Fall 2014 Kate Walker, Vice President for Finance and Treasurer Conflicts of Interest 101 Fall 2014 Kate Walker, Vice President for Finance and Treasurer

Why does the College care about Conflicts of Interest? (SOURCE: Grinnell College Employee Conflict of Interest Policy Grinnell College has an obligation to demonstrate and document good governance in order to protect the integrity and credibility of the College and to maintain the trust and confidence of our constituents. Managing conflicts of interest is part of the College’s commitment to enterprise risk management.

With that in mind… Here’s what is covered in this presentation: What is a conflict of interest? Situations and examples Recognizing when you have a conflict of interest When and how to disclose a real or potential conflict Managing conflicts of interest

What is a Conflict of Interest? A conflict of interest involves risk of benefit and/or bias. A conflict of interest arises when an employee may benefit personally (or appear to do so) from dealings with an entity or person conducting business with the College, including indirect benefits such as to family members or businesses with which the person is closely associated. Financial or other considerations may compromise (or have the appearance of compromising) the employee’s objectivity or independent professional judgment in the discharge of College duties and responsibilities. Benefit Bias

Conflicts of interest can be real – or they can appear real. If a situation looks like a conflict of interest or feels like a conflict of interest, it’s likely there is some level of conflict. Use the “reasonable person test”: If a reasonable, disinterested person would conclude that an individual might emphasize personal interests over other interests for which he/she has responsibility, there is, at the very least, the appearance of a conflict of interest.

Are all Conflicts automatically “bad”? Having a conflict of interest is not necessarily a problem or a “bad thing”. Having a conflict of interest and doing nothing about it is a problem! In a small community like Grinnell, choices are limited for certain services. Sometimes, the best organization to tackle a project is the one where your family member works. Discounts extended through personal referrals can be of considerable value to the College.

Conflict situations and examples: Accepting personal gratuities The ITS Director receives a “free” large-screen TV from a vendor seeking a contract with the College. “Just try it and see if you like it. No obligations.” Conflicting outside employment or other allegiances The College’s Purchasing Director steers procurement decisions to favor a company where a family member works. Using or disclosing confidential information A College Development employee uses Grinnell’s confidential donor list to solicit gifts for another community non-profit organization. Maintaining roles that conflict The CEO of an oil corporation, who serves as a Trustee for the College, votes against divesting endowment holdings in fossil fuels.

If you suspect a conflict, report it. Think you have a conflict? Consider these questions… Do my actions feel right? Do they reflect a basic understanding of generally accepted standards of right and wrong? Are my actions in alignment with my personal values and those of the institution I represent? Am I being honest about all facets of the situation? Do the right people know what’s going on? If you suspect a conflict, report it.

Regardless of whether it’s real or perceived, a conflict is a conflict. As soon as you suspect a conflict exists: Disclose it. Transparency is key. HR has forms and can provide guidance. Talk with your supervisor before taking action if there’s any risk of a conflict. Mitigate the conflict by taking steps to ensure a fair and level playing field among multiple qualified vendors, e.g. competitive bids, RFP process, etc. Abstain from decisions or other involvement where there is a risk of bias – real or perceived.

Grinnell’s approach to managing conflicts of interest 1. Disclosure 2. Review 3. Management Employees disclose real or potential conflicts as they arise or at least annually via Grinnell’s COI Disclosure Statement. College leadership reviews disclosures to determine materiality and, where warranted, places appropriate restrictions on employee’s scope of duties and/or vendor interaction. Management apprises the employee of the restrictions, if any, deemed necessary to mitigate and manage the COI. Employee agrees to observe the restrictions.

Closing thoughts… Conflicts of interest are more frequent in a community the size of Grinnell. Be alert to the risk. A perceived conflict is as potentially damaging as a real conflict. Err on the side of caution. It’s better to over-disclose than under-disclose.