Board Members, Bids, and Conflicts of Interest

First Church was engaged in the planning stages of a building project when one of the board members, the owner of a masonry company, suggested that he would like to bid on the brickwork required for the project. Can the board member submit a bid or is it a conflict of interest?

A conflict of interest arises when a person has a duty to more than one person or organization but may be unable to do justice to the actual or potentially adverse interests of both parties. In the above scenario, a conflict of interest could exist between the board member’s responsibilities to his own company and to the church.

Does this mean, the church may not do business with the board member? Not necessarily; however, the church should implement a Conflict of Interest Policy that includes three keys steps:

1. Disclosure

Every board member has a duty to disclose any actual or possible conflict of interest, including the disclosure of all material facts and financial interest. In the above hypothetical, the board member must disclose his ownership of the company and any financial gain he would receive from the contract with the church.

1. Recusal

The board member in the above hypothetical must recuse himself from involvement in the discussion and decision regarding the bid. He may present the bid to the board, answering any questions the other board members may have about the bid itself. But, when it comes time to discuss and decide who is awarded the bid, the board member must recuse himself from that discussion and vote, meaning he may not participate in the discussion or decision.

1. Fair

If in the opinion of the disinterested board members (those without a conflict), the board member’s bid is in the best interest of the church and is fair to the church, the board may vote to award the bid to the interested board member’s company.

A Conflict of Interest Policy should be adopted and affirmed by church board members at the beginning of each new year. Reynolds Law Group, PLLC has developed such a policy that is part of the Church Protection Plan, a collection of 44 policies and forms to keep churches safe, legal, and out of court. The Church Protection Plan retails for $397.00, but you can use coupon code LEADERS to receive a 75% discount and purchase the entire Church Protection Plan for $99.25. To purchase your Church Protection Plan, CLICK HERE. To request a free Conflict of Interest Policy, CLICK HERE.