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Board conflict of interest

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URL: http://www.communitytheater.org/forum/forum_posts.asp?TID=3106
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Topic: Board conflict of interest

Posted By: galliactors
Subject: Board conflict of interest
Date Posted: 4/09/08 at 10:28am

Hi!

I have a question. An artistic director who is compensated with annual salary wants voting rights at board meetings for a non-profit organization. Is this legal? Or is this a conflict of interest? Can you provide proof either way that I can take to the board?

Replies:

Posted By: 75director
Date Posted: 4/09/08 at 11:39am

To clarify is the person asking to serve as a voting member of the board which is employing them?

Posted By: galliactors
Date Posted: 4/09/08 at 12:56pm

Yes.

Posted By: jayzehr
Date Posted: 4/09/08 at 4:04pm

My suggestion is that regardless of what answers that you get here that you consult a lawyer in your state who has expertise with non-profits.

Posted By: 75director
Date Posted: 4/09/08 at 7:33pm

I would agree with jayzehr about consulting a lawyer in your state.

My impression is that yes it would be a conflict for the employee to serve on the board which employs them. They could possibly abstain from any vote and remove themselves from discussions that will concern their employment. It may not be illegal but it just doesn't seem kosher.

I am the Artistic Director (full time employee) for the theatre here. While I do not serve on the board I advize the board and attend all board and committee meetings as a non-voting ex-officio member. As the head of the staff I am also the connection between the board and the rest of our staff.

Posted By: galliactors
Date Posted: 4/09/08 at 9:32pm

Thank you

Posted By: JoeMc
Date Posted: 4/09/08 at 11:41pm

As an aside, here under the association incorporation Act, anyone with any pecuniary interest in the debate or the association, cannot have voting rights or be a member of the association, thus must be excluded/recuse.

This or words to that effect are set in the State Model constitution compliance. here.

which does not help you one bit,

but I feel it would have similar provisions in your Constitution &/or Legislation there.

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Posted By: Darren
Date Posted: 5/03/08 at 2:27pm

Although it may look like a conflict of interest, I know of a few specific professional nonprofit theaters where the paid artistic director and/or managing director is also a voting board member.

I agree that you should check with a nonprofit attorney in your state however. Rules could differ from state to state.

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Darren Farrington
Theater Management and Production Consultant
http://darrenfarrington.com - www.darrenfarrington.com

Posted By: ZFix1
Date Posted: 5/06/08 at 1:54pm

A good start, besides talking to a lawter, would also be to read the board of directors contracts and the artistic directors contract.

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If you can dream it, I can make it happen

Posted By: avgsuperheroine
Date Posted: 6/04/08 at 10:41pm

I'd check your bylaws too, that may already be addressed. I'd go with a lawyer too--our bylaws state that no staff member can be a voting member of the board, nor our immediate family.

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