Nonprofit Board Values and Ethics

[Mike Burns]

A recent shake-up in a nonprofit dependent on its credibility and adherence to high ethical standards can serve to remind nonprofit board and staff that conflicts of interest are not specific to board members alone.

"The CFA Institute (Chartered Financial Analyst Institute) is best known for administering the Chartered Financial Analyst exams, a rigorous test of financial analysis and ethics. This year, nearly 150,000 candidates from 179 countries registered to take one of the exams, often after years of study, on June 7. The organization has 119,000 members. CFA has an annual budget of $231 million. Its executive was paid $1.4 million in fiscal year 2013.

According to the Wall Street Journal, the executive "stepped down" after a board review that followed its learning about the executive's relationship with a senior staff member. The Journal notes that "While the organization's code of conduct doesn't prohibit relationships between staff, a concern on the board was that potential conflicts from the relationship could open CFA Institute to litigation or public criticism, people familiar with the situation said."

Whew! I understand rigor and all and the duty by the board to ensure that its biggest asset, rigor to high standards, is preserved but I for one wonder that this action doesn't stretch the meanings. I however do recognize that when an inner office relationship between a supervisor and supervisee shifts to something of an amorous nature, power dynamics can also change and perhaps in turn, risks to outcomes. At the same time I would expect that an organization like the CFA would have instituted enough checks and balances that inner-office dynamics would not directly affect the quality of its product. Might word of a relationship affect perceptions of quality by members? This of course becomes the basis for the board's action. I would expect though that the board must adjust its code of conduct to reflect its own sense of the impact of inner-office relationships.

At this point, based on its action, I'm led to wonder whether the board didn't have previous issues with its exec to reach this end result. This for me would be the only reason to take an action that did not otherwise have institutional documentation. Food for thought.