. But what I'm saying is, they need to look at their intention and make sure that their intention of doing it for (public relations) PR is not bad for the organization that they're giving money to.”

Organizations do have a responsibility to exercise judgment in who they accept donations from, Ciulla said. When she taught at the University of Richmond, the school had to consider whether to accept money from the tobacco company Altria. She said it decided to decline because it did not want to accept money from a manufacturer of harmful products.

Exceptions can be made in extreme cases, Ciulla said, such as with charities that provide emergency relief for crises like starvation. In the article, she said Mother Teresa’s charity, Missionaries of Charity, was one of the few organizations that accepted donations from unethical sources because it used that money to help those in extreme poverty.

One important consideration for both donor and recipient is what the donor wants in exchange for their gift, Ciulla said. A donor may give money to a university, for instance, to fund a program that the donor can use to help out their business, but a university would not enjoy reciprocating in this manner, she said.

“They have to be transparent,” she said. “One has to know what are the expectations of each other. And one hopes there's no expectations on the donor's part, except that we also have to consider the receiver has an obligation to use the money for exactly what the donor wants to use it for. That's one of the important ethical principles in nonprofits.”

Ciulla said giving to charity is admirable and usually brings out the best in people, but the reciprocal relationship in giving cannot be ignored. The ethics of giving are inseparable from the ethics of receiving, according to the article.

“Individuals and businesses have to think carefully about why they donate to a charity and make sure that what makes giving good for them is not potentially bad for the recipient,” Ciulla said, according to the article.