1 Introduction
1.1 Overview
This case study revolves around the “non-profit” i.e. Corporate Philanthropic organization known as National Kidney Foundation (NKF) which aims to give aid to needy kidney patients. It relies largely on donations to fund the organization’s most direct way of helping the patients which is to set up dialysis centers.
Across its development as an organization, NKF has also adopted other forms of helping needy kidney patients albeit in more indirect ways. NKF has set up many social initiatives and garnered Corporate Philanthropic actions by other organizations. These initiatives are funded by the public’s donations.
1.2 Underlying major issues
In this case study, a noteworthy major issue is (1) the appropriateness of the strategies which NKF had adopted in order to raise funds. Other major issues include whether the money donated to NKF has been spent appropriately by the organization. These expenditures include employee salary, infrastructure maintenance (e.g. building facilities), business trip fees (e.g. travelling and accommodations). Hence, this also brings up another issue of whether (2) a more than necessary proportion of the donations have been spent on the luxury of the staff members and their self-interests rather than to serve the cause of helping kidney patients and if (3) the staff members are being overpaid for their contribution to the organization. All these issues mentioned will be highlighted and analyzed in greater detail later on in the essay.
2. The major issues
2.1 Appropriateness of fund-raising strategies
2.1.1 Engaging celebrities to garner donations
This refers to engaging many foreign and local celebrities to perform stunts and make emotional appeals to viewers to donate what they could. Essentially, it was to use the celebrities’ popularity to garner donations from the audience.
The positive side to this technique was its monetary effectiveness. As seen in the case study, in the charity show held by NFK, S$4.5 million was raised in 1994. The funds can be potentially used to set up more social initiatives to help needy kidney patients.
However, effective as it is, it is necessary to consider the underlying reasons to why the audiences donate. Plainly, the audience are donating because they are fans of the celebrities and not truly and entirely for the sake of helping the needy kidney patients. When they call the hotline to make donations to NKF, what they hope to do is to support their idols who are performing on the show rather than out of sympathy for the kidney patients. This is a problem and inappropriate because the intended charitable message is not delivered to the audience. Hence, the meaning of the funds will differ and not be inclined towards the needy. This also demeans the purpose of the charity show and degrades the “human heart” aspect of NKF.
Moreover, because the audience are donating mainly for the sake of supporting the celebrities they admire, such charity shows face the possibility of being exploited to boost the popularity of such celebrities. Charity shows could be used as platforms by ill-intentioned celebrities who do not perform for the sake of helping the kidney patients but are driven by their own self-interests instead.
Thinking a step ahead, this strategy has its severe future consequences as well. As NKF is handed down to future generations, since the audience have a deeper impression of the celebrities who performed on the show more so than NKF’s mission, this will also obscure NKF’s reputation as a corporate philanthropic organization. Its ability to engage celebrities will be the main determining factor of the amount of donations that NKF can gather rather than its ability to convey the needs of need kidney patients to the public. Hence, it threatens the sustainability of the donations.
Hence, I believe that the engagement of celebrities could be effective in raising funds but it tends to mislead the audience and degrade the actual cause of NKF i.e. helping needy kidney patients. Overtime this could lead to unwanted repercussions like exploitation and the degradation of the emotional aspect of NKF’s mission.
2.1.2 Use of telemarketing techniques to call for donations
This refers to use of telemarketing techniques to attract or retain donors. Although its initial purpose was to garner more donations to fund their social initiatives, NKF had infringed on the privacy of the individual donors. Even if we assume that the funds are all for a good cause but this technique also compromises on human rights, especially in the field of privacy.
Besides infringing on personal privacy, I feel that it is an ineffective technique as well. Realistically speaking, it is difficult to convey the message of helping needy kidney patients over the telephone and to invoke feelings of sympathy to convert neutral parties to donors. As such, what this technique is essentially doing is socially pressurizing individuals or organizations to donate.
For telemarketers directed to retain donors, this could be counterproductive because donors who intend to donate only once could be repelled off at the thought of being pestered by NKF to donate again. Not only does it not retain donors but it could repel off potential donors who simply want to help the kidney patients on whim but do not want any lingering commitment to it.
2.1.3 Recruitment of youths to raise funds
I felt that the use of attractive lucky draws as incentives to encourage volunteerism was inappropriate. Similar to the engagement of celebrities to raise funds, it could give the wrong impression that volunteers are helping to raise funds not out of sympathy but for other selfish reasons instead. In which case, it could be that volunteers are volunteering only for a chance to win the lucky draw. This undoubtedly will help to raise funds for kidney patients but it degrades the mission of NKF to help needy kidney patients due to the incentive – driven intentions of the volunteers.
2.2 Allocation of donations
2.2.1 More than necessary expenditure on staff members
The case study mentions that there were excessive expenditures on Durai’s airplane ticket because he flew a first class flight. Moreover, the donations garnered by NKF from the public were also used on the installation of a golden tap and on Durai’s road tax and his personal Mercedes. Hence, this raises the debate among the public whether their donations are being abused and serve more to increase the luxuries of NKF’s staff members rather than to serve their mission of helping needy kidney patients.
I feel that the main problem here is the lack of accountability, both internal and external. From an external point of view, most of the donations had been given on the basis of trust by the public so they do expect the donations to be channeled to the appropriate people i.e. the kidney patients. What the public do not see or are aware of is the distribution of the funds. To quote the case study, there is lack of transparency.
From an internal perspective, there is a lack of audits and monitoring mechanism set in place. Lack of audits increases chances of employees committing unethical acts and lowers chances of detecting such acts. Selfish employees will face less risk of being discovered in the abuse of the public’s donations for personal gains. Moreover, due to lack of monitoring mechanisms, proposals get approved readily by default without even scrutinizing the details, which makes it extremely easy for staff members to incorporate some extra expenditure on personal pleasure like excessive accommodations. Even if such acts were to be detected, it is extremely difficult to trace back who was the person responsible for the act due to the poor audits made, which increases chances of letting the unethical employees off scot-free.
2.2.2 Staff members being overpaid
Similar to excessive expenditure on the staff members, in this case study it referred mainly to how Durai was getting paid with an inflated compensation package while giving the false impression to the public that he was receiving less. As a result, funds which could have otherwise been allocated to help kidney patients are being paid to the staff members for the effort that they do not deserve. This also undermines the trust that the public has in NKF as they will feel betrayed and donate for the wrong cause. The causes are similar to section 2.2.1 (above).
With regards to Durai’s compensation package in particular, it was an obvious attempt to pocket the public’s donations. However, the reason for the constant backdating of his compensations and the ongoing process of refusing salary payment and the offering of payments thereafter in the form of bonuses are to serve as a buffer for him to eventually receive a larger and larger portion of the donor’s donations for his own self-benefits though in a subtle manner. Personally, I disagree with his actions because the funds are meant solely for the needy kidney patients. To pocket them for his own benefits is unethical and immoral. It is equivalent to betraying the public’s trust. Moreover, this is also a form of betrayal to all the sponsors whom he had collaborated with as well as all the celebrities whom he had engaged to perform stunts for NKF.
Although we cannot deny all the efforts that Durai had put into the organization so far but the whole purpose of corporate philanthropy is to give voluntary aid to the needy. It was not meant to have any aspects of profits to it as it operates on the Charity principle. The main cause of this problem was the desire for profits and personal greed led to unethical pocketing of donations funds. As such, if Durai had declared and changed the status of NKF to that which operates on the Stewardship principle instead then the public would have been more accepting of part of the donations or profits to be used to keep the organization going.
3 Identifying the actions or inactions of the NKF Board Members
As seen in the analysis of the major issues in the case, the roots of the problems here include lack of external and internal accountability, lack of transparency and lack of monitoring mechanisms set in place. The sources of these problems all stem from the inactions and actions of NKF’s Board members.
According to the case study, the audit committee (AC) set up was to meet every 3 months to review audit plans and evaluate the adequacy of the internal control systems. However, the AC had never met 4 times a year. This is clear evidence that the audits made are not up to date or not even made i.e. poor maintenance of audit systems. Hence, this leads to lack of internal accountability because there are no records of actions taken by staff members. Another cause of lack of accountability is also contributed by the loss of all the meetings’ minutes by the financial committee (FC).
Lack of monitoring mechanisms is also demonstrated by the approval of proposals by default instead of through collective decision making, which provides an avenue for unethical employees to implement subtle plans for their own benefits. In which case, this refers to how Durai had used the donor’s donations to pay for his own car tax and expenses but disguised it under the notion that it was to serve the cause of the organization.

4 Suggestions
To tackle the actions or inactions of the NKF Board members, I have a few suggestions as described below to basically foster a better ethical climate and also to prevent future public fraud allegations.
4.1 Foster better ethical climate
4.1.1 Written codes, standard procedures (+ enforcement) and Ethics Training
Currently, as NKF board of directors is formed on the basis of trust, there is no specific framework on getting the proposals approved so there should be standard procedures installed. If standard procedures were enforced and set in place, such as disciplinary actions for violators of the standard procedures for proposal approval (refer to section 4.1.3), the board of directors will be forced to relook at suspicious suggestions and less employees will dare to suggest plans for their selfish gains. Moreover, to ensure that any plan is completely ethical, it should go through the Ethical Decision-Making Process below:

Also, a mission alone is insufficient to guide the organization. A constant incorporation, training and reminder about the code and conduct are necessary to remind the staff members to be ethical and to understand what they are working for. In NFK, they are working towards helping needy kidney patients. As such, I suggest an ethics training program conducted throughout the organization on a working day once every half a year that will bond the organization together such as personally experience helping out at a dialysis treatment center, interacting with the patients so that they do not stay behind an office desk and lose their sense of empathy. They will then be reminded of what they are working for and will think twice if they are ever tempted to abuse the funds for their own interests.
4.1.2 Audits, minutes and reporting avenue
Currently, NKF’s audit systems are not maintained properly and minutes are not accessible easily. Hence, I will suggest reinforcement of the original audit systems and for minutes to be taken. Moreover, a backup of the minutes should be stored in NFK’s database system so that it is easy to trace back the respective suggestions made or actions taken by the staff members. Any decision will have someone to account for. Disciplinary actions for people who do not follow this standard procedure should be taken so that staff members can see the necessity of these measures.
Moreover, if any unethical acts are found to be committed by certain employees, an anonymous reporting mechanism should be set in place to allow detection of such acts. The sooner such an act were discovered, the more leverage the board of directors will have in keeping the situation under control.
4.1.3 Disciplinary actions for violators
Deterrence measures are necessary to prevent employees from committing unethical acts in NKF. Some of the measures include salary reduction, bonus reduction and reduction in employee benefits e.g. Health insurances.
4.2 Prevent fraud public allegations (i.e. dealing with media and upholding public image)
A major cause of fraud allegations by the public to NKF is because the allocation of funds was not make known to the public. There was a lack of corporate transparency. Internally, assuming that the above suggestions were all set in place, internal corporate accountability will be naturally installed as well. As such, some information can be placed on the NFK website to garner trust from the public that the funds are being allocated largely to help the needy. This reduces suspicions on whether the funds are allocated to and what they are spent on.
Needless to say, the essential information will be decided by the board of directors and personnel must be assigned to maintain the website. As such, this will reduce all controversies by the media.