Review standard for full understanding of ‘conflict of interest’

• Date: 01 October 2020
• Published date: 01 October 2020
• DOI: http://doi.org/10.1002/ban.31172

B&A For Board Members

DOI 10.1002/ban © 2020 Wiley Periodicals LLC • All rights reserved

Other considerations board members should

keep in mind when they are taking part in virtual

meetings include:

• Learning to use the mute button. When

you aren’t speaking, it’s often preferable to keep

your device microphone or telephone muted,

so incidental noises—especially embarrass-

ing ones—aren’t shared with the whole group.

“I’m always in favor of that, because we can’t

control the background noise in our lives,” said

Schindlinger.

• Handling distractions and virtual “side-

bars.” As Schindingler explains, there are distrac-

tions when working remotely that we don’t neces-

sarily have when we are meeting physically around

the table.

“Like, you might want to go get yourself a cup

of coffee and you might decide to just get up

and leave the meeting for ten or fifteen minutes,

and just let it play in the background,” she

said. “That might really not be OK, especially

depending on what’s being discussed at that

moment in time.”

But if you’ve got a headset on, or you’ve got

the meeting on your phone, and you’re taking the

meeting with you to go get that cup of coffee, that

might be perfectly fine, she said.

“But, maybe turn your camera off for that par -

ticular moment,” she said.

• Dress appropriately. While it may be tempt-

ing to wear more comfortable clothing when

taking part in a virtual meeting, a good rule of

thumb is to dress as you would if the meeting

was in person.

For more information, the webinar, “Best Prac-

tices for Virtual Board Meetings During COVID-19,”

can be viewed at https://bit.ly/3aGan6b. ■

Review standard for full understanding

of ‘conict of interest’

Most board members have at least a cur-

sory understanding of what “conflict of interest”

means, but some might not know fully what that

entails. It’s important that they do, as there are

many situations where a board member should

recuse himself from a vote or input on an organi-

zation’s decision-making or risk violating state or

federal law.

To make sure board members fully comprehend

what constitutes a conflict of interest, specifically

as it relates to a nonprofit enterprise, they should

refer to the BBB Wise Giving Alliance’s account-

ability standard on this topic, as follows:

“Conflict of Interest—No transaction(s) in which

any board or staff members have material conflict-

ing interests with the charity resulting from any

relationship or business affiliation. Factors that

will be considered when concluding whether or not

a related party transaction constitutes a conflict of

interest and if such a conflict is material, include,

but are not limited to:

• Any arm’s length procedures established by

the charity.

• The size of the transaction relative to like

expenses of the charity.

• Whether the interested party participated in

the board vote on the transaction.

• If competitive bids were sought and whether

the transaction is one-time, recurring or

ongoing.”

According to the WGA, this standard ensures

that the charity is not involved in any business

transactions where there are any improper board

and/or staff member connections. Such transac-

tions could result in decisions that are not in the

best interests of the charity, and violate the board’s

fiduciary duty to the organization. The WGA cau-

tioned, though, that not every related-party trans-

action results in a material conflict of interest, as

each potential conflict of interest situation presents

a different set of circumstances. They should be

evaluated on a case-by-case basis.

This is just one of 20 standards the BBB uses to

evaluate the accountability of charities. For a more

detailed explanation of this standard, visit https://

bit.ly/31RfX1g. ■

continued from page 1