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A conflict of interest in a non-profit educational institution can arise when a board member’s personal financial interests or relationships potentially interfere with their duty to act in the best interests of the school.

Imagine that a non-profit acupuncture school has a board member who also owns a company that markets bulk Chinese herbs. This board member’s business supplies bulk Chinese herbs to various educational institutions around the country, including potentially the school in question. In this scenario, the conflict of interest might look like this:

• The board member is the owner and CEO of a bulk Chinese herb supply company.
• The school where the board member serves has an internship clinic with an herb dispensary that regularly purchases bulk Chinese herbs for use with its patients.
• The company owned by the board member is one of the potential suppliers of these herbs.

The board member, due to their ownership of the herb supply company, stands to financially benefit from the school’s decisions regarding purchasing supplies of herbs for its dispensary.

• The board member may be inclined to recommend or advocate for the purchase of bulk herbs from their own company, simply to increase their own business revenue.
• The board member may be inclined to oppose the purchase of bulk herbs from other suppliers even if the other suppliers might be better fits for the school’s needs, e.g., if they were cheaper.
• If the board member’s views influenced the board as a whole or the administrative leadership of the clinic, then this could lead to purchasing decisions that were not be in the school’s best financial interest, or result in a lack of competitive bidding to secure the best prices.

• In this case, the board member who owns the herb company should immediately disclose this conflict of interest to the board, and always recuse themselves from any discussions or decisions related to herb purchases.
• The school should establish a clear written policy for dealing with conflicts of interest of this sort, including procedures for disclosure and recusal, and require competitive bidding for significant contracts to ensure the best interests of the organization are prioritized.

Conflicts of this sort arise surprisingly frequently, particularly in small organizations where informal decision making may be common. Managing conflicts of interest that arise in these kinds of situations is essential to ensure that the board acts with transparency, integrity, and in the best interests of the school. It helps prevent decisions that might favor individual board members or other “related parties” over the organization’s own mission and financial well-being.

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