Better Practices
© 2002, Association Xpertise Inc. www.axi.ca
The practices described in this area are described as Better Practices for a very good reason. We have a great deal of difficulty with the term best practices used in any other context than to refer to the results of benchmarking exercises involving real and relevant organizations with tangible results. We offer Better Practices related to areas where we feel that change is needed in associations. The Better Practices are intended to provoke thought, and to encourage organizations to think about what they are doing and how they are doing it.
Conflict of Interest
A conflict of interest arises when the interests of a Board member have the potential to be at odds with the best interests of the organization. The Board member’s interests may be personal (the consideration of a family member for employment) or professional (affiliation with a potential supplier to the association).
There are two important aspects to the above description:
A conflict of interest does not exist only when interests are at odds. A conflict of interest exists when there is the potential for interests to be at odds. It is better to include these aspects within the definition of conflict of interest rather than having perceived or potential conflicts of interest that are somehow outside or external to the conflict of interest definition.
A conflict of interest exists in the context of the best interests of the organization. This means that it is not sufficient for the organization to benefit, but how the decision is made is also of importance. It is important that the decision is made by the right individual or group, in an objective and informed manner, and according to all policies of the organization.
The issue of Conflict of Interest can be dealt with head-on and proactively:
Have potential board members sign a conflict of interest statement before they stand for election. Continuing board members should sign the statement each and every year of their service.
In the conflict of interest statement, the signatory should:
agree to abide by the organization’s conflict of interest policy
identify organizations in which they currently hold volunteer or staff positions
attest to the fact that they were not:
a participant, directly or indirectly, in any arrangement, agreement, investment, or other activity with any vendor, supplier, or other party doing business with the association which has resulted or could result in person benefit to them, and
a recipient, directly or indirectly, of any salary payments or loans or gifts of any kind or any free service or discounts or other fees from or on behalf of any person or organization engaged in any transaction with the association.
The conflict of interest policy should include:
The requirement for full disclosure
Abstention from discussion or voting for board members in a conflict
Abstention from discussion for staff members in a conflict (assuming that they do not have voting status)
Develop conflict of interest policies specific to the organization’s circumstances and those activities most susceptible to conflict of interest (e.g. granting of contracts, ineligibility of sitting board members for association jobs)
Develop operating policies to ensure that decisions are made openly and fairly, especially in areas where there are concerns about conflicts of interest.
Encourage self monitoring to address changes that occur subsequent to the signing of the conflict of interest statement
Review the conflict of interest policy at least annually in the context of the board evaluation process.
Explain and discuss the conflict of interest policy in the annual Board orientation.
Make sure you have clear processes that are followed when dealing with conflicts of interest.
Conflicts of interest are common, and cannot be avoided. However, it is important to maintain the integrity of the organization, and how you deal with conflicts of interest impacts significantly on the reputation of the organization.
It is important to reinforce with your board members, and other relevant parties, that there is nothing wrong with having a conflict of interest unless nothing is done about it!