Conflicts of Interest

One of my professional assignments has involved working with a trade show board whose members are nominated by the three trade associations which sponsor the show (and share its surplus revenue -- "profits" is a dirty word in the not-for-profit sector, especially if someone thinks the IRS may be listening. )

Each of the twelve directors comes to the table with a built-in conflict of interest -- because the best interests of the trade show do not necessarily coincide with the best interests of one or more of the three associations and/or the industry function it represents, nor with those of the individual director and his or her company.

Sometimes the line is hard to draw. The event is financed by revenue from exhibitors, and at one time the operative management principle was to minimize costs for the people who were putting up the money. There was consensus that certain investments had to be made to build audience for those exhibitors, or otherwise to invest in the infrastructure. But a potential problem arises when an investment opportunity is declined not on its merits or lack thereof, but to preserve cash and build surplus for distribution to the associations (none of which is able to "make it" without the income stream the show provides). What's more, fewer than 10% of the exhibitors are members of the association which nominally represents them. All hell would break loose if those exhbitors realized that a very substantial percentage of their exhibitor fees are being passed through to associations they couldn't care less about.

The most egregious conflict arises when the interests of a participating company conflict with those of the show. Example: the board member whose company conducts a golf outing at the same time as important ancillary events of the show, thus reducing attendance at those events. Example: the board member who fought against an after-hours industry partyin the exhibit area, , which everyone else agreed would be good for the event, because he might still be conducting business in his space and the music from the party would be a distraction.

Many of the same dynamics apply in the philanthropic sector as well. Generally speaking, trustees at the hospital have no visible conflicts when they have to make policy for serving the sick, and there are no problems for college trustees in making policy for the students. But synagogue trustees are making policy for themselves. They may realize that reserved seats are an anachronism, and they would probably be willing to vote for open seating, as long as their own seats could continue to be reserved.

Serving on a voluntary board is expensive. You give up time, you have expenses in attending meetings beyond anything that may be reimbursed, you are expected to support the cause financially. But creating personal perks beyond those delineated for all board members is not appropriate. Most of us recognize what it's fair to expect by way of "protektzia" -- personal clout -- but there's typically at least one jackass in every crowd.