Legal Duties & Conflict of Interest Policy - Surprise Regional Chamber of Commerce
Each member of a nonprofit board, as well as the board as a group, is responsible for fulfilling three legal duties: the duty of care, the duty of loyalty, and the duty of obedience for the purpose of establishing and maintaining public trust. The key for nonprofit boards is not to try to avoid all possible conflict-of-interest situations but to identify and follow a process for handling them effectively. How you manage conflicts of interest and assure open and honest deliberation affects all aspects of our organizationâ€™s operations and is critical to making good decisions, avoiding legal problems and public scandals, and remaining focused on our mission.
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THREE LEGAL DUTIES OF BOARD MEMBERS
Each member of a nonprofit board, as well as the board as a group, is responsible for fulfilling three legal duties: the duty of care, the duty of loyalty, and the duty of obedience for the purpose of establishing and maintaining public trust.
1. The DUTY of CARE requires that board members be reasonably informed about the organization’s activities, participate in decisions and do so in good faith and with the care of an ordinarily prudent person in similar circumstances. This has to do with attendance at board meetings and participation in the work of the board.
2. The DUTY of LOYALTY requires that board members exercise their power in the interest of the organization and not in their own interest or the interest of another entity, particularly one in which they have a formal relationship. Each board is expected to adopt policies related to potential conflicts of interest.
3. The DUTY of OBEDIENCE requires that board members comply with applicable federal, state, and local laws; adhere to the organization’s bylaws, and remain guardians of the organization’s mission. Decisions to authorize activities beyond the scope of the mission may have tax or other implications.
Beyond these legal duties, emerging standards for organizational governance include effectiveness and efficiency as well as transparency. Effectiveness implies getting results; efficiency deals with the way in which boards use resources, such as organizational funds or the time set aside for meetings. Transparency refers to communication and information flow that enables both internal and external parties to understand the whys and how’s of organizational decisions. This is a crucial factor in establishing and maintaining public trust.
BOARD MEMBER ETHICS/CONFLICT OF INTEREST:
Board members must exercise their duties solely in the interest of the Surprise Regional Chamber of Commerce. Board members are required to acknowledge the Board Member Commitment Pledge upon completing a board member application.
Board members must acknowledge the acceptance of the understanding of the Chambers Conflict of interest policy.
No board member may serve in a staff position.
No board member shall use the name of the Chamber to promote the goals of or solicit funds for any other profit or nonprofit organization.
Board members shall value the privacy and interests of all those affected by their actions.
Board members shall adhere to the principle that all member/donor/prospect information is the property of the Chamber and shall not be transferred, removed, or used for personal reasons.
Board members shall not disclose privileged information, to unauthorized parties and shall agree to keep constituent information and board deliberations confidential.
CONFLICT OF INTEREST POLICY
Board members and employees should be aware that conflicts of interest can arise through various relationships including, but not limited to, family relationships, economic relationships, serving on other boards, and personal relationships. Individuals should disqualify themselves (or in some rare cases resign), from deliberations, discussions and not attempt to influence other members of the board. The Chamber board members must be fair and unbiased decision-makers that first and foremost act in the best interests of the Chamber of Commerce.
The Surprise Regional Chamber of Commerce takes a broad view of conflicts and board/staff are urged to think of how a situation/transaction would appear to outside parties when identifying conflicts or possible conflicts of interest. Conflicts can occur with the director, officer, employee, (or a family member of the preceding)
A Conflict of Interest is created when:
You are party to a contract or involved in a transaction with Surprise Regional Chamber of Commerce for goods or services.
You have a material financial interest in a transaction between the Surprise Regional Chamber of Commerce and another entity. For example, the chamber is negotiating a contract with a city, and the individual has contracts, real estate transactions, property, grants, honoraria, consulting agreements, construction projects, or provides goods or services to the city.
You are engaged in some capacity or have a material interest in a business or enterprise that competes with Surprise Regional Chamber of Commerce.
Other situations may create the appearance of a conflict, or present a duality of interests, with a person who influences the activities or finances of Surprise Regional Chamber of Commerce.
Procedures to Manage Conflicts:
For each interest disclosed, the full Board, or the President or the Chairperson of the Board, as appropriate, will determine whether the organization should:
take no action
or disclose the situation more broadly and invite discussion/resolution by the full Board of what action to take,
refrain from taking action and otherwise avoid the conflict.
In most cases, the broadest disclosure possible is advisable so that decision-makers can make informed decisions that are in the best interests of the organization.
When the conflict occurs:
The conflict must be reported to Board, President & CEO, the Board Chair. The person must fully disclose the conflict to all other decision-makers;
The party shall not be involved in the decision of what action to take (e.g., may not participate in a vote). If requested, they may serve as a resource to provide other decision-makers with needed information;
The person with the conflict may be asked to recuse him/herself from all discussions so as not to unduly influence the discussion;
In all cases, decisions involving a conflict will be made only by disinterested persons;
The conflict, and how it was managed, and the outcome will be documented in the minutes of Board meetings;
The Chairperson of the Board and the President & CEO will monitor proposed or ongoing transactions of the organization (e.g., contracts with vendors and collaborations with third parties) for conflicts of interest and disclose them to the Board and staff, as appropriate, discovered before or after the transaction has occurred;
Any board member or the CEO may raise the issue of a possible conflict of interest, real or perceived, and require board action/vote;
The Surprise Regional Chamber of Commerce Board is responsible for taking appropriate disciplinary or corrective action if the board member fails to disclose fully an actual or possible conflict of interest. In some cases, the conflict of interest may require the resignation of the board member.
I have read and understood the legal duties of a board member and the Chamber's Conflict of Interest Policy. *
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