Edible Ethics

This is the time of year I plan our upcoming visit to Maine, primarily to Camden, the town where I grew up. For the last ten years those visits have included breakfast with Rush Kidder, at a small coffee shop overlooking the harbor where we traded stories of our workshop experiences, dilemmas raised by our audiences, helpful resources, and new ideas on ethics training. Sadly, there will be no such rejuvenating conversation this summer as Rush passed away suddenly in March at age 67. I was stunned at the news of his death but today I feel the loss even more viscerally. I have lost a fellow traveler in the quest for moral courage and the world has lost a champion for ethics. Rush Kidder made ethics relevant, important, and palatable, at a time when the prevailing attitude was that ethics were passé and indigestible.

           

I had known of Rush’s work founding the Institute for Global Ethics long before we actually met. His book How Good People Make Tough Choices was a compelling read, beautifully written, and solidly grounded in the literature on ethical decision making. The paradigm the book sets forth, that all ethical dilemmas can be classified in at least one of four categories (truth vs. loyalty, short-term vs. long term, justice vs. mercy, individual vs. other), is so intuitive and elegant that I used it as an organizing principle in my book on The Ethics of Practice with Minors. Rush managed to balance the complexities of ethical decision making – the ways that various perspectives (rules-based, care-based, ends-based) can shape the ultimate decision on what is ethical—yet he never fell into the trap of relativism. In person and in writing, he approached dilemmas with curiosity and gentleness. In fact, the description of Rush that most comes to my mind is delight. Rush was delighted to talk about dilemmas, to see people working their ways through difficult situations, to uncover new avenues for enhancing ethical fitness^TM. His spirit and approach moved ethics from a topic of condemnation to one of conversation. In his view, ethics are not stark determinations of right and wrong, but instead a careful dialogue to choose well when right and right conflict. Ethics are not only the province of long-dead philosophers– dilemmas confront us every day and each of us must possess the skills to determine what is right and the courage to act on that determination.

Perhaps the greatest gift I received from Rush was an introduction to the concept of moral courage. I had recently done a workshop where I thoroughly failed to connect with the audience. Only afterward did I realize that the challenge for the participants wasn’t in knowing the right thing to do, but in doing what they knew was right amid the fear of social and occupational reprisals. Shortly thereafter, I heard Rush speak on moral courage and at last I had a term to describe what I and those workshop participants needed! With that term in hand, I can investigate the personal and organizational barriers to action, the precursors to acts of courage, and the people who demonstrate both moral courage and moral cowardice.

Over our last few meetings, Rush and I talked about my plans for a book on cultivating courage. This is the summer when those conversations and aspirations are finally put on the page, I mourn the opportunity to see Rush’s delight in my progress and to receive his support and advice, but I rejoice in the gifts he has already given and in the opportunity to be part of his legacy.

The Risks of Poor Governance: Conflicts of Interest in The Case of Penn State/Second Mile Scandals

In my last blog post I reviewed the essential findings of the Penn State/Second Mile (PSU/SM) scandal. While ostensibly about the sexual abuse of children who were clients of the Second Mile charity, the case also contains significant lessons for organizations about the risks of poor governance. Some of the issues are particular to nonprofits, but most apply to public as well as private entities. As I see them, the risks fall predominantly in three categories: conflicts of interest, inappropriate governance structures, and lack of transparency. Certainly other conclusions can be drawn about ethical failings in the case, but this post focuses on the organizational errors as they apply to both PSU and Second Mile. Michael Wyland has written a thoughtful commentary focusing specifically on the Second Mile, and it is likely future insights will evolve as records are opened and reports written by task forces looking at both organizations. Today’s blog will address conflicts of interest and next week’s will conclude the series by addressing governance and transparency.

Conflicts of interest

            Conflicts of interest arise anytime an individual has loyalties to two or more parties, such that upholding the interests of one may work to the disadvantage of the other. Typically such conflicts arise from blurred boundaries, where it is unclear what role or responsibility one is exercising at a given time. They can also arise from dual relationships where individual associate with each other in multiple roles or settings. In small towns or rural areas, dual relationships cannot be avoided: in fact, the interdependence in such communities is prized and necessary for successfully meeting life’s needs. For example, an individual may be the financial advisor for a doctor, for whom the financial advisor is a patient. Perhaps the two also serve on community boards and socialize together. The conflict of interest arises when information from one role or setting contaminates or jeopardizes another role or relationship. For example, perhaps in socializing, the doctor learns that the financial advisor likes to gamble and drinks excessively. How will this information be used in the doctor patient relationship? In trusting the financial advisor? In supporting him for treasurer of a nonprofit board? The PSU/SM case offers numerous examples of problematic conflicts of interest.

·         Jerry Sandusky was the founder of Second Mile and an executive officer of the board. He was also a major fundraiser and he interacted with and donated gifts directly to clients. Irrespective of the accusations of pedophila against him, was Sandusky able to act in the interests of the Second Mile as an officer, given his history in founding the organization and his multiple other roles? Were administrators and other trustees able to carry out their responsibilities in the presence of the founder, donor, service provider and fellow board member? Or, did Sandusky’s multiple roles quell inquiry and dissent, particularly when explicit reports of inappropriate contact with youth were conveyed to Second Mile?   

·         Wendell Courtney was the legal counsel for Penn State and, according to the grand jury report, also served as legal advisor for Second Mile. In which capacity was he acting when he reviewed the substantial investigative report in 1998 in which Sandusky reported inappropriate physical contact with young boys? To which organization did he report? If he offered advice to one why did he not do so to the other?

·         Two Second Mile board members worked in the same organization in which they had a hierarchical reporting relationship? Did this influence their capacity to govern independently as board members? The 2010 form 990 acknowledges that officers, directors, trustees or key employees had relationship or business interests with one another, though the nature of these beyond the cases noted here is unclear.

·         Did board members have affiliations with PSU that might have blurred or compromised their fiduciary responsibilities to Second Mile? PSU employees were clearly involved in Second Mile in other capacities, for example, participating in fundraisers, as well as football trips and events to which Sandusky brought Second Mile clients. Mike McQueary played in a Sandusky fundraiser/ golf tournament three months after he witnessed a sexual assault by the former coach.

·         The Executive Director and the Executive Vice President of Second Mile were married to each other.  As Michael Wyland notes, “This represents both a management and a board-level conflict of interest, as Dr. Raykovitz would normally be expected to review Ms. Genovese’s job performance, set her compensation, and otherwise act as her supervisor at The Second Mile.

Ms. Genovese, by virtue of being married to the CEO of The Second Mile, is by IRS definition a "disqualified person" under IRC Section 4958. The board has a legal responsibility to monitor the transactions involving disqualified persons. The board must insist that documented procedures are followed to assure that the marriage relationship does not adversely affect The Second Mile and its interests as it enters into agreements (such as employment) with Ms. Genovese.”

While the relationship between two senior staff was noted on the Form 990, it is not clear what steps, if any, the board took to segregate their duties or avoid the risk of collusion or exploitation.

·        Insularity was also problem at Penn State. While not a statutory or ethical violation, the propensity to hire administrators and other staff from within, and the tendency for those hired to stay for extended terms can create a stale, self-referential environment with an inclination toward groupthink.

Conflicts of interest are not uncommon in small communities, or among people in large communities who have shared concerns, for example the professionals and families who care about autism. While conflicts of interest can’t always be avoided, they should be anticipated and addressed, In the case of Penn State and the Second Mile, efforts should have been made to diversify the board, identifying people without significant PSU ties as prospective members. Individual members should have been alert to their various roles and responsibilities and declined service, resigned, or recused themselves in instances where they could not objectively uphold their board responsibilities. The same would hold true in instances where information gained in one setting might create a conflict of interest for the other.

The potential for financial, social, or professional conflicts of interest should be addressed in board recruitment and orientation. Boards should have a clear conflict of interest policy and require annual disclosure statements by board members. Board chairs should preface the discussion of significant or controversial agenda items by asking if any members have conflicts of interest with the matter at hand (Boardsource, 2007). The same strategies might hold true for Penn State trustees and administrators, given the multiple, overlapping, long-term relationships between the university and community entities. The leaders of organizations and the individual volunteers and employees are all responsible for the identification and careful resolution of conflicts of interest. While the Second Mile’s 2010 Form 990 indicates that it has a conflict of interest policy, that key trustees and employees are required to disclose interests that could give rise to conflicts, and that the organization monitors and enforces compliance with the policies and disclosures, it is clear that lapses in scope and application of these requirements failed for many years.  

BoardSource. (2007). The nonprofit board answer book (2^nd ed.). San Francisco, CA: Jossey-Bass.

The Risks of Poor Governance: The Case of Penn State/Second Mile Scandals

           Last November, the worlds of sports, nonprofits, and higher education were rocked by an abuse scandal involving Jerry Sandusky, a former assistant football coach for Penn State and founder of The Second Mile, a charity serving at-risk children. According to the grand jury report, Sandusky founded Second Mile in 1977 and was its primary fundraiser. He solicited his victims from young men served by the agency, inviting them to professional and collegiate football games, giving them gifts, coaching them in sports and weight lifting, and having them sleep at his home. He is accused of routinely fondling boys, demanding they shower with him, and seeking physical contact through back rubs and wrestling, all of which are considered strategies by which pedophiles “groom their victims”. (Link to read Dr. Strom-Gottfried's article on Grooming the Victim.)

            In 1998 Sandusky was investigated after a mother questioned why her son had wet hair upon returning from an outing with him. In a surveillance phone call, Sandusky admitted showering with her son, expressed remorse, and promised never to do so again. No charges were filed against Sandusky and it is not clear whether Second Mile was notified of the incident. However, Wendell Courtney, who served as Counsel for both Penn State and Second Mile, reviewed the investigation report at the time.

            In the fall of 2000, a janitor named Jim Calhoun observed Sandusky in the showers of the football facility performing oral sex on a boy. Calhoun, upset and crying, reported it to his colleagues and supervisor. The supervisor advised him of where to report the incident, should he choose to do so. It appears no report was made. 

            In 2002, Mike McQueary, a 28-year-old Penn State graduate assistant heard a shower running late at night in the football building and saw a naked boy being subjected to anal intercourse by Sandusky. McQueary reported it to his father, and the next day to the Head Football Coach, Joe Paterno, who in turn reported it to the Athletic Director and a Penn State Senior Vice President. Approximately 10 days later, the graduate assistant gave his account directly to the administrators, and two weeks after that, he was told that Sandusky’s keys had been taken away and that the incident had been reported to Dr. Jack Raykovitz, the Executive Director of Second Mile.

            In November, 2011, Jerry Sandusky was charged with the sexual abuse of eight boys, The Penn State Athletic Director and Senior VP were arraigned on making false statements to a grand jury and failure to report child abuse. They lost their jobs, as did the Head Football Coach and the University President. Raykovitz, who had served as Executive Director of the Second Mile for 28 years, resigned. Since then, at least two task forces have been empaneled to examine the institutional responses to this case, more victims have been identified, more staff have been suspended, fired or have resigned. 

Like other scandals, this has far-reaching effects for the nonprofit sector. It erodes philanthropic support for charitable causes. It creates suspicion on the part of those who entrust nonprofits with care of vulnerable individuals. It diminishes public trust and casts a pall on the positive impulses that draw many to social service work. It also raises questions that can be instructive to others who wish to avoid and mitigate future scandals. For example: 

• Why was Jerry Sandusky allowed ongoing access to Second Mile clients?
• In whose interests was Wendell Courtney acting when he reviewed the 1998 abuse report? Did he take any further action with either organization?
• Why did Penn State and Second Mile fail to act on explicit reports of child abuse?
• How could the harms to children, organizations and careers have been avoided?

Next week’s blog will address these questions and identify the lessons nonprofits and their boards can take away from the PSU/Second Mile case.