Conflict of Interest in Nonprofit Engagement

Given a nonprofit’s purpose to fulfill a community need, it is essential to remain in touch with evolving needs of the community.  The most direct touch point is engagement with clients and constituents. But experience has taught that this is easier said than done.

Is the nonprofit looking just for information? For engagement? For partnership? For ownership and control? It is essential to know the goal before determining a plan of action. Many nonprofits I have worked with approach this issue through a discussion of board recruitment and diversity. This, of course, jumps past the information stage right into the ownership and control stage. And the usual conclusion is to stay with the status quo — and I support this.  The main problem is conflict of interest.


In this extreme, a constituency board (all board members represent clients and interest groups) is a collection of advocates and too often do not feel a “duty and loyalty” to the interests of the organization. I have seen this when parents are on boards of schools (public or private) and when employees are on pension boards. Their perspectives and decisions are dominated by the impact on themselves personally and not on the impact on the organization. What boards need is skills they cannot hire onto their staff, perspectives they do not have, and resources to support the program. Placing a client or consituent on the board is advantageous only when the candidate brings one or more of these attributes to the table. And then the rationale is what they bring to the table IN SPITE OF their being a constituent or client.

If the goal is to get better information on the value or impact of a program, there are better ways than board membership. For an extensive discussion of this issue with global examples, see Matthew Forti’s and Willa Seldon’s extensive study released by the Bridgespan Group.

Certainly a nonprofit should actively seek ways to evaluate its programs. The first place to start is to develop measurable goals based on internal data such as inputs, client profiles, progress assessments. This is akin to the many sensors on our cars that continually evaluate the internal workings of the car and trigger indicator lights when performance parameters are violated.  But what about the driver and his impact on fellow drivers? The car’s systems won’t provide that kind of feedback. Similarly, a nonprofit needs feedback which its internal systems cannot provide.

That is where focus groups and periodic surveys are valuable. If you are a school, do you seek feedback from parents and students? If you are a food bank, do you regularly interview or survey your visitors? If you are museum, do you regularly approach random visitors and ask them to respond to a brief survey?

If not, you should consider how to do this effectively, efficiently, and without bias? We all know about bias. At my car dealer, I get a survey with a note like this: “I value your input but on a scale of 1 low to 10 high, I will be penalized if I get any score below 10.” Well, there goes the objectivity! Clearly a popularity contest, not an objective desire for useful feedback.

And therein lies a caution. The desire for feedback must be a sincere desire to learn about flaws as a guide to improvement. In More Than Just Money, in the chapter on leadership I include this quote of Parker Palmer from his book The Active Life: “Our culture’s fearful obsession with results has sometimes, ironically, led us to abandon great objectives and settle for trivial and mediocre ends. The reason is simple. As long as ‘effectiveness’ is the ultimate standard by which we judge our actions, we will act only toward ends we are sure we can achieve. People who undertake projects of real breadth and depth are very unlikely to be ‘effective,’ since effectiveness is measured by short-term results… But people with small visions will win the effectiveness awards, since those projects are so insignificant that they can almost always succeed.’”

(Republished with the permission of CINCOhio.)

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