member of two board of directors, one is subsidiary of other.one board

[Guest Chris]

Is it a conflict of interest if a person is a member of a two Boards of Directors, when One Board is for an organization that is an affiliate of the parent organization. The parent organization makes decisions about national issues that affect all of its affiliates. The affiliate makes decisions for the members in the affiliate organization. Many people are members of both the affiliate and the parent organization. The parent organization and the affiliate require loyalty in decision making, but the parent organization seems to trump the affiliates. There anything in RONR that addresses this beyond the abstention from voting if there's a conflict of interest?

[Atul Kapur]

RONR doesn't even say what you claim it does. "No member should vote on a question to which he has a direct personal or pecuniary interest not common to other members of the organization." (RONR 11th ed., p. 407, lines 22-25). I don't believe that being a member of two related organizations is a direct personal interest. And note the word "should"; "no member can be compelled to refrain from voting in such circumstances." (lines 30-31)

Either or both of the two organizations should develop codes of conduct for their board members if they feel that this is an issue of concern.

Edited April 21, 2020 at 12:08 AM by Atul Kapur

[Guest Thanks]

Thanks for your answer.

[Gary Novosielski]

22 hours ago, Guest Chris said:

Is it a conflict of interest if a person is a member of a two Boards of Directors, when One Board is for an organization that is an affiliate of the parent organization. The parent organization makes decisions about national issues that affect all of its affiliates. The affiliate makes decisions for the members in the affiliate organization. Many people are members of both the affiliate and the parent organization. The parent organization and the affiliate require loyalty in decision making, but the parent organization seems to trump the affiliates. There anything in RONR that addresses this beyond the abstention from voting if there's a conflict of interest?

Why would this represent a conflict of interest?  Ideally the parent and its affiliates would have a congruence of interests.  I do understand that not all situations are ideal. 😷

[Atul Kapur]

1 hour ago, Gary Novosielski said:

Why would this represent a conflict of interest?  Ideally the parent and its affiliates would have a congruence of interests.  I do understand that not all situations are ideal. 😷

Just one example: the national level organization is considering a policy -- say, introducing a certain requirement for continued membership -- that works well for the national body and for the vast majority of the county-level organizations (who make up the national body's membership) but will adversely affect a small proportion. One person is on the national-body's board and on their county's board, which will be adversely affected (because their entire membership doesn't and can't meet that requirement).

[Guest Chris]

19 hours ago, Atul Kapur said:

Just one example: the national level organization is considering a policy -- say, introducing a certain requirement for continued membership -- that works well for the national body and for the vast majority of the county-level organizations (who make up the national body's membership) but will adversely affect a small proportion. One person is on the national-body's board and on their county's board, which will be adversely affected (because their entire membership doesn't and can't meet that requirement).

The case is similar to the scenario you offer. So, if a person is a member of both the national board and the local affiliate board, a vote at the national level could adversely affect the affiliate.  In this situation, to which organization does the dual board member look out for? The national organization or the affiliate? Is there anything that governs this kind of situation? If this is a frequent occurrence would the long-term solution be to not allow an affiliate board member to be a national board member at the same time?

[Bruce Lages]

Is the Board of the parent organization made up of members who are also members of various affiliate groups? If so, it seems to me that this situation may arise frequently as the parent board creates policies that may very well have unequal impacts on the various affiliate groups. One would hope that the extent of any such inequalities that could be harmful to any affiliate groups would be taken into account by the parent board when formulating these policies and attempts made to minimize any such effects. In a scenario like this, I don't see that a parent board member advocating strongly for his affiliate during the discussion of such policies, and voting against them if they clearly may disadvantage his affiliate group in particular, constitutes a conflict of interest.

[Josh Martin]

48 minutes ago, Guest Chris said:

The case is similar to the scenario you offer. So, if a person is a member of both the national board and the local affiliate board, a vote at the national level could adversely affect the affiliate.  In this situation, to which organization does the dual board member look out for? The national organization or the affiliate? Is there anything that governs this kind of situation? If this is a frequent occurrence would the long-term solution be to not allow an affiliate board member to be a national board member at the same time?

There is nothing in RONR governing this situation. The organizations are free to adopt their own rules on this matter in their bylaws. There may also be relevant provisions in applicable law which provide guidance.

4 minutes ago, Bruce Lages said:

Is the Board of the parent organization made up of members who are also members of various affiliate groups? If so, it seems to me that this situation may arise frequently as the parent board creates policies that may very well have unequal impacts on the various affiliate groups. One would hope that the extent of any such inequalities that could be harmful to any affiliate groups would be taken into account by the parent board when formulating these policies and attempts made to minimize any such effects. In a scenario like this, I don't see that a parent board member advocating strongly for his affiliate during the discussion of such policies, and voting against them if they clearly may disadvantage his affiliate group in particular, constitutes a conflict of interest.

In any event, it certainly does not constitute “a direct personal or pecuniary interest not common to other members of the organization.” RONR has no rules regarding conflicts of interest generally.

[Atul Kapur]

As @Josh Martin says, there is nothing in RONR governing this situation. So I'm not going to debate on this forum whether my and Guest Chris's scenarios constitute conflicts of interest. That is for the organizations themselves to decide.

I will reinforce my earlier advice.

Either or both of the two organizations should develop codes of conduct for their board members if they feel that this is an issue of concern.

2 hours ago, Guest Chris said:

If this is a frequent occurrence would the long-term solution be to not allow an affiliate board member to be a national board member at the same time?

I have seen some organizations choose this solution and it works for them.

[Gary Novosielski]

On 4/22/2020 at 4:00 PM, Bruce Lages said:

Is the Board of the parent organization made up of members who are also members of various affiliate groups? If so, it seems to me that this situation may arise frequently as the parent board creates policies that may very well have unequal impacts on the various affiliate groups. One would hope that the extent of any such inequalities that could be harmful to any affiliate groups would be taken into account by the parent board when formulating these policies and attempts made to minimize any such effects. In a scenario like this, I don't see that a parent board member advocating strongly for his affiliate during the discussion of such policies, and voting against them if they clearly may disadvantage his affiliate group in particular, constitutes a conflict of interest.

I agree, and I was thinking of common interests at a higher level.  The objects of any organization ought to be reasonably similar at the various levels of the organization.  I don't think that individual views on how to accomplish these goals have to be in full agreement at all times.  That's what deliberation is for.  In cases where you're entrusted with two hats to wear, it's often necessary to remind yourself which hat to wear at a given moment.  In cases such as you describe, where a parent body implements policies without being mindful of the effect on some affiliates, it's not so much a conflict of interest as a failure to take enough facts into account to reach a decision that accommodates the diverse interests.  

Unfortunately that's not the case in all societies.  I've been a member of some where a conflict of interest was defined as being in the minority on any given question.  That's particularly common in so-called "consensus based" organizations. 

But I digress.

[Guest Chris]

Thank you to everyone for your input. It was helpful.