Dan Hotchkiss reads this article in an eleven minute podcast. (listen)
“Conflict of interest” is an ugly phrase, but it’s time to say it, lay it on the table, and deal with it as a normal part of life. Everybody who is not a hermit manages conflicting interests all the time. Congregations’ awkwardness and silence on the subject only makes us vulnerable.
Many congregations accept practices that in other contexts we would question. For example, when the driveway needs re-topping, why deal with someone we don’t know when good old Tom of Tom’s Blacktop sits right here at the board table? We know he’ll give us a good price (don’t we?). In any case, if we suddenly quit using him, he’d be upset.
No doubt he would, but we are living in a changed world, where in some ways the corporate and legal standard of good stewardship exceeds the common practice in religious institutions. If anything, the reverse should be the case. The scriptures are full of stories and admonitions about how to handle the “trustee” role, from Jesus’s parables about good, bad, and indifferent stewards back to Cain’s wrong answer to God’s question about Abel. We are our brother’s keeper, but in congregations we keep and manage property and money that our brothers and sisters have entrusted to us—not for our own benefit but for a higher purpose.
The governing board controls but does not own the congregation or its property. Neither do the donors or the members. The “owner” of a congregation is its mission; the board controls the property for one exclusive purpose: to fulfill the mission. When board members vote, they represent neither themselves nor the members who voted them into office. Instead, they are trustees whose duty is to vote the interest of their beneficiary, and their beneficiary is the mission.
Unfortunately, board members often think of the congregation as a collection of individuals whose preferences are paramount. They assume their duty is to represent the interests or opinions of the members who elected them. Actually, as trustees, they owe a “duty of loyalty,” which means they must vote in behalf of the real owner—the congregation’s mission—even if that goes against the private interest of any individual or group. (An interesting corollary is that when congregations meet, their members also are trustees. When private interests or preferences conflict with the congregation’s mission, a member’s duty also is to vote the mission.)
The most obvious conflicts come up when, as in the case of Tom the blacktop man, the board considers transferring the congregation’s money to a board member. Such conflicts also happen when a board member applies for a paid position on the congregation’s staff, or offers a computer for the office at a “reduced” price.
Clear conflicts arise when a board action benefits the spouse or child of a board member. When family of board members serve in paid staff roles, potential conflicts come up whenever the board acts on salaries or budgets.
When a board member serves on two nonprofit boards that deal with one another, yet another type of conflict can arise. Probably the most common case of this is where a congregation rents space to a nonprofit school or social agency and one person serves on both boards. Here the conflict is between two charitable missions—which may be compatible but not identical. As these examples show, you don’t have to be selfish to have a conflict of interest!
Any time an upcoming agenda item raises a conflict of interest for a board member (or, I would add, a congregation member), the minimum requirement is that the conflicting interest be disclosed and noted in the minutes. If the conflict is substantial, the board member should refrain from voting. Fastidious board members will absent themselves whenever the board talks about a matter in which they have a personal stake. In any case, it is important that the remaining members of the board ensure that its decision reflects the interest of the congregation (that is to say, its mission) independent of the interests of individuals.
Instead of waiting for an awkward issue to arise, the best way to address conflicts of interest is proactively. A written policy on conflicts of interest should apply to anyone who acts for the congregation, including board and committee members, staff members, volunteers, and even ordinary members when they vote at meetings. The policy should require the following:
- Annual disclosure by board members and senior staff of any interest they or close family members have in companies the congregation deals with, including stock ownership, employment, or other significant business dealings. The disclosure form should require a listing of other nonprofit board memberships.
- Immediate disclosure of any additional conflicts of interest when an item of business comes before a board or staff meeting. Where a member has a conflict, he or she should leave the room while the matter is discussed and voted on, and the minutes should reflect this.
- Competitive bids on contracts or purchases over a certain dollar amount, with written documentation of the bidding process. If a vendor who is related to a staff or board member gets the business, the documentation will help show how this was in the interest of the congregation.
All minutes, conflict of interest forms, and competitive bidding records should be available to interested members of the congregation.
In addition, congregations need a policy on nepotism—including hiring staff members who are related to each other or to board members. Certainly, no board member should participate in debate or voting on the hiring, evaluation, or dismissal of a spouse or close relative. It should go without saying (but unfortunately doesn’t) that a staff member who runs for a board position is creating a huge conflict of interest. With the possible exception of the top clergy leader, who in some polities must serve on or chair the governing board, this practice is best prohibited.
Everybody in a congregation, especially a small one, has multiple relationships with others. That is part of the power of congregations to touch and transform people in all aspects of their lives. But if conflicts of interest are not managed openly and well, it can also be a major source of conflict, liability, and—worst of all—failure to exercise the kind of moral influence a congregation can and ought to have.
Dan Hotchkiss is a senior consultant at the Alban Institute. “Conflicts of Interest” originally appeared in the September 2007 issue of Clergy Journal (www.logosproductions.com) and is reprinted with permission.
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