Each year, many nonprofit board members are requested to sign a conflict of interest statement. These statements generally require that a board member let members know that they (or their family or the place where they work) have some "skin in the game" depending on the outcome of a particular action. Pretty much these folks do best to sit themselves out of the conversation and the vote. Of course "skin in the game" can take on a variety of colors but a most clear situation is when there's money to be spent and the board member could be the beneficiary. And of course, every board member's fiduciary duty of loyalty requires that members put the nonprofit's interests ahead of their own.
So, the following Philadelphia Inquirer article is interesting to me in that its subject, which is arising out of a political contest, is conflict of interest. It appears that one of the candidates, at one time, was in a position to approve a huge chunk of money to a nonprofit organization that employed the candidate's husband. The challenge by the "authorities" was that such action violated state ethics policies. No clear decision was ever made but for a moment, this serves as a great question about what constitutes a conflict of interest.
If a board has the opportunity to support an institution that fulfills the board's mission and also happens to employ a board member's spouse or relative, what should happen? The cleanest answer: the board member who has a relationship, should declare that relationship and ask the board what it would like the board member in question to do during the conversation. Simple and clean. It's even possible that presuming the board would take a look at more than one possible mission-recipient (which is usually prudent practice), that the relationship is not even relevant - the nonprofit in question just happens to be the best fit regardless of relationships.
Bottom line in conflicts of interest: tell the facts at the start. A reasonable and prudent board will make reasonable and prudent decisions.
From the Philadelphia Inquirer:
In last Tuesday night's debate, Sestak told McGinty, "the Supreme Court actually reprimanded you for ethics for giving millions to a company with a conflict of interest."
He was referring to a case that drew scrutiny, beginning in 2007, when McGinty's nomination was before the state Senate for a second term as Pennsylvania's environmental protection secretary. McGinty had approved more than $2.7 million in grants for a nonprofit environmental advocacy organization that employed McGinty's husband as a consultant. Senate leaders had demanded that McGinty's boss, then-Gov. Ed Rendell, request an advisory opinion from the state Ethics Commission on whether such an arrangement violated ethics laws.
The Ethics Commission ruled that such a grant-making arrangement would violate ethics laws, and the state Supreme Court, in 2009, effectively rejected a Rendell administration challenge to the commission's rationale. In that decision, however, the Ethics Commission did not judge whether the grants already awarded by McGinty violated ethics laws.
McGinty was never sanctioned or reprimanded for her actions.
Marc Levy covers politics and government for The Associated Press in Pennsylvania. He can be reached at email@example.com. Follow him on Twitter at www.twitter.com/timelywriter. His work can be found at https://bigstory.ap.org/author/marc-levy.