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Why conflict of interest needs to be more than a standing agenda item

Jan 19, 2020 | ACFID Blog

Managing conflict of interest, real or perceived, is hugely important – not only for good governance, but also for building trust amongst stakeholders. If it is not managed well, it can damage the reputation of the agency and even the wider sector, eroding public trust.

The way an ACFID member demonstrates commitment to managing conflict of interest is through a policy and procedural approach. The Code at 7.4.3 is quite specific, such that the policy/procedure needs to define a conflict of interest, require the disclosure of conflicts of interest not only by responsible persons but also by volunteers and staff, articulate ways for recording and addressing conflicts of interest, and also cover open and fair procurement of goods and services.

In addition to this, the Code also requires this policy to be available on members’ websites, in the interests of transparency.

What is a conflict of interest?

There are various definitions– the ACFID Code doesn’t prescribe a specific definition, and each organisation will need to define it for themselves. The ACNC’s ‘Managing Conflicts of Interest Guide’ says: “A conflict of interest occurs when your personal interests conflict with your responsibility to act in the best interests of your charity. The term ‘personal interests’ does not need to be your own interest, but may also arise from the interests of your family friends, or other organisations you are involved with. It also includes a conflict between your duty to the charity and another duty that you have (for example, to another charity).” Beyond the definition, there are three accepted types of conflicts; actual, potential and perceived.

Approaches to Code compliance for managing Conflict of Interest

Members have varying approaches to managing conflict of interest, some addressing the issue head-on in a dedicated policy, others peppering their approaches through multiple avenues and pre-existing policies and procedural documents. Either approach is fine as long as the whole picture, when taken together, adequately satisfies the Code requirements and is adequately documented.

Relying on conflict of interest being a standing agenda item at Board meetings is not enough. This is a baseline approach that might cover ‘responsible persons’ but managing conflict of interest is not something that concerns only senior managers and Board members. All employees and volunteers of an organisation are responsible for behaving ethically, and should be conscious of this. Any employee or volunteer who thinks that they might have a conflict, or who believes that another person in the organisation may be in a situation of possible conflict of interest, has an ethical responsibility to bring the matter forward. An open workplace culture should encourage discussion and identification of these matters at any stage.

How to manage a conflict of interest

Importantly, any conflict of interest policy should be complemented by a documented procedure which sets out what to do when a conflict is identified. Conflicts of interest are part of life and will arise from time to time. When managed well they do not need to be feared, and most situations don’t require drastic measures. The Canadian Council for International Cooperation (CCIC)’s Practical Introduction to Managing Conflict of Interest Situations provides the DDDD approach along with some RRRRR responses:

  1. Declare it
  2. Discuss it
  3. Deal with it (you could RESTRICT involvement, RECRUIT third party, REMOVE the individual, RELINQUISH the private interest, or RESIGN)
  4. Document what has been done.

…but how do you know?

How do you know if you are in a conflict of interest situation, whether actual, potential or perceived? Identifying a situation where a conflict of interest exists, might exist, or could appear to exist is not always easy. Individual situations can be complex.

Take this quick test to see where you stand.

Clare Petre

Clare Petre

Clare was most recently the Energy & Water Ombudsman NSW for over 16 years. Prior to that she was a Senior Assistant Commonwealth Ombudsman. This work has given her in depth experience in complaint handling, identification of systemic issues, application of codes and standards. She was Chair of the Australian and New Zealand Ombudsman Association for several years. Clare has extensive experience in the community sector, with government, and the media. She has worked with community legal centres - Redfern Legal Centre, the Intellectual Disability Rights Service, and the Public Interest Advocacy Centre. She has also worked as a reporter with ABC TV’s 4 Corners and The Investigators, and in the health system. Clare has served on a range of NSW and Commonwealth government advisory bodies, and on the boards of community groups, including ACOSS and Performance Space. Clare is currently a Board member of Energy Consumers Australia and City West Housing. She chairs the consumer advisory panels for the Australian Securities & Investment Commission and the Credit and Investments Ombudsman. She is Deputy Chair of the Asylum Seekers Centre. Clare has a Bachelor of Social Studies, Diploma of Criminology, M.Sc Social Administration.