What are conflicts of interest?
A conflict of interest can occur any time a trustee’s or staff’s outside involvements (such as business interests, family relationships, political affiliations or other charitable activities) intersect with those of the foundation. The benefit, or potential benefit by board or staff, can lead to biased decisions and unethical behavior, or the appearance of such. In instances where there is a potential benefit from the foundation in a personal, direct or economic way, it can be difficult for the trustee or staff to make unbiased decisions. Some examples of conflicts of interest are:
- a foundation trustee serves as a board member of a grant applicant
- a foundation wants to pay necessary and reasonable compensation to one of its board members to manage the foundation’s investments
- a foundation board wants to make a general operating grant to a university attended by a board member’s grandchild
It is natural for conflicts of interest to occur as trustees/directors are likely to be affiliated with many organizations in their communities, both on a professional and personal basis. Problems do not arise because of the mere existence of a connection, even if it is determined to be an actual conflict of interest. Rather, problems arise when the proper steps are not taken to address the conflict of interest.