Standard 4: Conflicts of Interest
The land trust has policies and procedures to avoid or manage real or perceived conflicts of interest.
Background
A land trust operates in the public interest—not for the benefit of any individual. Both actual conflicts and the perception of a conflict can damage a land trust’s credibility. To avoid conflicts, a land trust should adopt and follow a written conflict of interest policy. A board member who thinks his or her participation in a board action could be viewed as a conflict should not attempt to influence that action and should not be present for discussion on the issue. Staff members who think they may have a conflict should disclose their concerns to their supervisor or as described in the organization’s conflict of interest policy. Other parties may also have conflicts of interest, and the policy should state how those conflicts are addressed. An individual who perceives the likelihood of serious continuing conflicts should not serve on the board or staff, both for legal reasons and to preserve the land trust’s credibility.
Relevant Law
- Society Act, RSBC 1996, c. 433, s. 27.
- Canada Corporations Act, RSC 1970, c. C-32.
- Society Act, RSBC 1996, c. 433.
- Canada Corporations Act, RSC 1970, c. C-32.
PRACTICE
B. Board Compensation
Board members do not serve for personal financial interest and are not compensated except for reimbursement of expenses and, in limited circumstances, for professional services that would otherwise be contracted out. Any compensation must be in compliance with charitable trust laws that apply in the jurisdiction the land trust operates in. The board’s executive officers are never compensated for professional services. In Ontario, it is the position of the Public Guardian and Trustee that no board members of organizations with charitable status may accept compensation for any form of professional services without first obtaining court approval.
Background
People serve on land trust boards as volunteers in a spirit of civic-minded service, contributing their time, talents and funds, as they are able. Board members should not serve for any personal financial interest, or the interest of any firm or organization they may represent. While board members may be reimbursed for, expenses (such as travel and lodging) incurred in attending board meetings and carrying out the land trust’s business. (Additional direct compensation for land trust board members is virtually unheard of and is restricted by law in some provinces, most notably in Ontario by the Public Guardian and Trustee Act). Compensation of board members, either directly or indirectly via payment for services or contracts, leads to the risk that decisions will be made that are more in the interest of the compensated party than in the public interests the organization was established to serve. Direct or indirect compensation may also be construed as an undue benefit. This may jeopardize the land trust’s charitable status. In limited circumstances when the organization is, seeking services that might be contracted out, a board member may be considered as a paid provider of these services. In these cases, the conflict of interest policy and policies on fiscal controls (such as bid requirements) should be carefully adhered to. Services provided by a board member should be offered at or below market rate and must not be in conflict with charitable trust or other laws. In limited circumstances where payment is made, the amount will be taxable to the recipient. The land trust must prepare an appropriate T4 slip if salary type payment or receive appropriate supporting invoice from recipient before payment is made. In all cases of providing compensation to a board member, the credibility of the land trust must be considered. The guidelines for charity accountability suggest that the executive officers not be compensated for services either directly or indirectly and the Canadian Land Trust Standards and Practices follows suit.
Assessment Questions
BC Assessment Questions
- Are the terms of compensation for board members clearly defined in the policy?
- Are the rates of compensation for travel and other expenses that vary over time updated every 2-3 years?
CLTA Assessment Questions
- Are any board members currently compensated for services?
- What procedures are followed when the land trust considers compensating a board member for services?
