An association was recently considering the purchase of real estate. Before the final meeting on the issue, it was discovered that the real estate was owned by a board member’s brother. The board member hadn’t declared this fact, and when asked if he planned to recuse himself from the remainder of the process, the board member declined. He indicated that he planned to participate in the decision because the real estate was owned by his brother (not himself) and the association didn’t have a conflict-of-interest policy.

The ASAE Standards of Conduct call on members to integrate ethics into all aspects of association operations. A conflict-of-interest policy is an important tool for doing so. By implementing a clear and detailed policy, associations can aid board members, volunteers, staff, and other covered individuals in recognizing and disclosing potential and perceived conflicts, while creating an atmosphere of transparency.

Best management practices suggest that association conflict-of-interest policies include the following elements.

Definition of terms. The policy should clearly define “conflict of interest” and “perceived conflict of interest.” For example, according Illinois Park and Recreation Association policy, “A conflict of interest may exist when an Illinois Park and Recreation Association board of director has a direct or indirect business, professional, or personal situation or relationship that might influence, or that might be perceived to influence, the judgment or actions of the leader when serving the association.” Many policies include example scenarios to assist covered individuals in determining if they have a conflict of interest.

The policy should establish how a conflict of interest or a perceived conflict of interest is reported, to whom it is reported, and what happens if a conflict goes unreported.

Statement of who is covered. Conflict-of-interest policies may apply to different people in different associations, but most cover board members, committee chairs, and other volunteers, as well as employees and vendors. Executives should consider who is covered when preparing a conflict-of-interest policy and state that clearly in the policy.

Reporting procedures. The policy should establish how a conflict of interest or a perceived conflict of interest is reported, to whom it is reported, and what happens if a conflict goes unreported. This process could vary depending on who is raising the issue. For example, board members may report a potential conflict of interest to the board chair, whereas staff may report to their supervisor or director of human resources.

The policy should also address how a potential conflict of interest will be handled, including how much or how little involvement an individual with a conflict should have in formal decisions about it. For example, the policy might indicate that a board member with a conflict of interest may not participate in discussion or decisions about the conflict but may be counted toward establishing a quorum.     

Disclosure statements. Disclosure statements are essential for maintaining transparency and avoiding conflicts. New board members or others who assume roles covered by the conflict-of-interest policy should sign and date an initial disclosure form, and they should routinely review and update their form (perhaps quarterly) or as new conflicts arise. The chief staff executive or another designated staff member should assist covered individuals in determining if they need to update their disclosure form when confronted with a potential conflict.

The association should notify covered individuals that the disclosure forms will be maintained for a period of time. For example, the Financial and Insurance Conference Professionals informs covered volunteers that “disclosure forms shall be kept on file at FICP’s office for a period of two years, or one year after the conclusion of the relevant activity or decision-making process, whichever is longer, unless otherwise determined by the board.”

Periodic review. An association’s conflict-of-interest policy should be routinely reviewed and updated to ensure that it remains relevant to the organization and the association environment.