What You Need to Know About Conflict of Interest in Your Ministry

Perhaps you have noted, as I have, that there is a general skepticism and lack of trust in our society today. While the news outlets recount one shocking (or at least sensational) story after another, our society becomes more jaded, and trust in institutions erodes.

No doubt it has become easier to express and foster mistrust and doubt through the low-risk power of virtual communication. For churches, one of the biggest ways mistrust can arise is through perceived hypocrisy due to conflicts of interest. We can protect our reputation and trustworthiness by improving our understanding of conflict of interest and taking steps to manage these conflicts.
 
As Shannon Greene points out in the article “Millennials' distrust in the Church and how to avoid it,” millennials tend to distrust institutions, such as the government, banks, the media, and, unfortunately, also churches.[i] Greene outlines steps the church can take to build trust through transparency, accountability, and honesty. Fortunately for our church, ethics and integrity are part of our values and the biblical operating model that we champion. We embrace an emphasis on good, ethical conduct, and, when opportunities arise, we can enhance our operations with better practices to protect you as a leader, along with the reputation of the church entity, while making choices that honor God. 

Defining a Conflict of Interest

Troy Segal says a conflict of interest occurs when an individual’s interests raise a concern about their bias.[ii] These personal interests might be related to money, status, reputation, knowledge, or relationships.
 
What might a conflict of interest look like in the context of a local church/school ministry?
 
Example 1: A church/school board member owns a roofing business and therefore may have a personal financial interest when the board decides to replace or repair the roof.
 
That board member has a conflict of interest because they have a duty to the board to make the best choice for the church/school, but as the owner of a roofing business, they have a personal financial interest in getting the business for their own company.
 
Example 2: A group of church members decides to start a ministry to engage in community service. They form an organization that does not carry the church’s name so that it will be more accessible to the community. Some of the board members of the church also serve on the board of the community ministry. To be clear, in this example, the ministry is a separate legal entity from the church.

These board members may have a conflict of interest because, as church board members, they have a duty to serve the church, which has a missional objective to serve the community. Meanwhile, in their capacity as board members of the community service ministry, they have a duty to that ministry’s objectives, which may compete or conflict with the church’s mission or ministry.
 
Now let’s say that the community service ministry wants to use the church property to host a clothing distribution or meeting event. For whom are the conflicted individuals acting when they decide whether to use the church property to conduct a community service ministry event? Do the conflicted individuals follow the church policies when servicing the community service ministry, including levels of insurance, background screening for volunteers, supervision of children, and others? What amounts of insurance and evidence thereof should the conflicted individuals require, and will they insist on a proper lease or facility use agreement approved by the conference? These are just some questions that illustrate the conflict. 
 
It is easy to see how questions might arise about how these individuals are using their positions to support a secondary interest. It is not enough that a few decision-makers believe the best choice was made. There needs to be transparency so that the members and, in some cases, the community can see and understand that the decision-making process was not influenced by some decision-maker’s interest.

Managing Conflict of Interest 

The truth is that it may be impossible to operate in the world without some conflict of interest appearing here and there. As Richard Smith shows in his article “Beyond Conflict of Interest: Transparency is the Key,” transparency should be utilized as a protective measure.[iii] Conflict of interest is a condition, not a behavior. The church/school needs to follow a process that can manage conflicts of interest as they arise.
 
The principles that churches and schools can use to manage conflict of interest are simple ones.[iv] They include defining conflict of interest and raising awareness about this and other ethics issues with the board. Conflicts of interest should be disclosed to the board in a documented process each year, and the disclosures should be reviewed by a governing body.[v]
 
In many cases, it may be enough to acknowledge the conflict of interest, but, in other cases, the conflict may be deemed significant enough to exclude the individual from serving.[vi] If a person with a conflict can still serve, instructions on how to manage the conflict must be determined ahead of time. The following are some examples of such instructions: 

1. Exclude a member with a conflict of interest from discussions and votes when items arise related to their conflict. For example, if the church is discussing the need for a new roof, the board member with the conflict (the one who owns a roofing company), should be excused from the discussion and vote, and their absence should be noted in the minutes.
2. Compare information and quotes (bids) from multiple independent sources that can provide competitive, expert opinions.
3. Make decisions based on the best interests of the church from a cost and quality perspective while also taking into consideration whether the transaction could be misperceived by others. Remember that trust is difficult to build and easy to lose.
4. In case questions or challenges arise that require evidence of the process used to make the decision, be sure to document these steps in the process. 

In all our business practices, let us strive to be fair and transparent and to uphold the highest standards of ethical conduct and integrity. We want our churches and schools to be known for the qualities of the kingdom of heaven where purity and justice prevail in a spirit of love. If we lead in these qualities, our church will continue to be blessed in its witness to a world that needs the gospel now more than ever.
 

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