Download the Co-op board of director’s Conflict of interest policy.
What is a conflict of interest?
A conflict of interest is when a board member has a personal interest that is in conflict with the interests of the organization. The board member may be influenced by this personal interest when making a decision for the organization, or he/she or another person or organization affiliated with that board member could stand to gain some benefit or advantage.
Sometimes, the public perception of conflict of interest is as damaging as an actual conflict of interest. Directors need to be aware at all times that they are acting in the broad public good, and even perceived conflict can erode public trust in a board.
Working through conflict of interest is a part of all board work. As an outside example, boat owner/operators who are board members of a Harbour Authority Board have implied conflicts with some decisions because of their use of Harbour facilities. As specific examples, Ringside Business Owners who are board members have implied conflicts with some decisions of the Coop Board, and Contractors hired by the Coop who are board members have implied conflicts with some decisions of the board. Board Directors must consider how to put the good of the organization above their own personal interests when making all board decisions, and policies are in place to protect the board from conflicts of interest.
Other common areas of conflict include financial conflict, affiliations with multiple organizations or conflicting roles and relationships.
How do we protect our board from conflict of interest?
Make disclosure a normal practice or habit
Disclosing potential areas of conflict should be a typical practice of the board. For example, it would be common practice for a board member to say, “This agenda item involves revamping our information management systems. Since my brother is one of the main computer retailers in this area and will be considered as a vendor, I have a potential conflict of interest and I am going to excuse myself from the room for this discussion”. As a practical example, a board member who is also a Ringside business owner, does not vote on any issues pertaining to the Ringside, and leaves the room when the voting/discussion takes place.
*Disclosures and excusals from voting will be recorded in the meeting minutes.
Get written bids for purchases
One or more competitive written bids will be attained if the board is making a major purchase. This will ensure that prices and products are comparable, if a board member stands to benefit financially.
Have a conflict of interest policy in place
A clear statement that defines conflict of interest is established, and renewed annually. All board members must sign the policy upon election.