What are the pros and cons of corporations offering donations to nonprofit organizations?

Beverly answered her office phone to find an executive from Grey Industries on the line. “Ms. Jones,” he began after pleasantries has been exchanged, “we would be honored if you would consider joining our corporate board.” After gathering information, Beverly agreed. As the president of the Natural History Museum, a nonprofit organization in Denver, Colorado, she was used to receiving these requests. In fact, she currently served on two other boards. A month later, Grey Industries donated half a million dollars to the museum. Beverly, on behalf of the museum, had received large donations from the other companies on whose boards she served. Although she knew it was good for the museum, she wondered if the companies were simply being generous or had ulterior motives. Beverly had managed to remain impartial and serve objectively despite such donations, but she knew other presidents and directors of nonprofit organizations had not and had made decisions based on donation promises. Beverly knew that the Nasdaq Stock Market was encouraging companies to put limits on their donations to nonprofit organizations if presidents and directors of those organizations served on their boards, but firm rules had yet to be put into place. Beverly thought this move would be a smart one on the part of corporations and helpful to board members. To further complicate matters, Beverly had some serious reservations about the ways in which Grey Industries conducted business. The company’s business model hadn’t been updated in years, and the competition was beginning to take over. Despite obvious issues, Grey Industries was holding on to its top-level managers—individuals who had been with the company since the beginning. These very same managers seemed incapable of implementing the changes necessary to keep Grey Industries in the running. Having accepted the company’s donation, Beverly had to make a difficult decision. Should she resign from the board? Or should she follow her gut instinct and insist that Grey Industries replace these managers immediately or lose to the competition?

1. Define the ethical dilemmas presented in this case.

2. Do you think presidents and directors of nonprofit organizations can remain objective despite promises of large donations?

3. What are the pros and cons of corporations offering donations to nonprofit organizations?

4. How do you think Beverly should approach the situation? Why?