There it was. Another news item about nonprofit compensation, this one detailing the exorbitant salary of the executive director of the Florida Coalition Against Domestic Violence. She is currently making somewhere in the mid-$700,000 range.
Something I fear is lost in the coverage is that the composition of the Florida’s Coalition Against Domestic Violence board of directors is made up almost entirely of directors of local domestic violence programs that receive funding from the Coalition. In other words, those responsible for setting the compensation for the director are also recipients of funding by that same organization, an inherent and exceptionally obvious conflict of interest.
Some conflicts of interest scenarios are easier to parse out than others:
- A board member is bidding on business for the organization.
- A major donor wants a family member to be considered for a staff position.
- The organization is offered funding from an industry that is counter to the organization’s mission.
Conflicts of interest are among the many topics about which boards of directors of nonprofits should be well versed. Fortunately, the current issue of the Nonprofit Quarterly is entirely dedicated to the topic. The issue contains a lot of legal and ethical guidance as well as expert commentary. For example, in a piece entitled “Charity Conflicts of Interest: A Guide,” David Renz, makes the observation that people either “(a) employ an overly narrow and legalistic definition of conflict of interest and ‘focus only on matters of [personal] financial gain,’ and/or (b) are quick to judge, label, and complain about ‘any kind of relationship at all’.” This tendency to treat conflicts of interests so differently may be a function of not having a solid understanding of what constitutes a conflict. I suspect what is also going on is an arbitrary approach that has a lot to do with the standing or status of the person or persons whose activity is under question.
These can be hard, uncomfortable conversations. They go to undue influence and self-interest. Imagine being the lone voice on the Florida Coalition board raising concerns about the director’s compensation.
Understanding how to evaluate and process a potential conflict of interest is all for naught if no one is willing to raise it.
A solid policy should provide the necessary foundation and process for addressing conflicts of interest. Boardsource.org has sample policies and additional discussion. How the policy is activated by the board and key staff is worth visiting on a regular basis.
At your next board meeting, consider using a case scenario and ask these 4 questions:
- What guidance does the organization’s current policy provide?
- Do board members and key staff agree on the presence of a potential conflict?
- How much risk might this type of conflict create for the organization?
- Are board members and key staff comfortable and confident addressing the scenario?