One of the other common risks faced by the non-profit organisation concerns corporate governance.
In many respects, members of the committee of management/board of a non-profit organisation can suffer from the same issues that face other volunteers time pressures, skills gaps and so on. In a move to address these difficulties, many committees and boards have attempted to 'professionalise' their membership, leading to new risk management challenges. These are largely around conflict of interest.
When a committee/board desires to make an appointment of a person with skill and knowledge relevant to the activities of the organisation, the most suitable candidates often come with a history of relationships with other key players in the field.
This sort of mutual inter-relationship is quite common and can be very advantageous in actually having services delivered. It can, however, also lead to perceived or actual conflicts of interest in a range of decision making areas such as hiring and firing, setting remuneration levels, award of contracts/subcontracts, strategic direction and policy/lobbying activities.
A conflict of interest is a situation in which an employee or volunteer has a private or personal interest sufficient to influence, or to appear to influence, the impartial and objective exercise of his/her work functions.
The primary reason for concern about conflict of interest is the potential for damage to stakeholders trust and confidence in the integrity and impartiality of the organisation. Conflict of interest issues can be especially challenging to cover with detailed rules about behaviour.
One of the most important risk management controls in the area of corporate governance for any non-profit organisation, therefore, is to have a well-developed and widely-circulated policy covering the self identification and disclosure of conflicts of interest.
