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Running Head: ETHICS IN PUBLIC BUDGETING 1

ETHICS IN PUBLIC BUDGETING

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ETHICS IN PUBLIC BUDGETING 2

In various organizations and institutions, money for carrying out functions and designated

services might also be acquired through funding. There are ethics,however,to be upheld in the

utilization of funds, through putting the money acquired for the right use. This paper brings out a

summary of the article Education charity to pay millions for misusing funds, by Sherman (2013).

The ethical issue in the article is stated in the paper as well as an explanation on how the ethical

issue might affect the budget funding request of the institution in the article.

Summary

Sherman (2013) gives the account of the New York reaching the decision of $7.7 million

as a settlement with the Pearson Charitable Foundation (PCF). The article states that PCF used

funds in a manner that benefited them, through dealing with the Pearson Inc. (PSO) an affiliated

for-profit organization which is against the law. PCF as a non-profit organization, according to

the law, should not ‘misuse charitable assets in order to benefit their affiliated for-profit

corporations.’ (Sherman, 2013).

According to the article, PCF is an education charity which develops materials for

commercial sells through PSO. The materials are meant for charitable use in supporting

educational standards in the 45 states. PCF as a Charity organization carries seminars in which

are supposed to benefit institutions as well as learners. Howevers, information sourced from such

are directed for financial gain of PSO.

Ethical issue related to misuse of funds in the article

According to Alexander (1999), the misuse of funds simply involves using funds for

purposes outside of those dictated by the grantor. In addition, Sherman (2013) brings forth how

the PCF uses funds for their commercial benefit through PSO, which is an affiliated for-profit

ETHICS IN PUBLIC BUDGETING 3

organization. The ethical issue involved in this case is the act of carrying out activities with the

claim that such are charitable with an aim of gaining financial benefit. The case in the paper is

where PCF carries out conferences in which are supposed to be for the gain of the attendants but

however, their main aim behind such is to gain information for commercial purposes.

As brought out above on the relationship of PCF and PSO, their profit affiliated

organization, New York had to take charge in handling the case as it is against the ethics on how

a non-profit organization should deal. Smith (2003), indicates that the act undertaken by New

York in the article is justifiable according to corporate ethics officers and government ethics

administrators who oversees ethical issues involving funds in corporations and governmental

institutions respectively.

How misuse of funds impact future budget funding request

Alexander (1999) states that in the budgetary process, the issue of trust is quite important.

In order to solicit funds, an organization should have quite a good reputation. A company needs

to have individuals who are liable at making sure that funds in the co-orporation are used for the

right purpose. Smith (2003) brings forth the corporate ethics officers and government ethics

administrators in non-governmental as well as governmental agencies for such purpose. With

lack of trust, funds are quite hard to be given out due to the manipulation by individuals in

particular organizations such of that of PCF.

Therefore, the effect that the misuse of funds brought out in the paper by PCF negatively

affects their future budget funding requests. The reason for the above is due to the fact that

Pearson already lacks credibility and therefore, funders’ lacks trust and will less likely give in to

the budgets brought forth by the PCF

ETHICS IN PUBLIC BUDGETING 4

The ethical issue brought out in the paper is in the misuse of funds by PCF which are

directed for educational purposes and was against the ethics of a non-profit organization. Funds

directed to charity in a nonprofit organization are not supposed to be utilized for business

purposes.

ETHICS IN PUBLIC BUDGETING 5

References

Alexander, J. (1999). A new ethics of the budgetary process. Administration & Society, 31(4),

542-565.

Sherman, E. (2013). Education charity to pay millions for misusing funds. CBS Interactive Inc..

Smith, R. W. (2003). Corporate ethics officers and government ethics administrators: Comparing

apples with oranges or a lesson to be learned? Administration & Society 34(6), 632-652.

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