Q: I’m new to a board of a small nonprofit and I’m writing following our board meeting last night, at which a discomforting situation arose. The organization currently has four staff positions, each of which is part-time at less than 20 hours per week. However, there are two openings, one of which is for a new full-time position with some benefits. Our board president has two daughters and each has applied for one of the openings. Both are assertively pursuing the jobs. One example: after learning of the openings they signed up as volunteers and are regularly in the office. Adding to my discomfort, the board president is also on the personnel committee.

I would like your comments. I’d also like to know what is “recommended best practice” and how we might write a policy to handle this conflict of interest. Thanks.

A:  As you clearly appreciate, this is not “recommended best practice!” Where to start?

Even without the father of the girls being on the board – chair yet and on the personnel committee – it’s generally unwise to have two people from one family working for the same public organization. There is too much potential for opening a Pandora’s Box of real or perceived problems, ranging from the intrusion of complex family dynamics to undue influence centered in the family unit. The latter concern is particularly relevant here where, with the two new positions, there would still only be six employees. If both young women were hired it would mean that one-third of the employees were from a single family.

Having anyone on staff related to someone on the board – the chair especially – means that the staff could potentially influence decisions about raises, supervision and other self-serving issues by appealing to that individual to go around the executive director to his/her loved one on the board. Worse, they could create problems for the executive director if he/she didn’t treat them the way they want to be treated. My guess is since all of the current positions are part-time and one of the new positions is full-time with benefits, that one of the current openings is for the executive director position, which would make this situation even trickier.

Maybe the father is truly unique and is capable of following through on commitments to never talk to his daughters about their work and to stay out of any actual decisions related to their work environment. The public could still perceive improprieties and that perception might as well be seen as fact. The organization would likely end up on page one of the local newspaper – not a good thing in this case!

I trust that the positions are posted. I hope that they are widely posted. I also trust that the position announcements are very specific as to the skills, education, and experience required. It is critical that the board have a number of viable candidates from which to choose and that it gives all candidates a fair look against objective criteria. The fact that the girls are volunteering might be a good thing. It gives the board a true means of ascertaining their actual skills and work ethic. If they are all talk and little action, that should make the decision easier.

In any case, if the daughters really want to work at this nonprofit and they have the proper qualifications, I would suggest that the father resigns from the board immediately – before this situation goes any further and any decisions are made. At the very least, he should recuse himself from any discussions about the new hires. Of course, if there is no executive director and the board is doing the hiring, it goes without saying that he must recuse himself from the vote. If either or both young women are hired and the father stays, he should step off the personnel committee and must recuse himself from any evaluation and salary increase discussions brought to the full board.

It might help to remind the board that someone in the community – may be a candidate who didn’t get one of the jobs – could sue the directors and the organization for “derivative action.” That person’s argument: that the directors breached their duty of loyalty by making their decision in light of what would make the board chair happy rather than on what was best for the organization and, in so doing, “injured” the organization. The person would not have to win to take down this small organization, which might be forced to incur attorneys’ fees to fight the claim even if they have directors and officers insurance.

Whether any of these arguments will hold sway, I would start by taking a look at the organization’s bylaws and any written policies that currently exist to see if anything is mentioned about nepotism. There often are such clauses in bylaws. If not, I would initiate a discussion to create such a policy. I would recommend that there shall be no more than one person working for the organization from any one family at any time. I would initiate a second policy that there shall be no persons from the same family serving in positions on the board and on staff at the same time. Personally, I’d go so far as to prohibit more than one person from a family serving on the board at one time, though I may be a minority voice blowing in the wind on that one. It may be too late to establish policies at this point, but maybe not. My guess is that the father would be anxious to prevent problems that inevitably would reflect poorly on his daughters.