Trust, Transparency and Ethical Conduct

When it comes to issues of trust, transparency, and ethical conduct, the question for UJA-Federation of New York has never been “Have we done enough?” Instead, they push to answer tougher questions: What more can we do to raise the standard? How can we be more transparent? What measures do we need to take to avoid conflicts of interest? Every decision and every investment needs to be made with full transparency.

At the recent General Assembly in Washington, D.C., John Ruskay, UJAFed NY’s executive vice president and CEO, spoke on a panel titled “Betrayal, Redemption, and Reward in a Post-Madoff World.”

As the panel touched on many of our core themes, John has graciously made his remarks available to us:

For me, this session comes down to the question in the forum description:

“How can we, as a system – and as Jewish leaders – best use this moment of transition to promote organizational success and financial resource development through good governance and ethical practices?”

There is much to say here, but I want to use the few minutes allotted to touch on three broad areas:

1. Values

2. Policies

3. And People, i.e. leadership

And hopefully we might deepen in the time allotted for questions and answers.

Values – From my perspective, we will not be able to learn the lessons we need to learn unless we acknowledge that the economic crisis resulted from many things. Sub prime mortgages. Interest rates. Government policies.  Compensation policies. Corporate Governance.  And more.

But the crisis also reflects troubling cultural and value trends.

The 1980s, and 90s and the first decade of the 21st century can be characterized by the insatiable pursuit of more; and bigger.

Unbridled individualism. Including in philanthropy. (I will only support my…)

This is the result of broad cultural trends and history including the collapse of all collectivist models and the dialectic that framed the culture wars.

If we acknowledge that this was more than the results of misguided economic policies, if we are prepared to explore the deeper social and cultural factors, then we as a people and as a Jewish community, have something valuable to contribute.

As but one example, in 17th and 18th centuries European Jewish communities, one was prohibited from building a home raised higher than the synagogue.

At Passover, we say: avadim hayinu, we were slaves; on Yom Kippur, al chayt shehatanu, for the sins we committed.

We are part of a people with a nuanced understanding of the relationship of the individual to the community and the responsibilities of the individual to the welfare of the entire community.

There are value issues that must be acknowledged.

Second, policies and procedures. Every organization must make a decision that it seeks to achieve the highest standards of good governance, accountability, and transparency.

Once a decision is made by senior volunteer and professional leadership it must take the time to learn from best practices to implement procedures which minimize, or better, avoid conflicts of interest; maximize transparency; create open channels for volunteers and staff to call attention to possible violations, and more.

At least since 1997, the organization which I lead, UJA-Federation of New York, has worked in an ongoing way to implement the highest standards of not-for-profit accountability and integrity.

In 1997, we adopted a written set of practices called “ethical guidelines and practices,” which reiterate the fiduciary responsibility of the organization and include sections on conflict of interest, disclosure, special committee rules, legal requirements, and more.

4 quick examples:

1) a UJA-Federation board, commission, or committee member who also sits on the board of a network agency is prevented from participating in UJA-Federation grant-making decisions concerning that other agency;

2) those who serve on an agency board are precluded from also serving as the chair of any of UJA-Federation’s commissions;

3) board members are prohibited from soliciting business from staff members;

4) volunteer members of UJA-Federation’s investment committee are prohibited from managing any UJA-Federation funds.

These were adopted in 1997 and of course it was the last provision which protected UJA-Federation from losses of endowment funds from the Madoff scandal.

In 2002, we created a standards and conflict committee, chaired at present by former New York State Attorney General Robert Abrams, which studies issues which are not crystal clear, allegations of misconduct, and such questions as to how UJA-Federation should interact with those accused, but not convicted, of wrongdoing.

The committee is guided by the assumption that the preservation of UJA-Federation’s reputation and maintaining the highest standard of integrity is of paramount importance.

In 2003, we instituted a whistleblower policy and it is now included in our personnel manual and posted on our website. It facilitates the confidential reporting of claims of wrongdoing with the knowledge that the claims will be investigated fully and impartially.

In 2006, the title of our general counsel, Ellen Zimmerman, was expanded to General Counsel and Chief Compliance Officer. She regularly conducts trainings on ethics and compliance for all new board members and staff.

All of this is framed by a recognition that the balance sheets of a not-for-profit list many assets: endowment funds, donor pledges, buildings. But no asset is more important, certainly for a federation, than donor trust.

Every volunteer and professional must be obsessively committed to conducting themselves and participating in organizational decision making with a total commitment to maintaining donor trust.

Which brings me to the third subject:

The People and leadership – One of my heroes in this whole area is Larry Zicklin, who served as UJA-Federation’s president from 2001-2004, teaches business ethics at NYU and Wharton, and who was instrumental in creating our Standards and Conflict committee.

Larry imbued in me the bedrock idea that every decision we make – large and small – should be made as if it might be covered on the front page of The New York Times.

Several times a year, when issues are difficult, one of us evokes Zicklin’s admonition. It tends to clear the air quickly.

While procedures and policies are essential, and there is more for all of us to learn in this area, in the end, large not for profits like federations need people who are deeply committed to this broad area .

The tone at the top is critical on issues large and small.

Without this commitment by senior leadership, written policies will not be adequate.

I refer to:

Commitment to transparency;

The disposition to present gray areas to groups so larger numbers can study and opine;

When considering individuals  for senior volunteer and professional positions at a federation or any not-for-profit organization, the consistent ongoing commitment of the individuals to conduct themselves with integrity; as if decisions could be on the front page; to obsessively recuse oneself, must now be standards for selecting senior leadership in each of our organizations.

Said differently, we need senior colleagues who speak not only of the steps taken, but those who continue to ask: what else can we do? How can we conduct ourselves with more transparency? How can we raise the standards even higher?

What is at stake is nothing less than our ability to continue our sacred work of caring for all and actualizing the highest values of collective responsibility.