Conflict of Interest

[Guest Bruce Cowen]

We have senior members who help in operations. Their income depends on the operations of our charity. They teach and receive bowl collections. They are against raising of fees because it effects their bowl collections. They are not directors, but sit in board meetings. What rules apply to exclude them from attending discussions about raising fees. It is very clearly a conflict of interest situation. They are used to influencing directors. thanks, Bruce

[Rob Elsman]

We have senior members who help in operations. Their income depends on the operations of our charity. They teach and receive bowl collections. They are against raising of fees because it effects their bowl collections. They are not directors, but sit in board meetings. What rules apply to exclude them from attending discussions about raising fees. It is very clearly a conflict of interest situation. They are used to influencing directors. thanks, Bruce

Non-members of the executive board are not entitled to attend board meetings. A motion to go into executive session is a main motion; it requires a second; it is debatable; and it requires a majority vote for adoption. See RONR (10th ed.), pp. 92, 93.

[Gary Novosielski]

We have senior members who help in operations. Their income depends on the operations of our charity. They teach and receive bowl collections. They are against raising of fees because it effects their bowl collections. They are not directors, but sit in board meetings. What rules apply to exclude them from attending discussions about raising fees. It is very clearly a conflict of interest situation. They are used to influencing directors. thanks, Bruce

No rules apply that would exclude members, but these are apparently non-members of the board, and so would have no rights to attend board meetings at all, except with the consent of (a majority of) the board.

Even so, I do not perceive a "conflict" of interest at all. I do see where these volunteers have a definite interest in keeping fees low, and would probably have an interest in communicating that interest to the board. But a conflict exists only where there are competing, opposing interests, and that doesn't seem to be the case here. They simply have an interest, and a fairly direct and understandable one.

But the term "conflict of interest" is not defined within RONR, and would have nothing to do with attendance, one way or another.

The closest RONR comes to this issue is advising against members exercising their right to vote in a situation where they have a personal or pecuniary interest--not shared with others--in the outcome of a vote. In this case, they do have a pecuniary interest, but it is shared with others. And in any case they do not appear to have voting rights on the board, so the question would only come up in a meeting of an assembly of which they are members.

[Guest Bruce Cowen]

No rules apply that would exclude members, but these are apparently non-members of the board, and so would have no rights to attend board meetings at all, except with the consent of (a majority of) the board.

Even so, I do not perceive a "conflict" of interest at all. I do see where these volunteers have a definite interest in keeping fees low, and would probably have an interest in communicating that interest to the board. But a conflict exists only where there are competing, opposing interests, and that doesn't seem to be the case here. They simply have an interest, and a fairly direct and understandable one.

But the term "conflict of interest" is not defined within RONR, and would have nothing to do with attendance, one way or another.

The closest RONR comes to this issue is advising against members exercising their right to vote in a situation where they have a personal or pecuniary interest--not shared with others--in the outcome of a vote. In this case, they do have a pecuniary interest, but it is shared with others. And in any case they do not appear to have voting rights on the board, so the question would only come up in a meeting of an assembly of which they are members.

Dear Gary. Thank you for your fast reply. The charity is a religious teaching center. Two of the long term teachers who are not directors attend board meetings. They argue strongly not to raise food or rent fees because it effects their bowl collections. There bowl collections are not revenue for the center. Some of the directors are students of these teachers. The center really should raise the fees because it is running at a loss. I my view these teachers should not be present when decisions are being made about fees. The directors should not be influenced by having these strong minded in the room when the directors are voting. It just makes sense to me. Actually, these teachers are not even paid up members of the center. Just looking for a solution. Thanks, Bruce

[hmtcastle]

Two of the long term teachers who are not directors attend board meetings.

The board could ask them, politely, to leave. Their feathers might get ruffled but they'll get over it. Or they won't. You could put it to a ballot vote so no one will know how anyone voted. But don't be surprised if a majority of your fellow board members vote to let them stay. No one wants to be the one to take away Grandpa's car keys.

[Guest Bruce Cowen]

The board could ask them, politely, to leave. Their feathers might get ruffled but they'll get over it. Or they won't. You could put it to a ballot vote so no one will know how anyone voted. But don't be surprised if a majority of your fellow board members vote to let them stay. No one wants to be the one to take away Grandpa's car keys.

It's a real problem. In Nathan's Company Meetings Rules of Order, only those who can vote and the company auditor are entitled to attend meetings. The presence of persons not entitled to be present may, if objected to, render the proceedings invalid. But now we are locked into RONR because we put it into our by-laws. My view is that the directors should be able to vote without being intimidated by outsiders. Looking for a solution.

[Guest Bruce Cowen]

Non-members of the executive board are not entitled to attend board meetings. A motion to go into executive session is a main motion; it requires a second; it is debatable; and it requires a majority vote for adoption. See RONR (10th ed.), pp. 92, 93.

The problem is, these non-directors are used to attending meetings and influencing the directors. I don't think the majority will exclude them. But bad financial decisions are being made because of them.

[hmtcastle]

The problem is, these non-directors are used to attending meetings and influencing the directors. I don't think the majority will exclude them. But bad financial decisions are being made because of them.

Well then you'll just have to live with the unfortunate consequences of majority rule.

[hmtcastle]

In Nathan's Company Meetings Rules of Order . . . The presence of persons not entitled to be present may, if objected to, render the proceedings invalid. But now we are locked into RONR because we put it into our by-laws.

Well, if you're looking for supporters of Nathan's Rules of Order, I'm afraid you've come to the wrong place. Unless it's got something to do with hot dogs, in which case I'll order mine with just a little mustard.

[Guest Bruce Cowen]

It looks like the only route is to inform the board about RONR (10th ed.) pp. 92,93. Thanks Rob Elsman. I'm the bookkeeper. I'll talk to the chairman and treasurer. "Executive Session" (directors only in this case) seems the only route to go. If I explain it properly, it should fly. Thanks for your help. Bruce

[Guest Guest]

Well, if you're looking for supporters of Nathan's Rules of Order, I'm afraid you've come to the wrong place. Unless it's got something to do with hot dogs, in which case I'll order mine with just a little mustard.

I appreciate your loyalty RONR, but it would have been a solution before we put RONR (10th ed.) in our by-laws.

[Guest Guest]

Well then you'll just have to live with the unfortunate consequences of majority rule.

This may work where the majority rule applies ever where. But in corporate law, in least my limited understanding, the board of directors are responsible to the voting members of the corporation, not to domineering outsiders who are not even voting members or paid staff. This may be a case where the usefulness of RONR breaks down.

[David A Foulkes]

. This may be a case where the usefulness of RONR breaks down.

I'd say only if the chair and assembly choose to disregard it.

[Guest Bruce Cowen]

I'd say only if the chair and assembly choose to disregard it.

What is your solution to domineering outsiders? Thanks, Bruce

[David A Foulkes]

What is your solution to domineering outsiders? Thanks, Bruce

As noted in post #2, pages 92-93 (on executive session) will be helpful, as might be pages 625-626 on Principles Governing Discipline At Meetings, particularly the second paragraph.

The solution? If the Chairman won't enforce the rules, with the memberships support - nothing. Rules don't enforce themselves.

[Guest Guest]

As noted in post #2, pages 92-93 (on executive session) will be helpful, as might be pages 625-626 on Principles Governing Discipline At Meetings, particularly the second paragraph.

The solution? If the Chairman won't enforce the rules, with the memberships support - nothing. Rules don't enforce themselves.

I appreciate your suggestion. It is a matter of perception. Nobody wants to see two "great" teachers of the group in that light. But their willingness to influence directors by saying their own personal income suffers if the fees are raised is to me a way out of line. Nobody in the room saw it was a classic conflict of interest. Something RONA doesn't address. I talked to the chairman after and she said it was a very delicate issue. As the bookkeeper, I see such influence having dangerous financial consequences. It's a problem. Fees don't cover expenses. They are depending heavily of donations to subsidize operations. I'm looking for solutions. Thanks for your help.

[Josh Martin]

This may work where the majority rule applies ever where. But in corporate law, in least my limited understanding, the board of directors are responsible to the voting members of the corporation, not to domineering outsiders who are not even voting members or paid staff. This may be a case where the usefulness of RONR breaks down.

There is nothing wrong in using RONR in a board which is responsible to the general membership. This is the case in most societies which use RONR. If the general membership doesn't like what the board is doing, they can elect new board members. Of course, if a society finds the rules of RONR undesirable in a specific case, that's what special rules of order and the Bylaws are for.

I'm looking for solutions.

If the non-members are becoming disorderly, the chair may order them removed, although this ruling is subject to Appeal. Otherwise, removing them will require a majority vote. Those are your only solutions in the short term. In the long term, you can seek to amend the society's rules or get new board members.

Personally, my opinion is if there is a concern that non-members are dominating the board members, the problem is with the board members, not the non-members (or the rules). Get some board members who remember who they represent and have some spine.

[Gary Novosielski]

What is your solution to domineering outsiders? Thanks, Bruce

The solution is to stand up on your hind legs and tell them they're not invited to the meeting.

[Josh Martin]

The solution is to stand up on your hind legs and tell them they're not invited to the meeting.

As long as we're clear that a majority vote is required to remove them. Mr. Cowen can't demand it on his own.

[Gary Novosielski]

As long as we're clear that a majority vote is required to remove them. Mr. Cowen can't demand it on his own.

I would suggest that a majority is required to admit them. A tie vote should exclude, as that is the default rule. (Presuming no local rules pertain.)

[Josh Martin]

I would suggest that a majority is required to admit them. A tie vote should exclude, as that is the default rule. (Presuming no local rules pertain.)

Unless the assembly is meeting in executive session, that is not the case. See RONR, 10th ed., pg. 625, lines 19-28. Since the non-members appear to have been regularly attending board meetings, it does not appear that it is the custom of the board to meet in executive session. In addition to confidentiality, this is a key difference between executive session and "open" session. In the former, a majority vote is required to admit. (RONR, 10th ed., pg. 93, lines 10-12) In the latter, a majority vote is required to expel.

[Guest Bruce Cowen]

To remedy the situation, I've decided to introduce a new by-law: Strangers Only persons having the right to vote, directors and the corporation's auditors are entitled to be present at meetings. Strangers may be admitted only with the consent of the meeting. The presence of persons not entitled to be present may, if objected to, render the proceedings invalid, but if no objection is taken, the meeting is not invalidated.

[hmtcastle]

The presence of persons not entitled to be present may, if objected to, render the proceedings invalid, but if no objection is taken, the meeting is not invalidated.

Well, that's a bylaw that's guaranteed to come back and bite you where the sun don't shine have unintended consequences but go for it. It's the kind of thing that helps parliamentarians pay the mortgage.

[Gary Novosielski]

To remedy the situation, I've decided to introduce a new by-law: Strangers Only persons having the right to vote, directors and the corporation's auditors are entitled to be present at meetings. Strangers may be admitted only with the consent of the meeting. The presence of persons not entitled to be present may, if objected to, render the proceedings invalid, but if no objection is taken, the meeting is not invalidated.

Hooboy. That's a doozie all right.

[Josh Martin]

To remedy the situation, I've decided to introduce a new by-law: Strangers Only persons having the right to vote, directors and the corporation's auditors are entitled to be present at meetings. Strangers may be admitted only with the consent of the meeting. The presence of persons not entitled to be present may, if objected to, render the proceedings invalid, but if no objection is taken, the meeting is not invalidated.

I'm not entirely clear on how this Bylaw fixes your problem. The bylaw permits non-members to be present with the consent of the meeting. Since you have said the directors would be unwilling to exclude the members, it seems they would have the consent of the board to be present. The final sentence of the proposed bylaw is also problematic, as it's not entirely clear how it interacts with the second sentence. May a member object to the presence of a non-member if consent has already been given?

I still think that if you believe the board members will be influenced to take actions not in the best interests of the society, the solution is to get new board members. Attempting to create rules to protect the weak-willed board members from influence are likely to be ineffectual, as the non-members will simply apply their pressure to the board members outside of a meeting context.