Conflict of interest is a sneaky beast that rears its head in odd places.
January is one our favorite months at Nonprofit Network. It is the month that we get to update our Conflict of Interest Disclosure forms.... (wait! keep reading!)
This process allows us to map our sphere of influence, discuss where our connections intersect, and most importantly where these relationships might test our allegiance or loyalty. Our board, staff and volunteers take part in this process. This might surprise you and you might wonder, how does a relationship create a conflict of interest?
We speak to many people about issues of conflict. When we teach board basics – it’s one of the topics that get the most questions and conversation. It’s tricky, confusing and can catch us by surprise.
What makes the concept of conflict of interest so difficult is that the definition in the non-profit world is very different than in the for-profit world. In the for-profit world, conflict is identified by money – who has it and who wants it. In the non-profit world, conflict is defined by allegiance.
One of the legal duties of a board member is the Duty of Loyalty: The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. A Board of Trustees is supposed to be an independent group of thinkers representing the community served who pledges allegiance to the mission of the organization.
By definition, in the presence of a conflict of interest, loyalty and allegiance are challenged.
As a volunteer, it would be nearly impossible to eliminate all challenges to your loyalty and allegiance to the mission of an organization. Without being melodramatic, rarely could a board member be so devoted to a cause. The intent, then, must be to manage these conflicts – share the load with your other board members, work as a team and to help offset a situation where your allegiance is divided.
This is why it is critical to ensure that conflicts of interest between board members and staff are eliminated. Having co-workers, family members or best friends sit on a board together jeopardizes a board’s ability to govern. When boards say they can overcome the appearance of nepotism, self-serving or self-dealing they then need to spend an enormous amount of energy in proving they are successful – energy that should be spent on governance of resources.
Conflict takes away independent (or neutral) thinking – and independent thinking is the test of due diligence. Can we put the mission above self?
Boards must be deliberate about preventing conflict of interest to ensure they can maintain their duty of loyalty.
To review our Conflict of Interest Policy or our other policies click HERE
For an in-depth conversation about Conflict of Interest you can purchase our 1-hour webinar "Managing Conflicts of Interest within Your Organization". Click HERE for those details.
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