Conflicts of Interest, Reconsidered

If I suggest a different way to think about conflicts of interest, the first reaction may well be “but we don’t think much about conflicts of interest to begin with.”  Perhaps the topic comes up once a year at a board meeting.  Board members review any places where external financial connections might influence them to make a proposal or vote in a way that does not serve the best interests of the organization, and pledge to reveal and recuse themselves as necessary.

Conflicts of interest are much more widespread, and therefore more interesting, than a simple review of your business connections and investments.  A board member dating part of your leadership team?  They not only have an exciting new relationship, but a new conflict of interest, as they reasonably may be biased towards decisions that benefit that person, even at a cost to the organization. The staff person’s son who is enrolled in the nonprofit’s job corps now has a conflict of interest, as well - their son’s salary enriches the family.   Conflicts of interest arise if you receive a favor from the nonprofit that saves you money (e.g. free parking space downtown) or if the perks designed to ease the way for a charismatic founder become personal, as opposed to mission-based.  

However, we can broaden our understanding of conflicts of interest even more.  Board members are expected to contribute unique perspective.  Unlike staff, they can consider the organization’s strategy without fear for their own salaries, but they still carry other kinds of fears and hopes.  They may be the parent of a toddler in a nonprofit preschool, and realize the personal tradeoffs of raising tuition to pay for infrastructure repair.  They could be the relative of someone who uses a less popular program and therefore will hesitate to recommend its termination.  They could be a business person who will profit if main street generally becomes more vibrant. Benefits from "disinterested" perspectives are obviously balanced by the significant benefit of board members who are connected in the community, with have strong context and commitment to the mission.

Instead of valuing disinterest, we need to value deliberate consideration of interests. The ideal culture frames conflicts of interest as a normal byproduct of complex lives and still is diligent about processing the potential implications of any conflicts (or perceived conflicts) that might arise, recognizing the potential damage to the organization’s public image.  In cases where there is connection to a board member’s personal financial interests, the board member can name the conflict and leave the room until that agenda item is over (that absence is noted in the minutes!).  Where the conflict is fuzzier, board members can follow a simple procedure: explore the potential ethical issues and who is affected, consider what courses of action are in line with the organization’s values and ethics, collect any needed advice, and then document their final decision. 

Being deliberate, instead of rushing by potential conflicts or pushing them under the rug, will help people build on individual perspectives to make decisions that are good for the whole, a fundamental skill of civil society.   Handled well, conflicts of interest ultimately benefit our process.