CONFLICTS OF INTEREST – SHORT GUIDE

Defining the problem

Conflicts of interest:

  • Includes not just financial conflicts, and can arise in many other ways, especially through friendships and family relationships, and
  • May arise because of a pecuniary or personal interest or because of some element of bias or predetermination in the mind of a decision-maker.

Bias is a type of conflict of interest:

  • Describes a situation where a decision-maker may not have an open mind on or may have predetermined an issue, and
  • May be presumed where there is real possibility of bias, or may be clear from the behaviour of a decision-maker, noting that
  • The actual motives and good faith of the decision-maker are not relevant.

Predetermination is a type of bias:

  • Describes situations where the decision-maker has (or might be considered to have) a “closed mind” and is therefore unable to come to an issue willing to be influenced by facts or logic to make a decision either way.

Personal or financial interests:

  • If a decision-maker has any personal or financial interest greater than other decision-makers that person may be considered to be biased or to have pre-determined the issue.

 

Declaring an interest or standing aside

Where a decision-maker has a conflict of personal or financial interests, and therefore is or might be biased:

  • The person should “declare an interest” or stand aside and not participate in decision-making,
  • Preferably, should not take part in discussion prior to any decision (but sometimes such people have essential information which needs to be made available to the actual decision-makers), and
  • Should not vote.

 

Conflicts of interest in governance and management

  • Those who “govern” should not also “manage,” otherwise those roles tend to be confused, but
  • In smaller voluntary organisations the committee usually also does most of the organisational work!

 

Conflicts of interest, bias and predetermination in meetings

The declaration of conflicts of interest is now commonly an early agenda item in not-for-profit meetings. More and more organisations are maintaining a formal “Conflicts of Interest Register,” and the proposed new Incorporated Societies Act will require societies to maintain a formal “Interest Register,” and “interested” committee members will need to follow statutory rules.

Astute decision-makers and (particularly) chairpeople need to ensure that in meetings:

  • Conflicts of interest are identified, declared and minuted, and that those with such conflicts are not involved in debate and decision-making, and
  • Potential bias and predetermination issues are identified and dealt with.

 

For more information: See the article “Conflicts of Interest, Bias and Predetermination in Societies and Charities – Recognising and Managing” on the Bannister & von Dadelszen Website – link here.