When a Board member of a non-profit has a conflict of interest, who tells him of the conflict?

Asked over 1 year ago - Moses Lake, WA

Does the Board in general inform one of their members that there is a conflict of interest, or does that function fall to the President of the Board?

Attorney answers (4)

  1. Gavin Nathaniel Johnson

    Pro

    Contributor Level 12

    1

    Lawyer agrees

    Answered . I agree with the previous answer. There is not generally any one director that is responsible to report all conflicts of interest to the Board. Typically the director with the conflict is under a duty to report that conflict (or potential conflict) to the Board. Non-profit corporations should always have a policy for dealing with conflicts of interest, and this policy should detail the manner in which the conflict should be reported to the board.

    If there's a potential for harm to the non-profit as a result of the conflict, you should consult with a business attorney to advise you on remedies. It's best to look into drafting a conflicts policy so you don't run into future situations where there's a conflict and no clear procedure for dealing with it. Good luck!

  2. John Paul Fernandes

    Contributor Level 6

    2

    Lawyers agree

    Answered . There is no one that is "solely" responsible for raising conflict of interest questions. In fact it is the duty of each director and officer to advise the appropriate body that a conflict of interest may exist. This also goes for the member(s) that are involved in the transaction itself. They have a duty to inform company personnel that there may be a conflict of interest in the transaction they are involved with so that the deal can be scrutinized to make sure that, among other things, it is fair and reasonable to the company.

    Note this answer is based on the limited facts and vague description of the court document being filed without out... more
  3. A Richard Ross

    Contributor Level 3

    2

    Lawyers agree

    Answered . I agree with the prior answers but add that it may depend on whether the board has committees. If there is an ethics committtee, the chair of that committee should raise the conflict with the board member. I think the better practice is to consult with general counsel and then have counsel for the committee present when the matter is raised.

  4. Jonathan B. Lefkowitz

    Contributor Level 13

    Answered . Both previous posters are correct. Ideally the person with the conflict would come forward and let the Board know so a decision could be made as to how to handle it.

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