Is it a conflict of interest for a nonprofit board member to raise funds for that nonprofit using her for-profit business if that business takes a commission?
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I'm helping a friend start a nonprofit, and he wants me to be on the board. At the same time, I'm starting a for-profit business that takes a commission for helping organizations find funding. If I help this nonprofit find funding using my business where I'll earn a commission, is that a conflict of interest?
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Answer:
I agree with Andrei Kolodovski's response but would add an additional point. As a board member of the nonprofit, you will have a fiduciary interest in its operation. Your responsibilities include oversight of management's activities and operation of the non-profit. A part of your responsibilities may include voting on contracts that the non-profit wishes enter into with other organizations. One such a contract could be with your firm or another firm to raise funds for the non-profit. If you vote on such a contract, you open yourself up to a variety of legal issues that could bring public scrutiny to the nonprofit. It could also result in lawsuits being brought against a nonprofit or even you or your for-profit company. And, though very unlikely, it could even result in criminal charges even though you would've done nothing illegal. In order to avoid a conflict of interest and negative consequences thereto, as a board member, you must never vote on or include yourself in any discussion about third-party fund raising activities on behalf of the non-profit. In fact, you shouldn't even be in the room during those discussions. Given that fundraising is such an important activity of the nonprofit, avoiding such issues may be impossible. Consequently, it's probably best that you not be involved with the board of the nonprofit. By avoiding such involvement, you protect both yourself and the nonprofit from a variety of ethical and legal issues as well as negative publicity should the relationship ever be questioned. Just as importantly, you avoid the appearance of conflict and negative publicity which will lead to a negative impact on your business' for-profit fundraising activities. In short, there's great downside risk for you by your being involved on the board of the nonprofit as long as you are also involved with a for-profit fund raising business.
Robert Stockdale at Quora Visit the source
Other answers
Yes there is. As with all conflicts of interest, they can be managed, and if they rest of the board is comfortable with the arrangement, and you can pass the "can I justify this if the New York Times complains about it" then you might be able to do it. But personally there are so many possible land mines, that I wouldn't do this myself. The big problem is you run into issue if in fact the non-profit would be better off using the services of another company or no fundraising company at all. If I were to help the non-profit, I'd actually consider donating the services of my company for free as part of volunteer work. The "goodwill" and social contacts you be enough to make this a win-win situation.
Joseph Wang
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