The First Word: Keeping Everything On The Up-and-Up
These days, it is imperative that organizations ensure they operate transparently. An "open-book" mentality not only helps create trust between all parties, but for not-for-profit organizations such as NAFA, it’s actually a requirement. Did you know that the IRS mandates that NAFA and all not-for-profits disclose on its annual tax return whether or not it has a Conflict of Interest policy for all of its employees and volunteer leaders?
IRS instituted a Conflict of Interest requirement several years ago, in the wake of scandals involving not-for-profit leaders and staff who personally profited from their organizations’ operations. Now, if a not-for-profit organization does not have a conflict of interest policy in place, it is a "red flag" for the IRS and nearly ensures an audit...or at least a troublesome call or letter.
For its part, NAFA was about two years ahead of IRS, having instituted a Conflict of Interest policy in 2008. Every year since that time, NAFA has required every staff member, Officer, Trustee, national committee chair and vice chair, and local chapter leader to be aware of NAFA’s policy regarding conflicts of interest and complete a form to disclose the existence, or even the appearance of any existence, of any conflict of interest.
NAFA’s policy is, in fact, broader than IRS requirements which note that only decision-makers and those in authority must adhere to the conflict of interest policy. NAFA (rightly, I believe) extended that requirement to every volunteer. Service in the non-profit sector carries with it important ethical obligations which should be upheld by everyone, not just for those few people in power. Non-profits and not-for-profits serve the broader public good, and when any volunteer fails to exercise reasonable care in their oversight of the organization, they are not living up to their public trust.
NAFA’s policy defines conflict of interest this way:
A conflict of interest arises when a person in a position of authority in NAFA (an "interested party") may benefit, or appear to benefit, financially from a decision that he or she makes or could make in that position, including direct, indirect, real or potential benefits, to himself or herself or to any family member, friend, or business person with whom the person in authority is associated.
Further, NAFA’s policy notes that when a conflict exists or appears to exist, the person must provide a description of the interests that could give rise to conflicts, including a list of interested parties, potentially interested parties, businesses, investment holdings, and all other actual or potential transactions or affiliations with businesses, other organizations, or other interested persons.
I, along with the NAFA President and, if necessary, the entire Board of Trustees, review each situation to determine whether a conflict or appearance of conflict exists and, if so, how it will be addressed. Interestingly, there is nothing necessarily inappropriate about having a conflict of interest; impropriety occurs when a person with a conflict fails to disclose that conflict. With that, it is entirely appropriate for NAFA to decide that the person with the conflict may remain in their position but must, for example, recuse him/herself from all discussions related to the area of conflict.
You should rest easy knowing that NAFA is operating with a full-disclosure, "open-book" mentality. If you have any questions, comments, or concerns about what NAFA is doing or how NAFA is handling things, please let me know.
Sincerely,
Direct: 609-986-1055
prusso@nafa.org