Blogging about life in Minnesota, raising our six kids with Down syndrome while battling Breast Cancer.

Be the kind of woman that when your feet hit the floor in the morning the devil says, "Oh shit! She's up!"

Thursday, July 28, 2011

Conflict of Interest: What is it?

Are you involved with a non-profit organization and concerned about conflict of interest? Do you wonder what's o.k and what's not? "Conflict of Interest", when it comes to non-profits, is a commonly misunderstood problem. It's important to make sure the organization you're working for or with has taken steps to avoid issues revolving around conflict of interest. Several people have come to me lately, asking what I know about "Conflict of Interest" when it comes to non-profit organizations, and I told them I would do some digging and answer their questions here. Keep in mind I am NOT an attorney. Not even CLOSE in fact! It has also been several years since I've sat on the board of a non-profit organization.

I know conflict of interest is discussed a fair amount in board meetings, and I remember voting on a conflict issue when I wasn't completely sure I understood the problem. One example presented to me by a reader was this, "If a non-profit requires a client to work with a specific company, when an employee of that company sits on the board of the non-profit, meaning a board member is profiting off the decision of the non-profit to require people to work with that company. Would that be seen as "conflict of interest?"

From what I'm finding, and what I remember from previous board decisions, yes, that is a very clear case of Conflict of Interest. In that particular case, the non-profit could avoid conflict of interest by offering several different choices to the client. Those choices should offer the same or similar level of services and be competitively priced with one another, which would allow the client to choose who to employ rather than being forced into that decision.

You can go here to read more about how to avoid Conflict of Interest with non-profit organizations. I hope you'll find it helpful. I found it kind of interesting to read as past issues with non-profits came to mind.


Stephanie @ Ralphcrew said...

So, how about an illustration to clarify the issue?

Let's say you run a non-profit org that provides grants for families to purchase iPads for their non-verbal children.

An employee of a business that sells iPads sits on your board.

You require grant recipients to purchase their iPad at the board member's store.

Is this an adequate illustration of a conflict of interest?

Leah S. said...

Stephanie, yes that is a good illustration of conflict of interest. The organization giving the iPad grants cannot tell the family that they MUST buy from the board member's company. (after all, that wouldn't be good financial stewardship if there's another company that offers them at a better price.) But they can give a list of "approved companies", or suggested companies to use who offer ipads at a comparable price, including the company owned by the board member.