Fundraising Ethics and Corporate Scholarships

I entered my current professional fundraising position after it had been vacant for nine months. Knowing the importance of building relationships with those that had invested their philanthropy in the organization, I spent my first several months meeting all donors who were active at a leadership level. Included in this group were all of our scholarship donors. I noted that over fifteen new corporate scholarship funds were established just prior to my predecessor’s departure and nearly all included a specific sentence in the gift agreement terms and conditions.

Each scholarship recipient selected by the University may be given an opportunity to intern at XYZ Corp, depending on mutual need and consent.

Having worked in higher education my entire career I appreciated the way in which this statement was worded. It indicated to students that the company would like to consider scholarship recipients for an internship, but the company understood that the scholarship award was not contingent on the students’ acceptance of an internship and the University was ultimately responsible for selecting the recipient.

In theory this arrangement would be ideal. However, as I began to make my visits, I soon discovered that they had a understanding of how the scholarship selection process would function which was contrary to the gift agreement. As I made my visits I discovered that these donor companies expected an opportunity to review scholarship applications and resumes prior to the University selection process and the company would be given an opportunity to directly select the recipient. Fortunately, since my position sat vacant for so long I was able intervene before this scheme could be enacted.

I spent considerable time those first several months reestablishing the proper boundaries between benefactor and beneficiary by educating the new corporate scholarship donors on the Code of Ethical Principles and Standards (Standards 13 and 15). The majority of these donors were receptive to this news. However, there was one company in particular that, despite countless personal visits and phone calls, refused to accept the ethical standards I proposed so I would be in compliance with Standards 1, 2, 4, and 5.

The only resolution was for me release this donor from their gift commitment. Provided below are letters sent to the donor in question. Details have been changed or removed to protect donor confidentiality.

Follow-up letter sent after initial face-to-face visit

I am writing to follow-up to our discussion earlier today regarding the XYZ Corp Scholarship at the University.

Please accept my apologies for any miscommunication that might have taken place during the transition of our development office. I do not want this miscommunication to overshadow how much we appreciate the scholarship support and student encouragement created as a result of the investment of XYZ Corp at the University.

Several years ago we did have a scholarship selection committee that helped narrow the pool of potential scholarship recipients. It is on this committee that a select group including representatives from industry were invited to serve and have an opportunity to provide feedback on scholarship candidates. Your interest in establishing a presence on a future scholarship selection committee here at the University has been expressed with our scholarship office.  If we resume this method I will notify you of the opportunity.

Moving forward I would like to conduct this scholarship in strict compliance with the summary of gift terms as agreed upon when the gift was created. To clarify any miscommunication, we do not currently have a scholarship selection committee with external representatives and are unable to offer this opportunity for specific scholarships. The point at which a donor gives specific direction on the selection of a student candidate is the point at which the charitable intent of a gift is lost.

Your investment is greatly appreciated, both in the lives of our students and in the life of the University. Please let me know if I can be of any further assistance.

Final letter sent to release donor from remaining pledge and to terminate the scholarship

Thank you for your recent call regarding the outstanding scholarship gift pledge of $$$ that the XYZ Corp made to the University. I understand your interest in using the XYZ Corp Scholarship, established in 2007 as a tool in recruiting future graduates to work for XYZ Corp.

Since its inception, the XYZ Corp Scholarship has been administered in accordance with the terms outlined and agreed upon at the outset of the fund. Unfortunately, XYZ Corp has pressed the University to administer this scholarship with terms that fall well outside the original terms. Namely XYZ Corp feels entitled to select student recipients of the XYZ Corp Scholarship.

I am sure you can appreciate our disappointment in not being able to administer this scholarship award in strict compliance with the original summary of gift terms as agreed upon when the gift was created. The University is unable to accept future gifts earmarked for specific students as requested. The point at which a donor gives specific direction on the selection of a student candidate is the point at which the charitable intent of the gift is lost. Because of this, I have instructed the University to write off the remaining pledge balance outstanding for the XYZ Corp Scholarship.

Please accept my apologies for any miscommunication that might have occurred in the establishment of the scholarship. I do not want this miscommunication to overshadow how much we appreciate the scholarship investments XYZ Corp made in 2007 and 2008. The student support provided during these two years was an encouragement in the lives of our students.

Please let me know if I can be of any further assistance.

About Benjamin Mohler

Benjamin Mohler, CFRE, ACFRE has a keen interest in understanding the connection between culture and the practice of philanthropy. His experiences working with international nonprofit organizations, extensive international travel, together with his graduate work at Saint Mary’s University of Minnesota and leadership roles with local nonprofits combine to produce his expertise in this area. He’s also a big baseball fan.

Mohler is the Assistant Vice President for Major and Planned Gifts at Eastern Kentucky University. Prior to his current role, he held key roles with The William States Lee College of Engineering at UNC Charlotte, Cedarville University, and The Cockrell School of Engineering at the University of Texas at Austin. He is a Certified Fund Raising Executive (CFRE), Advanced Certified Fundraising Professional (ACFRE), and serves AFP at an international level, including his current role chairing the publishing committee for the AFP Fund Development Series.

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