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Nonprofit ethics: VMC Foundation leads in Silicon Valley

Nonprofit Ethics: Valley Medical Center Foundation earns Seal of Excellence

The public’s faith in institutions of all sorts may be crumbling. But one Santa Clara County-related organization fortified its reputation for strong nonprofit ethics: the Valley Medical Center Foundation.

The foundation is the nonprofit fundraising arm of the County-run Santa Clara Valley Medical Center. It recently became the first U.S. hospital foundation to earn a full accreditation for nonprofit ethics and governance from the Standards for Excellence Institute in Baltimore.

The yearlong effort to win the institute’s Seal of Excellence also made the hospital foundation the first nonprofit of any kind on the West Coast to earn the accreditation, aside from the Markkula Center for Applied Ethics at Santa Clara University. Markkula is the institute’s West Coast replication partner and guided VMCF’s effort.

VMCF’s achievement, coincidentally, comes amid eroding public faith in all sorts of institutions. These include Hollywood, the federal government, the news media, the NFL, and the election system.

Ethics blow at Silicon Valley Community Foundation

Even one of the Bay Area’s most prominent nonprofit institutions has been buffeted. Last spring, allegations of workplace bullying and harassment by a high-ranking executive at the $8 billion Silicon Valley Community Foundation prompted the ouster of longtime CEO Emmett Carson.

It was against this backdrop that Chris Wilder, CEO of the $11 million VMCF, said his organization sought the nonprofit ethics Seal of Excellence from the Baltimore-based institute.

The best way to raise money is to have a great cause, he said. But now more than ever, donors need assurance they’re dealing with an ethical outfit. “We’ve always had that. Now we can prove it a lot more easily,” Wilder said.

Within the social sector, holding the institute’s Seal of Excellence is comparable to a business earning the coveted ISO 9000 quality award. It is, Wilder said, “the most difficult ethics and operational accreditation a nonprofit can get.” Most ethics training programs in the nonprofit sector “aren’t very good,” in Wilder’s experience, being superficial and prescriptive.

The Standards for Excellence application, however, required VMCF to delve into every aspect of the organization. Financial operations, board oversight, transparency, fidelity to mission and succession planning. In all, Wilder said, there were 130 boxes to check off. It was all backed up by 600 pages of documentation. The institute scrutinized all of it and demanded clarification before awarding the seal.

All-hands effort

Highly motivated, every staffer and board member pitched in. Thus, a process that typically takes three years to successfully complete, if ever, wrapped up in a year.

“It was every bit as difficult as we thought it would be to go after it, and every bit worth it,” Wilder said. “It has made us a better organization.”

VMCF must continuously document that it’s living up to the Standards of Excellence code because the institute reviews accreditation every other year.

According to the Standards for Excellence Institute’s website, only 225 nonprofits currently hold full accreditation.  The biggest cluster of seal-holding nonprofits is in the mid-Atlantic states. Local and regional nonprofits, like VMCF, predominate, although some are chapters of familiar national organizations.

“It was every bit as difficult as we thought it would be to go after it, and every bit worth it. It has made us a better organization.” – Chris Wilder

None of the country’s best-known A-list foundations, however — such as Ford, Packard, and Gates — is on the list. Perhaps they think they don’t need to be, although they are eligible for accreditation. But if the Silicon Valley Community Foundation’s pickle proves anything, it’s that prominence is no guarantee of ethical purity.

Spreading the word

Wilder said he’s excited to spread the code of nonprofit ethics among peer institutions. He’s eager to help other Silicon Valley charities go through the accreditation process. As a member of the Markkula Center’s nonprofit-ethics advisory board, he’s already recruiting other groups to try.

“It was every bit as difficult as we thought it would be to go after it, and every bit worth it. It has made us a better organization.” – Chris Wilder

“A lot of us are disappointed with what happened at the Community Foundation,” he acknowledged. “I think they have an opportunity right now to right the ship. And I think that they will. Their interim CEO and a lot of their staff have been on a listening tour. And so I’m hopeful that our sector emerges from this a lot stronger. If we can be of help, that’s great. If we can be a role model, that’s great.”

The Community Foundation is “a gigantic institution,” he said, “and so we really want them to be as strong as they can be.”

With some irony, he pointed out that the Community Foundation, before it got in hot water, provided seed funding to the Markkula Center to offer ethics training to valley nonprofits.

Even if they decide not to seek accreditation, which admittedly can be a big drain on the time and resources of underfunded nonprofits, attending the institute’s two-day preliminary training is “way worth the time,” Wilder said. “It’s a fantastic, deep, deep dive” that will prompt much-needed self-examination. Groups may find that their old policies, procedures and bylaws are dated, and thus don’t ensure a high level of accountability, he said.

Political advocacy

Wilder took pains to point out that, contrary to the position of many nonprofits, being politically involved is part of being an ethical organization.

Many nonprofits steer clear of political advocacy out of fear of losing their tax-exempt status, he said. In truth, the law prohibits only advocating in a particular partisan race or for a particular candidate. But there has never been an IRS rule against advocating for issues.

In fact, Wilder said, judicious political involvement is crucial, lest an organization end up fighting for its cause with one hand tied behind its back.

Wilder and VMCF have been involved in several ballot campaigns over the years. For example, in 2008, he chaired a committee advocating the passage of Measure A. Voters authorized the sale of $840 million in bonds to modernize and improve VMC. The Sobrato Center project improved earthquake safety, allowing the burn unit and trauma center to remain open. It also added more beds and better medical technology. But when he approaches friends and colleagues in the social sector to join in the campaign, many demur.

Another reason some nonprofits shy away from political campaigns, he said, is that they perceive government programs as wasteful.

Wilder doesn’t buy it, especially when it comes to the County of Santa Clara.

“I’ve looked at what they do. They don’t have money to waste,” he said. “And so sometimes things take a long time because we can’t get it wrong. And yet … Santa Clara County is so big that it can effect incredible change. So if you as a nonprofit see that change happening and it’s on the ballot and you do nothing … then you’re not behaving ethically.”

Fundraising tool?

Whatever its social mission, fundraising is at the core of every nonprofit. And Wilder acknowledged that he plans to tout the Seal of Excellence when he talks with donors or potential donors in order to get more contributions. He said the East Coast groups that have gotten the Seal of Excellence have all reported being able to raise more money. But because the accreditation is not well-known on the West Coast, he can’t be sure the same will happen here.

“I hope you’re listening, donor community!” he said with a laugh. “I hope the answer is yes. We did it because it was the right thing to do, not because we wanted to raise more money, but I hope that’s a byproduct.”

To learn more, connect with VMCF on social media, email or give us a call at 408-885-5299.

— By Chuck Carroll

September 27, 2018

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September 2018
Santa Clara County