Conflicts of Interest – Why They Matter

Conflicts of Interest - Why They MatterIt has taken some time to absorb the events of the last few months but we are still here and slowly adjusting (not adjusting) to the new normal (this is not normal). It’s no secret to anyone who follows me on social media that I am outraged over our new President’s refusal to manage his conflicts of interest.  Managing conflicts is something that those of us in the nonprofit sector or advising the sector are deeply familiar with. Its unacceptable that our President is holding himself to a lower standard and I’m concern about the tone that sets both for government and nonprofits.

As most nonprofit directors and executives already know, if decision makers do not disclose their conflicts of interest and properly manage them, there is no way to know whose interest they are serving when they make decisions. Directors and trustees of nonprofits have a fiduciary duty of loyalty to make decisions in the organization’s best interest without regard to their own interests or the interests of third parties. Even the most well-meaning individuals can find their decisions clouded by competing interests.

The first step to managing conflicts is disclosure of potential conflicts. If decision makers are not required to disclose their conflicts, then there is no way to ensure that their decisions are not tainted by self-interest. Once conflicts are disclosed, they are managed by requiring the conflicted individual to recuse his or herself from the decision-making process when decisions that are tainted by conflict arise.

The President’s decisions are too wide ranging and important to rely on recusal as a mechanism for managing conflicts. That is why, historically, Presidents have been held to a higher standard. In the case of the Presidency, disclosure and recusal is not sufficient. Presidents have taken the extreme step of divesting their business interests and putting the proceeds into a blind trust. A blind trust is a trust managed by a professional trustee. In such cases, the beneficiary of the trust does not even know what assets the trust is holding and therefore cannot be influenced by the impact decisions will have on those assets.

In the case of our new President, he knows exactly what his assets and interests are. The public does not know. Congress does not know.  Our new President has not complied with the most fundamental requirement of conflict management: disclosure. By refusing to release his tax returns, he has refused to disclose his interests. Further, he has announced the assets are going to be managed by his sons. Thus, decisions that benefit the Trump Organization will continue to benefit the President personally and benefit his immediate family. The President’s plan to manage his conflicts is smoke and mirrors. Those of us who have worked in government, for public companies, or in the nonprofit sector are being held to a higher standard than the President.

Where will this new obliviousness to law and ethics at the highest levels of government lead? No one knows for sure but I fear a Golden Age of Shenanigans is upon us.

Ellis Carter is a nonprofit lawyer with Carter Law Group, PC. To contact Ellis, call 602-456-0071 or email us at info@carternonprofitlaw.com.

Read more: http://charitylawyerblog.com/2016/11/28/court-blocks-overtime-rule/#ixzz4WaJecSAv

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