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The Correlation Between Fund Raising and Ethics

Discuss the arguments for and against various approaches to the Smith Family I.C.U. Case Study involving handling the receipt of gifts tainted by scandal or wrongdoing.

Smith Family I.C.U. Case Study

Smith was the chief financial officer for Big Business Company â?" an international, biomedical corporation that employed over 10,000 people worldwide. Smith was credited for much of the companyâ??s success. You were the development director for an academic medical center.

Smithâ??s 18 year old nephew had been treated as a baby for a rare disorder at your medical center and the nephew is now fully recovered. Smith was very pleased with the treatment his nephew received and he was one of the medical centerâ??s most public advocates in the community.

After working with Smith for a sufficient amount of time, you approached Smith in 1995 to make a lead gift of $10 million to launch a comprehensive capital campaign for your medical center. Smith accepted your proposal and funded the gift with $10 million in Big Business Company stock that he acquired through performance based stock options.

Smithâ??s gift was used to fund a $1 million renovation of the pediatric intensive care unit; it was named the Smith Family Pediatric Intensive Care Unit in recognition of Smithâ??s philanthropy. The remaining $9 million was used to fund several named endowments for purposes such as cancer research, to purchase toys for children in the hospital, an endowed faculty position, indigent care, etc.

In 2002, Big Business Company began to collapse due to a number of fraudulent financial transactions that were orchestrated by Smith. Thousands of people lost their jobs. The companyâ??s stock price dropped to almost nothing. Thousands of the companyâ??s employeesâ?? retirement assets were wiped out because they were invested in the companyâ??s stock.

In 2007, Smith was convicted of numerous felonies ranging from securities fraud to money laundering to income tax evasion. Stockholders and former employees of Big Business Company have publicly called for the return of the gift to help compensate them for all the losses caused by Smith.

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It is very clear that it would be unethical for any individual or organization to knowingly accept gifts that were tainted by scandal or wrongdoing. But in this case, it appears that the gifts were accepted years before there was any knowledge of wrongdoing or scandalous activity, so the acceptance of the gifts in 1995 were excepted in good faith, and at that time there was no evidence of wrongdoing on the part of Smith. In addition, ...