Lately, there’s been a flurry of sexual harassment scandals involving celebrities and powerful industry insiders such as Harvey Weinstein, James Toback, Kevin Spacey, and others. The public’s anger at these men has been swift, although in many cases their appalling behavior was an open secret for years or decades. They are now paying a price, as Harvey Weinstein has been fired from his company, and Netflix has cut ties with Kevin Spacey, to name just a couple of examples.
Among the many lessons society draws from these examples, nonprofits should take this as a reminder of the importance of a particular contract provision: the morality clause.
This clause is likely what allowed Netflix and The Weinstein Company to act so quickly, and it is an even more important consideration for nonprofits (for whom reputation is everything).
Whether your nonprofit has engaged a celebrity to receive an honor or attend a gala, contracted with a corporate sponsor led by a public (or not so public) figure, or partnered with a company or individual on a commercial co-venture, you want to be able to distance yourself as soon as possible from someone whose behavior could taint the organization’s reputation. And you don’t necessarily want to wait until the accusations are confirmed or the matter is decided in court (although circumstances vary on this point). Many times, the mere accusation of bad behavior can be enough to turn off your donors and grantors.
That is why I often recommend a morality clause, particularly in corporate sponsorship agreements and commercial co-venture agreements.
Ideally, a morality clause should:
An organization may not have the bargaining leverage to insist on a morality clause that is this robust. But if you ignore the issue altogether, your organization may find it difficult to distance itself from the next person who is shamed by the public for his or her bad behavior.This entry was posted in Contracts. Bookmark the permalink. ← Mark Zuckerberg’s Unconventional Approach to Philanthropy