Ethical? Or Not So Much? What Do You Think?

Here is the scenario:

1. Agency provides advocacy, services and referrals for a special population.
2. Board president is a professional services provider.
3. Board president has been in her position as board leader for 10 years (no term limits).
4. Board president makes a generous annual contribution to the agency.
5. Board president's company has enjoyed high volume of referrals from the agency.
6. Board president does not disclose any conflicts of interest.
7. Board president has begun to pressure the agency to direct all referrals to her company.
8. Agency's mission is to provide individualized case management and referrals that are client-centered.

What do you think about this scenario? Is there a conflict of interest? Is the board leader operating in the best interests of the agency and its clients?

Looks to me as though there is a clear conflict of interest and that the board leader should disclose that she is not 'independent' as defined in the current IRS Form 990. And I would be concerned that she is really over the line in pressuring the agency's staff to refer to her company exclusively.

Then there is the issue of a lack of term limits for board members and officers.

And I wonder what other service providers and the agency's funders and grantors would think about this practice of referring to the board leader's company exclusively.

And It looks to me as though the board leader and the board have completely forgotten the mission of the agency they govern.

If you were the concerned chief executive staff person, what are your options? What would you advise him to do in this scenario?

How could this scenario be prevented or remedied?

I have seen this type of scenario more than once in organizations I have advised over the years so
I've outlined a way to more clearly define board and staff roles in my newest nonprofit resource book, "The Invisible Yellow Line: Clarifying Board and Staff Roles" available from CharityChannel Press Bookstore at www.charitychannelpress.com/bookstore/productid/158/catreferrer/2236 or from Amazon.com.

Jean Block