The Nonprofit Ethicist: Cheese Curls and Conflicts of Interest

 

Ethics

Dear Nonprofit Ethicist,

Can you advise me about the legal and ethical implications of the following? A member of the board of directors at a nonprofit agency serving foster and adoptive children and families is applying for an ED position. This board member is closely linked to the agency, being both a daughter of the founders (the organization was founded forty years ago) and a board member (for more than three years now, and very active on the board). I am wondering if there are mandates that prevent this from taking place, and, if so, what they are. If the board member were to resign from her board position, would it be a different situation? It seems there is a conflict of interest here, but if she were to leave the board at this time, is there?

Doubtful

Dear Doubtful,

It’s a conflict, all right. The problem is not cured by the candidate’s recusing herself from the discussion and the vote. A voting majority of a board is necessary to select an executive director. If Ms. Founder’s Daughter loses, she will blame every member for her loss, which will poison the air in the boardroom for a long time. If she is confident that she is the best candidate for the job, she should resign her board position. Then, should she lose, she and the board can reunite by mutual consent if they are still friends.

The Ethicist will go one step further. It is not a good idea for her to be a candidate under any circumstances. Arguably, the most important job of a board is to hire and fire (if necessary) an executive director. This function is compromised when a board chooses one of its own for the top job. Additionally, after the fact, things are more likely to go haywire under an executive director who was a former board member and scion of the agency’s founder, because the board might be unwilling to exercise independent judgment.


 

Dear Nonprofit Ethicist,

I’ve recently started my own business as a nonprofit consultant, and I’m in a bit of a conundrum. I’m an active member of a church congregation that founded a nonprofit organization two years ago, filed as a separate 501(c). I served as a volunteer for this nonprofit for about six months (January–June 2012), so I’m very familiar with the plethora of
fundraising and marketing challenges it faces—thus making it a great prospect for me for new business.

However, I’m unclear on the ethics of approaching a group of people that I know fairly well in one arena (as church member and former skilled volunteer) to pitch a paid gig.

Complicating the situation is the fact that the board is a bit dysfunctional, the executive director is not well suited to a management position (it’s a counseling center, and her primary training is counseling, not nonprofit business), and the nonprofit is struggling to find firm financial footing.

The classic irony in our field is that all of these issues make this NPO the perfect candidate for consultant/outside assistance. Having said that, am I viewed as enough of an “outsider” to offer assistance—for pay? Do you have any suggestions for transitioning such relationships?

Thank you,

Confounded Consultant




Dear Confounded,

 

This is a very bad idea. You wouldn’t consider being your spouse’s therapist, would you?

If you are bound and determined to do it, you should follow the IRS guidelines for dealing with conflicts of interest that involve trading with insiders. Be sure everyone who has a vote knows of your deep roots in the church. And advise them to consider whether they could find a more advantageous arrangement with another consultant who does not have a similar conflict of interest. If an alternative is not “reasonably possible,” be advised that in such a situation a majority of the 501(c)’s disinterested board members must determine whether such a proposal is in the organization’s best interest, whether it is for the organization’s own benefit, and whether it is fair and reasonable. And, of course, you should not be present during the deliberations and voting, and the board should make the decision by recorded vote.

The relationship between consultants and the organizations they work with can be fraught from time to time. Apparently, a really beneficial, transformative consulting relationship is often marked by resistance from the organization. Why create such a situation at your community of worship? Get on a committee to hire a good, disinterested consultant, if you think the organization needs one so badly. I repeat: it is a bad idea—steer clear.


 

 

Dear Nonprofit Ethicist,

I am the head of a health-and-nutrition-focused community that sees about eight hundred thousand visitors a month. While we are not a nonprofit organization, we offer the vast majority of our information as well as our entire nutrition program for free on our website. The first step of our healthy eating program is getting rid of all the processed, junky snack-type stuff in one’s kitchen. People often ask us what they should do with it. We tell them either (a) throw it out, or (b) donate it to a local homeless shelter. Is it ethically defensible to give a homeless shelter foods that we believe are like poison to one’s health and quality of life? On the other hand, is it ethically defensible to throw away perfectly edible food-like products rather than giving them to people who might otherwise starve?

We Are What We Eat

Dear We Are What We Eat,

NPQ has become embroiled in a number of discussions about the idea of restricting people’s food choices on the basis of their being poor—as in banning the purchase of sugared foods with food stamps. We know from experience that food controversies are intense. How about just giving no advice, except, “Get it out of your house—now—if you know what’s good for you.” By the way, I like your phrase “edible food-like products.”


 

Woods Bowman is a professor of public service management at DePaul University, in Chicago, Illinois.