Ten myths of conflicts of interest

There are plenty of myths and misnomers which surround the concept of conflict of interest. Here are 10 of the most common conflict of interest myths.

1. All conflicts are 'bad'

There is a general perception that this is the case but it is not so. What often happens is that the issue gets tainted when the conflict (or public perception) is not declared and managed.

2. It is only about money

Many people think that this is the case but the clear inference is putting interests above those of the organisation. These interests do not need to be financial - for example, benefits could include "stroking the ego".

3. It is only about me (i.e. not about your spouse/kids, etc.)

"Hey - you mean my wife can't benefit?" That is an obvious one. But there are other less obvious ones - stepchildren, extended family, employers, etc.

4. It has got to be real to be a conflict

While technically this is not a myth - the reality is that it is perceptions of conflict of interest that do the most harm to not-for-profits.

5. It is only a small conflict, it doesn't matter

Just like the previous, the perception that you have gained is enough. Declare and manage the conflict, no matter how small.

6. I have a conflict, but it won't affect my decision making

It may not, but how does anyone know if you haven't declared it? Declare and let everyone make the decision.

7. As soon as a conflict is declared you leave the room

If I'm the only one with knowledge about building and we're discussing putting a tender together, why would I leave the room after declaring an interest?

Generally speaking, the "interest" is in the decision making. As long as you don't unduly influence it is fine (unless your constitution or Act - for example, Local Government Act - says otherwise).

Being able to add to a discussion due to your knowledge is fine. But unduly influencing the decision is not.

8. We can't do anything when we know someone has a conflict, but they won't declare it

Assuming that you know of the conflict of interest from public and declarable information sources rather than by something like hacking the villain's computer, you'd ideally tell the chair.

The chair could raise the issue. If there was evidence the chair could rule the vote out of order. If it's just a he said-she said situation, the issue might be entered into minutes so it could be used later.

9. Your company can't sell to the board if you're on it

If you have set a process in place to evaluate businesses of board members (for example, a lawyer providing professional advice) then there are no issues - but document the process of course!

10. You can't have staff members (or clients) on the board because of conflict of interest

While we wouldn't recommend this there is no legal impediment for this occurring (unless you have this in your constitution). It is up to you to decide who can or can't sit on the board (and be a member and vote) - but it must be in your constitution.

You may also like...

Become a member of ICDA – it's free!