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Conflicts of Interest 101

Fall 2014
Kate Walker, Vice President for Finance and Treasurer
Why does the College care about
Conflicts of Interest?
(SOURCE: Grinnell College Employee Conflict of Interest Policy

Grinnell College has an obligation to demonstrate and


document good governance in order to protect the integrity
and credibility of the College and to maintain the trust and
confidence of our constituents.

Managing conflicts of interest


is part of the College’s
commitment to enterprise
risk management.
With that in mind…
 Here’s what is covered in this presentation:
 What is a conflict of interest?

 Situations and examples

 Recognizing when you have a conflict of interest

 When and how to disclose a real or potential conflict

 Managing conflicts of interest


What is a Conflict of Interest?

A conflict of interest involves risk of benefit and/or bias.

A conflict of interest arises when an employee may benefit


personally (or appear to do so) from dealings with an entity
BENEFIT or person conducting business with the College, including
indirect benefits such as to family members or businesses
with which the person is closely associated.

Financial or other considerations may compromise (or have


the appearance of compromising) the employee’s
BIAS objectivity or independent professional judgment in the
discharge of College duties and responsibilities.
Conflicts of interest can be real –
or they can appear real.

 If a situation looks like a conflict of interest or feels like


a conflict of interest, it’s likely there is some level of
conflict.

 Use the “reasonable person test”:


If a reasonable, disinterested person would conclude
that an individual might emphasize personal interests
over other interests for which he/she has responsibility,
there is, at the very least, the appearance of a conflict of
interest.
Are all Conflicts automatically “bad”?

 Having a conflict of interest is not necessarily a problem or a “bad


thing”.
 Having a conflict of interest and doing nothing about it is a problem!
 In a small community like Grinnell, choices are limited for certain services.
 Sometimes, the best organization to tackle a project is the one where your
family member works.
 Discounts extended through personal referrals can be of considerable value to
the College.
Conflict situations and examples:

 Accepting personal gratuities


 The ITS Director receives a “free” large-screen TV from a vendor seeking a
contract with the College. “Just try it and see if you like it. No obligations.”

 Conflicting outside employment or other allegiances


 The College’s Purchasing Director steers procurement decisions to favor a
company where a family member works.

 Using or disclosing confidential information


 A College Development employee uses Grinnell’s confidential donor list to solicit
gifts for another community non-profit organization.

 Maintaining roles that conflict


 The CEO of an oil corporation, who serves as a Trustee for the College, votes
against divesting endowment holdings in fossil fuels.
Think you have a conflict?
Consider these questions…

Do my actions feel right? Do they reflect


a basic understanding of generally
accepted standards of right and wrong?

Are my actions in alignment with my


personal values and those of the
institution I represent?

Am I being honest about all facets of


the situation? Do the right people
know what’s going on?

If you suspect a conflict, report it.


Regardless of whether it’s real or perceived,
a conflict is a conflict.

 As soon as you suspect a conflict exists:


 Disclose it. Transparency is key. HR has forms and
can provide guidance.
 Talk with your supervisor before taking action if
there’s any risk of a conflict.
 Mitigate the conflict by taking steps to ensure a
fair and level playing field among multiple qualified
vendors, e.g. competitive bids, RFP process, etc.
 Abstain from decisions or other involvement
where there is a risk of bias – real or perceived.
Grinnell’s approach to managing
conflicts of interest
Employees disclose real or
potential conflicts as they
1. Disclosure arise or at least annually
via Grinnell’s COI
Disclosure Statement.
College leadership reviews
disclosures to determine
materiality and, where
warranted, places 2.
appropriate restrictions on Review
employee’s scope of duties
and/or vendor interaction. Management apprises the
employee of the
restrictions, if any, deemed
3. necessary to mitigate and
Management manage the COI. Employee
agrees to observe the
restrictions.
Closing thoughts…
1. Conflicts of interest are more frequent in a community the size of Grinnell.
Be alert to the risk.

2. A perceived conflict is as potentially damaging as a real conflict.

3. Err on the side of caution. It’s better to over-disclose than under-disclose.