Board Policies: Conflict of Interest

A Conflict of Interest Policy will help you ensure that a conflict of interest – a situation where a Board member or staff person attempts to promote a private or personal interest by exercising his or her position to gain advantage - does not exist, or does not appear to exist, between your organization and any of your volunteers.

CONFLICT OF INTEREST - DEFINED

Any situation where a volunteer attempts to promote a private or personal interest for himself / herself or some other person, which results or appears to result in the following:
• An interference with the objective exercise of his / her responsibilities with the organization; and
• A gain or an advantage by virtue of his / her position with the organization.
Conflicts of interest may be real, potential, or perceived.

CONFLICT OF INTEREST – Perceived by Self

If a volunteer perceives that conflict of interest exists, or has the potential to develop, he/she must inform the President, or the Chair, who shall decide if a conflict of interest situation actually exists then, if necessary, move to resolve it. Volunteers may declare a conflict of interest and remove themselves from a specific situation and abstain from discussion and voting. This abstention must be recorded in the minutes.

CONFLICT OF INTEREST – Perceived by Others

In situations where a conflict is perceived to exist by others, the President, or Chair, shall use his/her discretion in determining whether or not a conflict of interest exists, then if necessary, move to resolve it.

Due to the nature of volunteers’ responsibilities, it may be, in some cases, necessary to restrict the activities of the individuals serving as volunteers to ensure that a conflict of interest does not, or does not appear to, exist.

COMMON AREAS OF CONCERN:

There are a number of areas where there can be the potential for conflict of interest by board members. It is important to review these areas and decide as an entire board how they are to be handled.
 

ACCEPTANCE OF GIFTS

Some organizations consider the acceptance of gifts a conflict of interest. A board must determine its opinion and develop a policy. For example, some organizations have a policy that says: A volunteer shall never accept any gift or service that could be viewed as payment for services rendered through his / her position. However, a volunteer may accept any gift, which is:
• the normal exchange between friends;
• the normal exchange of hospitality between persons doing business together; and
• tokens exchanged as part of protocol.

NON-ARMS LENGTH DEALINGS

Another area to consider is the hiring and/or contracting of family or close friends for business purposes. Volunteers who exercise regulatory, and/or discretionary control, over others must not give, or appear to give, preferential treatment to:
• family members, friends, business associates and/or former business associates; or
• any organization that they are presently, or were formally, associated with.

USE OF INSIDER INFORMATION

Volunteers must manage their private affairs so that neither they, nor their relatives, friends, business associates, or former business associates, benefit, or appear to benefit, from information not available to the public.

A volunteer must not reveal information to any unauthorized individual prior to its public release date.

COMMITTEE MEMBERS

Board members should always be aware of other committees on which they serve. In some cases, directors should not be sitting on committees or boards belonging to their organization’s voting membership. Being on a member board, or committee, may imply a conflict of interest – the member organization could be given special consideration over others. If this allowed, the board member should declare a potential conflict of interest upfront, and remove herself/himself from any votes that may be identified as conflicting interest.

Also in some cases, but not all, individuals employed by the organization, or any one of its member organizations, should not serve as a volunteer on the board of directors. In some cases, where no funding decisions are involved, a paid staff person for a member organization, may serve on a committee, and in some cases be on a board as a volunteer.

CONFLICT OF INTEREST STATEMENTS

Members must represent “unconflicted” loyalty to the interests of the corporation. This accountability supersedes any conflicting loyalty, such as that to advocacy or interest groups and membership on other boards or staffs. It also supersedes the personal interest of any board member acting as a consumer of the organization’s services.

Members must avoid conflict of interest with respect to their fiduciary responsibility.

a. There must be no self-dealing or any conduct of private business or personal services between any board member and the organization except as procedurally controlled to assure openness, competitive opportunity and equal access to “inside” information.
b. When the board is to decide upon an issue, about which a member has an unavoidable conflict of interest, that member shall absent herself or himself without comment from not only the vote, but also from the deliberation.
c. Board members must not use their positions to obtain employment in the organization for themselves, family members or close associates. Should a member desire employment, he or she must first resign.
d. Members will annual disclose their involvements with other organizations, with vendors, or any other associations which might produce a conflict.

Board members may not attempt to exercise individual authority over the organization except as explicitly set forth in board policies.

a. Members’ interaction with the chief executive or with staff must recognize the lack of authority vested in individuals except when explicitly board-authorized.
b. Members’ interaction with public, press or other entities must recognize the same limitation and the inability of any board member to speak for the board.
c. Members will give no consequence or voice to individual judgments of CEO or staff performance.

Members will respect the confidentiality appropriate to issues of a sensitive nature.

ANNUAL DECLARATION

It is common practice, for each board, and/or committee, member to make an annual declaration of involvement within other organizations, which may be seen as a real, or perceived, conflict of interest.

ACTION TAKEN IF A CONFLICT OF INTEREST ARISES

If a conflict of interest occurs, the President, or Chair of the relevant committee, may consider the following options:

• remove the volunteer from the responsibilities which are causing conflict;
• accept the volunteer’s resignation; or
• the volunteer may remove himself or herself from the outside situation that is causing conflict.

Content for Conflict of Interest Policy was reprinted with permission in 1999 by SaskCulture as part of the SaskCulture Inc. Handbook for Cultural Organizations. Updated March 2014

Other links:

Conflict of Interest Policy Samples, Council on Foundations, 2010

 

DISCLAIMER