Conflict of Interest Policy
Purpose
The purpose of this Policy is to provide guidance to HPHH to effectively identify, disclose and manage any actual, potential or perceived conflicts of interest in order to protect the integrity of HPHH and to manage risk.
Scope
This policy applies to all HPHH board members, employees, volunteers, and contractors.
Key Principles
Conflicts of interests are common, and they do not need to present a problem to HPHH as long as they are openly disclosed and effectively managed. However, as a guiding principle, no board member, employee, contractor or volunteer of HPHH shall operate or act in any manner that is contrary to the best interests of HPHH.
What is a conflict?
A conflict of interest occurs when a person’s personal interests’ conflict with their responsibility to act in the best interests of HPHH. Personal interests include direct interests, as well as those of family, friends, or other organisations a person may be involved with or have an interest in (for example, as a shareholder). It also includes a conflict between a board member’s duty to HPHH and another duty that the board member has, for example, to another Not-For-Profit (NFP).
A conflict of interest may be actual, potential or perceived and may be financial or non-financial.
Actual conflict – you are being influenced by a conflicting interest. For example – You work in a business on the weekend that works with animals.
Potential conflict – you could be influenced by a conflicting interest. For example – you are on a selection panel for a new employee and you know a potential candidate.
Perceived conflict – you could appear to be influenced by a conflicting interest. For example – a family member provides a quote to perform work for HPHH. While you believe you may make an impartial decision on behalf of HPHH, it could be perceived as being made in the interests of your family member.
HPHH takes a broad view of conflicts and the board, employees and volunteers are urged to think of how a situation/tractions would appear to outside parties when identifying conflicts or possible conflicts.
The Process
Step 1: Undertake the Reasonable Person Test
The Reasonable Person Test
Would a reasonable person think that an individual’s competing personal interest conflicts, appears to conflict, or could conflict with the individual’s duty to act in HPHH best interests in the future?
Step 2: Complete a Conflict of Interest (COI) Declaration form
The COI declaration provides a record of a board member, employee, volunteer or contractors agreed actions and provides an opportunity for an independent judgement to be made about the status of the conflict and any corresponding mitigation plans.
Step 3: Review COI Declaration
Once a board member, employee, volunteer or contractor has filled out the COI Declaration form, it should be forwarded to the relevant Executive Leadership Team (ELT) Member, or the Board Chair, who will review the disclosure and determine whether an actual, potential or perceived conflict of interest exists.
Where an actual, potential or perceived conflict of interest exists, proceed to Step 4.
Step 4: Establish a mitigation plan
Where an actual, potential or perceived conflict of interest exists an appropriate mitigation plan is to be developed for the circumstances. The mitigation plan will be recorded on the COI Declaration form.
Board
Once a conflict of interest has been appropriately disclosed, the board (excluding the board member who has made the disclosure, as well as any other conflicted board member) must decide whether or not those conflicted board members should:
vote on the matter
participate in any debate
be present in the room during the debate and the voting
In exceptional circumstances, such as where a conflict is very significant or likely to prevent a board member from regularly participating in discussions, it may be worth the board considering if it is appropriate for the person conflicted to resign from the board.
Employees, Volunteers and Contractor Contractors and Volunteers
Once a conflict of interest has been disclosed and formalised on the COI Declaration form, mitigating actions to reduce the risk should be discussed with the Manager and endorsed by an Executive Leadership Team member a. In exceptional circumstances, such as where a conflict is very significant or cannot be appropriately mitigated, the CEO seek to terminate the relationship (see compliance). The Executive team member is responsible for recording the conflict of interest on the COI Register.
What should be considered when deciding what action to take?
In deciding what approach to take, the Board and/or CEO will consider:
whether the conflict needs to be avoided or simply documented
whether the conflict will realistically impair the disclosing person’s capacity to impartially participate in decision-making
alternative options to avoid the conflict
Other strategies include:
Removal from the situation or conflict
Restricted involvement in the situation or conflict and documenting this involvement
Engaging an independent third party to oversee part or all of the relevant activity or process
Relinquishing an interest which is ongoing, unacceptable and/or likely to damage the reputation of HPHH
Step 5: Record reported COI’s including relevant mitigation plans
All submitted COI Declaration forms including details of applicable mitigation plans are to be recorded on the relevant Register of Declaration of Conflicts of Interests by the ELT/Board member. Refer:
Employee/Volunteer/Contractor Register of Declaration of Conflicts of Interests
Board Register of Declaration of Conflicts of Interests
Ongoing management of Conflicts of Interest
Notifying others of Conflict of Interest
If a board member, employee or volunteer has formally declared a conflict and a mitigation plan in place, they are obliged to declare the conflict to unknown parties in circumstances where it could impact on their duties. Additionally, if circumstances change in relation to the conflict, a new COI Declaration form must be filled out.
Advance notification/Reminders of Conflict of Interest
To ensure that the conflicts of interest are proactively and transparently addressed, where someone identifies that a potential conflict is likely to arise e.g. a family member intends on submitting a quote or job application, the conflict should be raised with the relevant Manager at the time (even if the potential conflict has not been formally declared previously). The Manager is to notify the relevant ELT member in writing.
In addition, should a situation arise where a person/organisation with whom a formally declared conflict is in place, it should not be assumed that others are aware of the conflict. The person to whom the conflict applies is required to verbally advise others of the conflict.
Changes in Conflicts of Interest
The COI declaration must be updated if the circumstances change.
Annual submission of Conflicts of Interest
Each July, board members, employees, volunteers and contractors will be asked to declare any actual, potential or perceived conflicts.
Review of Conflicts of Interest
Regular reviews of conflict of interest should be undertaken. Reviews should consider whether agreed mitigations are being implemented as agreed, including any changes in circumstances that may require resubmission of a COI declaration.
Board: Board conflicts of interest should be reviewed at the beginning of each board meeting.
Employees/Volunteer/Contractor: The Employee/Volunteer/Contractor Register of Declaration of Conflicts of Interests should be reviewed by the ELT at the beginning of each monthly ELT meeting.
Confidentiality of disclosures
All declarations will be managed with discretion; in accordance with the HPHH Privacy Policy; the Conflict of Interest Policy; and the law. If there is uncertainty about how to describe or define a conflict, or unsure of whether it is an actual, potential or perceived conflict, seek guidance from the Chief Financial Officer or Chief Operating Officer, and declare if unsure. In addition, if confidentiality is required, an employee or volunteer may seek to disclose to the CEO or a Board Member directly.
Compliance
Failure to disclose or avoid a conflict of interest is a breach of this policy and a potential breach of the Code of Conduct. If HPHH has a reason to believe a board member, employee or volunteer has failed to comply with this policy, it will investigate the circumstances.
If it is found that an employee or volunteer has failed to disclose a conflict of interest, HPHH may take action against them. This may include disciplinary action and/or seeking to terminate their relationship with HPHH. If a board member has failed to disclose a conflict of interest and it is a significant conflict, the board member may be asked to resign. Where necessary HPHH may undertake legal proceedings.
On a yearly basis, board members, employees and volunteers will be asked to declare any conflicts. However, board members, employees or volunteers should not wait until the yearly disclosure process if a conflict arises during the year. In these circumstances, an ad-hoc disclosure should be made.
References
HPHH Code of Conduct
HPHH Privacy Policy
Australian Charities and Not-for-profits Commission, Governance Standard 5
Australian Charities and Not-for-profits Commission, Managing Conflicts of Interest guide and policy
Institute of Company Directors, Managing Conflicts of Interest
Commonwealth Ombudsman, Conflict of Interest Guidelines
Board Conflict of Interest Register
Employee, Contractor, Volunteer Conflict of Interest Register
Conflict of Interest Declaration form
Contacts
For questions about this policy, contact the Chief Financial Officer or Chief Operating Officer.