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There are many ways a director can find themselves in a conflict of interest, but let’s look at a couple of examples: Imagine if you're a member of your child's school board and the child gets into a problem with a teacher.
Should that teacher’s dismissal ever be discussed at the board meeting, you would have a conflict of interest.
Another typical example is receiving gifts such as concert tickets, expensive dinners, or free hotel stays. While these might not necessarily influence you, there is no guarantee that they won’t.
You should disclose a conflict of interest during the first meeting of the board of directors. The board president should take it upon themselves to introduce the Conflicts of Interest Policy form and ask every member to fill it out and sign it. If you note any conflicts of interest, everyone can freely discuss them.
Yes, they can, and they often do. But even though there usually isn't any genuine concern for creating a conflict of interest, it should be noted.
If a person is already a member of the board in one non-profit entity, they should sign a Conflicts of Interest Policy where you state that fact.
Conflicts of interest that are not managed and disclosed in a policy can result in severe penalties.
These are called intermediate sanctions. And can be applied to those who have benefited from their actions and against the organization itself. Sometimes, the member of the board can be removed for some time or indefinitely.
One of the best ways to handle conflicts of interest in any organization is to obtain competitive bids, in writing, for all major purchases.
For example, one member of the board might own a restaurant. At the same time, the organization is preparing an event that requires catering services.
To avoid conflict of interest, the board member owning a restaurant can also suggest other catering services submit their proposals.
Finally, discussing the potential conflicts openly and recusing yourself when you find yourself in a battle are excellent practices as well.