Funder by the Department of Human Services Auspiced by Our Community

Help Sheet

Handling conflicts of interest

In this help sheet, the term 'Committee of Management' (COM) is used but it is intended to apply to whatever governance structure your group has, such as a Board. The term "CEO" (Chief Executive Officer) is used but it is intended to apply to whatever name your group has for its head person (coordinator, general manager, chief executive, executive director etc.).

The number one duty of any COM member is to act in the interests of the organisation he/she is overseeing. So what do you do when your other, non-COM interests call for a different course of action than that which would be in the best interests of your COM?

This situation is called a conflict of interest and it is vitally important that any new or serving COM member learns how to spot one and how to deal with one.

What is a conflict of interest?

Consult 10 different sources and you will probably get 10 different explanations of exactly what constitutes a conflict of interest. That's because a conflict of interest is a lot like beauty - it's often in the eye of the beholder. That is why COM members need to try to avoid even the perception of a potential conflict of interest.

Generally, a conflict of interest situation arises when a COM member's duty to his/her community group clashes with their duties, obligations or interests elsewhere - their business or workplace interests, for example, or even those of his/her family or friends.

Some examples of the negative consequences (for the group) that can arise from conflicts of interest include:

Such situations as described above can cause real damage to official and public confidence in the COM and the reputations of individual COM members - even those not directly involved in the conflict. Failing to adequately deal with a conflict of interest may not always be illegal, but it will almost always be unethical.

There are other situations that can give rise to potential rather than actual conflicts of interest, which can be just as serious in undermining confidence in your group and your COM. Steps you can take to prevent the potential conflict becoming a real conflict are outlined later in this help sheet.

Examples of potential conflicts of interests include:

As mentioned above, scenarios such as these do not necessarily have to mutate into fully blown conflict of interest situations so long as correct procedures are followed and the decision that is made is truly in the best interests of the group.

Strategies for avoiding a conflict of interest

COM members do not live within the prism of their COM work but have a range of other personal and professional interests and relationships. It is no surprise, then, that almost all COM members will come across a real, potential or perceived conflict of interest at some point.

Prevention is always better than a cure and you should check if your organisation has a policy or particular rules about how these situations should be handled. The policy or rules should stipulate when and how a COM member should disclose their personal and financial interests, how they should deal with gifts made to them in the course of their COM role, under what circumstances relatives or friends of COM members can be hired or considered for contracts, penalties for breaching the code, etc. If your COM has such a policy, read it and commit it to memory - then follow it. If your COM does not have one, speak to your colleagues about introducing one. (There's a sample code in the Our Community Policy Bank at www.ourcommunity.com.au/policybank.)

As a general rule, you should:

What to do when you have a conflict of interest

Despite your best intentions, you may one day find yourself exposed to a conflict of interest situation. Again, there are steps you can take to protect yourself and your group from damage.

 

 

An initiative of Department of Human Services, Developed & Managed by www.ourcommunity.com.au