Nonprofit Scandals: A Systematic Review and Conceptual Framework

Abstract

High-profile charity scandals have always represented a threat to the nonprofit sector, which relies on public trust and funding to operate. We systematically review 30 years of empirical research on scandals involving nonprofits and present both quantitative and qualitative syntheses of the 71 articles identified. Informed by this review, we generate a conceptual model theorizing the causes and consequences of scandals, as well as how nonprofits can best prevent and respond to organizational transgressions. We then put forward a research agenda that elaborates five key factors that are especially important for understanding nonprofit scandals but remain understudied: (a) integrity versus competence violations, (b) moral licensing, (c) the multilevel nature of organizational transgressions, (d) sectoral causes of scandal, and (e) effective responses. We close the article with recommendations for nonprofit managers about how to conceptualize, prevent, plan for, and respond to transgressions occurring within their organizations, and any resulting scandals.

Gender employment contradictions in Israeli nonprofit organizations providing social care

“…According to the findings, employees identified misconduct in the core values of social care NPOs, a central contradiction for workers and the social care NPOs' missions. Unethical behavior in organizations is a well-known phenomenon (Beaton et al, 2021;Chapman et al, 2022;Chum et al, 2013;Greenlee et al, 2007;Holtfreter, 2008;Martin, 2014). Burt (2014) notes that the glorification of NPOs may be misleading.…”

“…Research on the moral goodness of the nonprofit sector is growing (Chapman et al, 2022;de Bruin et al, 2021;Kanter and Summers, 1994). Ethics and values are critical components of NPOs because they promote social change and equality and create value for the public and their members (Rothschild and Milofsky, 2006).…”

How Moral Goodness Drives Unethical Behavior: Empirical Evidence for the NGO Halo Effect

“…Moreover, the former category has often drawn from the business ethics literature, which, while useful, does not offer explicit consideration of the unique characteristics of NGOs and their broader role in society. While this literature provides practical guidance for NGOs and offers insight on sector-level trends, it does little to explain why unethical behaviors persist in a sector frequently touted as “benevolent” (White, 2010) and “virtuous” (Dolšak & Prakash, 2022), leading to calls for more thorough examination of the “sectoral causes” of unethical behavior (Chapman et al, 2022). Second, while others have pointed to the probable role of NGO culture in promoting unethical behaviors, such as sexual abuse and harassment, and offered policy and management approaches for addressing this challenge (e.g., Bruno-van Vijfeijken, 2019; Lamothe et al, 2022), possible pathways or mechanisms linking organizational and sectoral culture to (un)ethical behaviors have remained largely under-theorized and untested.…”

“…Drawing on qualitative evidence from 34 interviews with people working or volunteering in a range of NGOs across the globe, we explore whether and how the NGO halo effect explains not only instances of unethical behavior by and within NGOs but also individuals’ perceptions of the NGO as ethical. Examining the validity of the NGO halo effect contributes to the growing literature on NGO unethical behavior (e.g., Chapman et al, 2022; Dolšak & Prakash, 2022; Lamothe et al, 2022) and shows whether NGO unethical behavior can be seen as congruent with the positioning of NGOs as moral organizations (Greitemeyer & Sagioglou, 2018). Our research also responds to calls for empirical research to understand how (un)ethical behavior within organizations is promoted (Mitchell et al, 2020; Treviño et al, 2006, 2014).…”

Is cryptoaltruism transforming the nonprofit sector? Lessons from the Ukrainian nonprofits during the Russia-Ukraine War

“…It heavily relies on individual charitable donations (Salamon et al, 2017). However, over the recent years, a growing number of nonprofit scandals have been found involving fraud and misuse of funds (Chapman et al, 2023). As a result, recent trends indicate declining trust in nonprofits, which is a key factor contributing to the challenge many nonprofits face in soliciting donations and sustaining their daily operations (Lilly Family School of Philanthropy, 2022).…”