Fiduciary Standard

1. Should nonprofit and charitable organizations be held to a high fiduciary standard? Why? Is the Red Cross being held to an unreasonable standard in this case? What should one consider in answering these questions?

2. Should charities, if they are given more money than they need for one project, shift the funds to other worthy projects that are underfunded? Otherwise, what should they do? Return it or spend it needlessly? What principles and ethical perspectives apply here?

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3. What ethical obligations do nonprofit organizations and charitable organizations in particular owe to donors?

4. Often working closely with government agencies when responding to emergencies and a federal instrumentality by virtue of its congressional charter, the American Red Cross is required to fulfill responsibilities delegated by the federal government (including providing family communications for U.S. military personnel). The IRS gives charities nonprofit status, which means they are exempt from taxes and some other forms of government regulation. Given this special relationship and the need for public confidence and trust, does government have an obligation to ensure proper stewardship, or should this issue be worked out without government intervention, perhaps in the marketplace?

5. In this case, did the Red Cross operate in the public interest? Why should or should not this be among its concerns? Some might argue that, for nonprofits, “The challenge . . . is for the board of directors to provide direction and leadership while meeting the competing needs of multiple stakeholders, as well as reconciling the rival demands of both the fiduciary principle and the common good principle”. Do you agree or disagree, and why?