Friday, February 22, 2008

Managing Conflicts of Interest

A recent question on this subject had me looking for yet another book on the shelf. Managing Conflicts of Interest: A Primer for Nonprofit Boards, by Daniel L. Kurtz and Sarah E. Paul. The book acknowledges the difficulty in identifying problematic conflicts of interest and gives recommendations for practice.

The nonprofit sector depends on the spirit of volunteerism displayed by board members’ personal and professional knowledge, experience, and community engagement. These board members can also face challenges in carrying out their board responsibilities precisely because of the number and breadth of associations and connections they have. Making unbiased, independent decisions on behalf of the organization isn’t always easy. So, not only should nonprofit board members and executives be able to recognize potential conflicts of interest, but they must determine when these conflicts present areas of concern and what to do about them.

1. Stay up to date on the most recent state and federal laws governing conflicts of interest.
2. Be aware of situations in your organization that give rise to conflicts of interest
3. Create a conflict-of-interest policy and the need for proper disclosure
4. Establishing a procedure for responding to existing conflicts
5. Maintain an organizational code of ethics and an overall culture of integrity

The key for nonprofit boards is not to try to avoid all possible conflict-of-interest situations, but to identify and follow a process for handling them effectively. How an organization manages conflicts of interest and assures open and honest deliberation affects all aspects of its operations and is critical to making good decisions, avoiding legal problems and public scandals, and remaining focused on the organization’s mission.

Julie Vreeland, NRS, Brainerd

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