It is a conflict of interest when two different interests clash and the one has to give way to the other. It is important to face up to conflicts of interest early before they become too big to handle.

Example: a person serving as both a board member while working as a research consultant for the same NPO. This is a conflict of interest because:

  • The board member serves voluntarily on the NPO’s board. Although he/she may have some expenses covered, the member is not paid for time spent at board meetings.
  • The board member is being paid as a consultant doing research for the organisation. This clashes with his/her tasks as a board member, for example, in drawing up a policy or approving a budget on consultants.

An example of some how this conflict could be dealt with:

  • The board member could step down as a member of the board;
  • He/she can stop being a consultant for the organisation,
  • Or the board member could offer to do research work voluntarily for the NPO.

To prevent a similar scenario in future, your board should have a policy for handling actual or potential conflicts of interest. For example:

  • The board member must fully disclose the facts about the possible conflict of interest as soon as possible.
  • The board must minute the disclosure of the next meeting.
  • The board can investigate the conflict of interest.
  • The member should have a chance to explain at a board meeting, but should not be present for discussion and voting on the issue. 

Some more conflicts of interest you should try to avoid:

  • When full-time staff members ‘moonlight’ – do other paid work on the side either during work time or after hours. If a staff member is employed part-time, they can do other work, as long as it doesn’t interfere with organisational time or work.
  • When a board member sits on the board of another NPO providing similar services and competing for clients with your NPO. It should also be a conflict of interest if your NPO and the other organisation are asking the same donors for funds.
  • When the CEO/Director, a programme manager or member of the board has a personal relationship with another member of staff – this can lead to compromising situations such as favouritism or at least feelings that someone could get special treatment.
  • When a person in a position of authority is part of a decision to employ a partner or family member for a position in the NPO or on the board – they should rather be excused from the discussion.
  • As a board member, the CEO/Director should withdraw from discussions on his/her own performance or conduct.

Can you think of some situations of conflicts of interest you have experienced in your NPO, on your board or heard about in other organisations? What systems and/or policies do you have in place to avoid or handle them if they arise?


REFERENCE

Attracting Support Kit for NPOs: Book 1 – Building an effective non-profit board | How should your board govern and sustain your organisation? [pages 28 – 29]

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