Nonprofits adopting tougher donor rules

After the 2004 tsunami that devastated shorelines around the Indian Ocean, the relief group Médecins Sans Frontières, won plaudits for its decision to halt fundraising for the disaster once it had collected enough donations to accomplish the mission it had set for itself.

Other relief organizations raised as much as they could and faced criticism from French and British regulators and others for being unable to spend all of it expediently.

Médecins Sans Frontières -- also known as Doctors Without Borders, a French medical charity -- has long practiced a form of discipline that may cause other nonprofits to squirm.

For more than a decade, it has declined financial support from corporations whose activities conflict with its mission and principles, recently adding some medical-device makers and biotechnology companies.

Idea is to avoid conflicts

It even declines money such companies make to match donations from their employees. "We're not making moral judgments," said Alyssa Herman, director of development at the organization's New York affiliate. "The policy is really an effort to avoid potential conflicts or barriers to our mission."

Nonprofit circles have been buzzing lately over a two-part series in The Los Angeles Times and published in The Seattle Times that highlighted conflicts between the goals of the Bill & Melinda Gates Foundation and the activities of some companies in which it invests.

Foundations and charities have long confronted such questions. A few years ago, some museums and other organizations were fighting questions over their acceptance of donations made by corporate leaders tainted by scandals, such as L. Dennis Kozlowski, the Tyco International executive who gave millions of dollars to the Whitney Museum of American Art in New York City, and Kenneth Lay, the Enron founder, whose name adorned facilities and programs in Houston and Aspen, Colo.

Doctors Without Borders is not alone, though its policy may be the most stringent. Last year, the American Diabetes Association adopted a tougher policy in its relationship with food and drug companies, and many charities ban acceptance of gifts from tobacco companies and their subsidiaries.

Critics note, though, that beyond tobacco, such policies are usually nuanced. The American Heart Association, for instance, does not allow wine and alcohol companies to use its brand for marketing and image-building, but it will accept money raised through wine auctions and tastings.

Rules differ

Similarly, it does not allow the use of its name or logo by candy and chocolate makers but will accept money from them "as long as no strings are attached," said David Livingston, the association's corporate secretary and counsel.

About 18 percent of the association's revenues in the year that ended June 30 came from companies, compared with about 7 percent of the $122 million the U.S. unit of Doctors Without Borders raised in 2005.

"Corporations are not per se bad," Livingston said. "They have different interests than we do, but where our interests overlap and where doing so would not have an impact on our integrity and credibility, we think it's appropriate to work with them on behalf of what we do."

As the growth in the number of charities rises at a much faster pace than giving, it is difficult for any nonprofit group to look a gift horse in the mouth.

"It's a very thorny subject," said Diana Aviv, president and chief executive of the Independent Sector, a trade association representing about 550 nonprofit organizations. "Where do you draw the line? Some of our largest foundations were created by individuals who many regard as robber barons. Should charities look askance at that money?"

Rushworth Kidder, president of the Institute for Global Ethics, said he did not think a blanket ban on gifts from corporations was necessary but charities should be thinking more about the issue.

"We're here to help people understand how to think, not what to think, and to the extent that people see us as coming from a particular position because of the money we receive, it dilutes our mission."