My May newsletter will be dealing with ‘conflict of interest’ however I am blogging a brief article on it in quick response to a number of questions that arose at a strategic planning session earlier last week. Trust this is helpful until the May newsletter is sent out next week.
Conflicts of interest are among the most difficult issues for any volunteer board of directors to deal with. This is particularly true in smaller organizations that must rely on board members to do some of the organization’s basic work, manage its programs, and provide specific expertise, and who may even be beneficiaries of the organization’s services. The following sample policy is offered for adoption or adaption to the specific circumstances of your organization. Also in this section are conflict of interest scenarios that your board may find useful to discuss.
Sample conflict of interest policy
Members of the board of directors shall act at all times in the best interests of the corporation rather than particular interests or constituencies. This means setting aside personal self-interest and performing their duties in transacting the affairs of the corporation in a manner that promotes public confidence and trust in the integrity, objectivity and impartiality of the board. Members of the board shall serve without remuneration. No director shall directly or indirectly receive any profit from his or her position as such, provided that directors may be paid reasonable expenses incurred by them in the performance of their duties. The pecuniary interests of immediate family members or close personal or business associates of a director are considered to be pecuniary interests of the director.
Definition of conflict of interest
• Board members are considered to be in a “conflict of interest” whenever they themselves, or members of their family, business partners or close personal associates, may personally benefit either directly or indirectly, financially or otherwise, from their position on the Board.
• A conflict of interest may be “real”, “potential” or “perceived”; the same duty to disclose applies to each.
• Full disclosure in itself, does not remove a conflict of interest.
Principles for dealing with conflict of interest
• The board member must openly disclose a potential, real or perceived conflict of interest as soon as the issue arises and before the board or its committees deal with the matter at issue.
• If the board member is not certain s/he is in a conflict of interest position, the matter may be brought before the chair, executive committee or board for advice and guidance.
• If there is any question or doubt about the existence of a real or perceived conflict, the board will determine, by vote, if a conflict exists. The person potentially in conflict shall be absent from the discussion and vote.
• It is the responsibility of the other board members who are aware of a real, potential or perceived conflict of interest on the part of a fellow board member to raise the issue for clarification, first with the board member and, if still unresolved, with the board chair.
• The board member must abstain from participation in any discussion on the matter, shall not attempt to personally influence the outcome, shall refrain from voting on the matter and, unless otherwise decided be the board, must leave the meeting room for the duration of any such discussion or vote.
