Tainted Money?

What if a major donor of yours - one whose name is featured on your building plaque - were to be arrested and found guilty on charges of fraud and embezzlement? Would you remove his name from your building? Would you return the money? Would you make a donation to the fund for those who he swindled?

These are not just abstract ethics teasers for the many organization in the Aspen, Colorado area that were philanthropic beneficiaries of the late Ken Lay, who died just after conviction (but before sentencing) for his role in the Enron scandal.

The Aspen Music Festival and School is one organization facing this question. Their Garden Court bears the Lay name in prominent signage. The University of Missouri is wondering what to do with a $1.1 million endowed professorship Lay donated to the school's department of economics. In Katy, Texas, the YMCA of Greater Houston has no such problem; Lay wrote them a letter just after his conviction asking them to remove his name from their facility.

Had Lay lived, would he have released all of his Foundation's beneficiaries from their obligation to recognize him as a donor? This is a question of donor intent that we may never know the answer to. Meanwhile, nonprofits have to decide what they will do about it.

When Robin Hood steals from the middle class to enrich himself, but then gives a little bit back to the poor, how tainted is that money? Do you continue to promote your association with a questionable donor?

Public relations expert Jeanette Darnauer, owner and founder of Aspen-based Darnauer Group LLC, thinks distance is the best policy:

An organization's reputation takes years to build and it can be destroyed in a heartbeat. I think the music festival should do what's right to maintain their integrity and to protect their reputation. I certainly think they have a stellar reputation. But Ken Lay was convicted of hurting a lot of people. Any continued association with him is negative for the festival. I don't think they should disgrace their name by continuing to honor him by leaving his name in a place the public can see.

If you were on the board of the Aspen Music Festival and School, what would you do?

Tags: nonprofit, ethics, donors, Ken Lay