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IBMA in Need of New Ethics & Conflict of Interest Policies

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Code of EthicsThe International Bluegrass Music Association (IBMA) has a long history of leadership problems. In virtually every case, the underlying issue was "transparency" or, the lack there of. The lack of transparency was caused by two factors. Communications were non-existent, late or self-denial and, a lost trust in the leadership as a result. If one goes back through the years of emails and other communications, there is always a common thread and, for the past 12+ years, a common individual in the mix as well.

We obviously cannot repair the past however, going forward there are some steps that the IBMA could undertake to help reduce or, hopefully, eliminate some of these problems in the future. The first is to create a "Conflict of Interest and Ethics Policy" and the second it to employ a "Communications Staff Director" who is NOT a member of the board. While ethics is the primary topic and Conflict of Interest falls under that umbrella, I am presenting the Conflict of Interest element first to help one visualize the entire ethics topic.

Conflict of Interest

The IBMA should hire an outside ethics agency to create a "Conflict of Interest and Ethics Policy" that would apply to all levels of leadership, staff and committees of the IBMA. This has to be created by an outside agency or, adopted from an existing outside policy, to ensure that those who most need it are not involved in the creation of it. The reason is that repeatedly, there has been the appearance of a lack of integrity and ethics among some board members.

A Conflict of Interest can be defined as an action or relationship that might impair an member's ability to make objective and fair decisions relating to the member's job performance. Many organizations add the words "even the appearance of a conflict" to the definition. There are many situations where an individual risks creating an actual or perceived Conflict of Interest, where a reasonable person could conclude that the individual has a divided loyalty.

Incentives are pervasive in every aspect of society. People are rewarded for taking certain actions, and not rewarded for taking others. Incentives can be monetary, favoritism or of other perceived value. Workers are paid for their effort and productivity, salespeople are paid commissions for their sales, and non-profit associations are rewarded with recognition with outside partnerships. So long as these incentives are well-understood by everyone, they work reasonably well. They motivate effort, performance, improve the image and social welfare. But sometimes, leadership individuals have incentives that conflict with their professional responsibilities, often in ways that are not transparent to the membership, partners, public or even in their own minds. These conflicts of interest produce serious social problems or even legal ones.

Conflicts of interest are pervasive in everyday life and certainly within the IBMA, These conflicts can motivate professionals to act in ways that violate their responsibilities and hurt their peers and membership. One example is when a professional wants to find an easy way to achieve their objectives. In doing so, they hire people they already know to work with them. Their professional responsibility is to do what is best for the organization, but their personal incentive is not always aligned with this responsibility.

Basically, conflicts come in two basic forms. One occurs when an individual of influence (a board member, staff member or an executive) or an immediate family member could receive financial benefit from the nonprofit they serve. The second occurs when an individual could experience mixed loyalties from within the organization or, while serving two or more organizations.

When there are conflicts of interest, you can almost guarantee that they will lead to bad outcomes. The IBMA has certainly seen this repeatedly in its history and, most recently with the string of resignations. Ethics issues come up with how these outcomes are addressed and will be discussed further in this article.

The IBMA leadership has certainly fallen into the Conflict of Interest area numerous times. Some of the issues this would address would include:

  • Board members may not be related to each other, executive officers or staff by hereditary, business or other relationships.
  • Board members may not participate or vote on issues that deal with themselves directly.
  • Board members may not hold back-room meetings and/or secret votes. Meeting will always be scheduled in advance and open to the membership.

Here are a few unethical hypothetical situations where there exists a strong Conflict of Interest...

  • Two board members own a music publishing and production company. The IBMA wants to put out a DVD video of the awards show. The board members recommend their own company and offer a low cost deal for the association.
    • Two board members associated with the same company
    • Board member's company earns business because of their relationship with the parent organization
    • Board members create artificial competition for the bidding
    • Board members unfairly discriminate against other companies
    • Board members benefit from their position
    • ...
  • A board member is friends with someone that wants to be on the board. The board member explains to the board why his friend would be a good choice and then votes for his friend's inclusion to the board.
    • Board member creates the perception of a Conflict of Interest
    • Board member participates in the discussion for including his friend
    • Board member participates in a friend's vote
    • Board member creates the possibility of a personal relationship with another board member
    • ...

The key implication is that directors, board members and policy-makers must constantly evaluate whether they might face incentives to act which are counter to their responsibilities. Eliminating conflicts of interest is one of the simplest and most effective ways to reduce unethical behavior. It is also one of the most difficult things to actually do. But in order to do so, we must be willing to acknowledge that professional codes of conduct, like those followed by doctors, lawyers, and accountants, do not make people immune to these conflicts, and that these codes are rarely a justification for ignoring the likely outcomes that conflicts of interest create.

The fact that the IBMA lacks a clearly defined Code of Ethics contributes greatly to these regular uprisings. It is most certainly clear that the activities following Nancy's resignation were greatly amplified by a lack of a Conflict of Interest policy and violations of the Code of Ethics. In the Code of Ethics, a Conflict of Interest is generally the most common and most severe violation that can occur. If the IBMA reflects back on its history, it is blatantly clear that these violations have been responsible for what subsequently occurred many times in the past.

Code of Ethics

Non-profit agencies are established to serve the public trust. This is how they get their tax status and, their objectives must in some way benefit the public. They achieve this by earning the public's trust and, in many non-profit agencies, the leadership members are referred to as "trustees" with the emphasis on "trust." The IBMA is one such organization. In order to achieve a trust, ethics needs to employ compliance monitoring and reporting to the Executive Director and/or the membership on a regular basis.

The first step is to create an ethical environment and documented constraints (policy) for the leadership. Transparency and trust are essential. You need the membership and the public as watch dogs over the activities of the board. The IBMA must work to develop an ethical environment for staff and board members. That means conducting numerous discussions on people's perception of ethical behavior and conflicts of interest - maybe adding open discussions at most meetings. Get rid of the spontaneous closed door back-room meetings. There is no place for them where transparency is paramount. The IBMA board shouldn't be doing anything that would require a security clearance and they need to quit acting as such. They don't have any competition and their goal is to achieve public trust. Back-room meetings have no place and go against the legal role of a non-profit.

While each board member may think they are ethical and without conflict, others often see them differently. The reality is that both ethics and conflicts are perceptions, not absolutes. The only way to ensure that the entire board acts ethically or that they are handling their conflicts of interest appropriately is to consistently ask those around them to be open and honest in what they see. When dozens are screaming that there is a problem, rather than deny it, they need to listen and correct their path. The IBMA leadership fails to do this. This is the problem that Jon currently has. He perceives nothing wrong with his actions while everybody else does. Perception is the reality and he needs to get out of the denial mode and into the corrective mode. So far, he has failed to even acknowledge his failings. While it sounds simple, it is, in fact, very difficult for most board members to provide such candid advice to their peers and the executive staff - it's even harder for them to accept.

Board members, committee members and staff should:

  • Listen to our members and stakeholders and make all reasonable efforts to satisfy their needs and concerns within the scope of our mission, and to strive for excellence and innovation and demonstrate professional respect and responsiveness to constituents, donors and others.
  • Make an effort to understand, respect and support our constituents from other cultures, exemplified by the contributions of our staff and executive leadership, and to contribute to an organizational culture that respects the diverse, individual contributions of our membership, committees, staff and leadership.
  • Respect the confidentiality of sensitive information about the International Bluegrass Music Association, its members, constituents, donors, partners, business associates, board and employees.
  • Comply with applicable federal, state and local laws, regulations and fiduciary responsibilities in an effort to create transparency in all of our operations.
  • For the board of directors, provide credible and effective oversight to the organization’s work without personal bias.
  • Not accept commissions, gifts, payments, loans, promises of future benefits or other items of value from anyone who has or may seek some benefit from the International Bluegrass Music Association in return, other than occasional gifts of nominal value that are in keeping with good business ethics.
  • Abide by the governing documents and policies of the International Bluegrass Music Association.
  • Be accountable for adhering to this Code of Ethics.
  • Implement and follow a Conflict of Interest Policy.
  • Implement and follow a Whistleblower Policy.
  • Act at all times in accordance with the highest ethical standards and in the best interest of the International Bluegrass Music Association, its members, constituents, donors and reputation.
  • Openly and honestly tell the truth.
  • Do not hold any personal animosity towards another for a difference is opinion or disagreement for any action.
  • Honor our commitments and promises to the best of our abilities.
  • Appropriately acknowledge contributions from other individuals and organizations who help facilitate our goals.
  • Not be deceptive in our fundraising activities or in prospecting for new members to join the International Bluegrass Music Association.
  • Not be deceptive in soliciting or selecting new board members, filling board positions, or creating new board positions.
  • Advocate for all nonprofit organizations, but not for any specific initiative - being respectful to the sector as a whole.
  • Not lobby with the intent to influence individual candidates.

There are also issues that must be addressed regarding checks and balances and how to remove any officer from their position when ethical issues or conflicts of interest issues cannot be resolved. Currently, the IBMA has no mechanism to remove a person in power either by impeachment or forced resignation. It is the lack of a removal policy that has repeatedly been abused and most recently by the Chairman of the IBMA Board. When a single person can stack the board and hold the chair position, then multiple ethical issues arise. Unfortunately, the IBMA does not have provision in their bylaws to address this and, further, has no mechanism in place to correct this. Thus, Jon, by his position of power and his board member selection authority is currently in a situation that cannot be corrected. The board and its membership are stacked to support itself. The perception of an incestuous board is real. Until such time as he resigns or his term ends, there probably is no immediate method to correct these conflicts of interest and ethics improprieties.

It is essential that the IBMA adopt a Code of Ethics which also includes a strong Conflict of Interest statement. As mentioned earlier, it must be done by an outside entity to ensure that no part of the IBMA may include any favoritism in it or its adoption.

Communications Director Staff Position

With the Board of Directors, staff and even the Executive Director, communications to the membership, public, media, partners and donors is essential. What has been happening over and over again within the IBMA is that the communications are always written by the focus of the problem. This results in statement letters always appearing as self-denial letters or letters that entirely fail to address the real problem at hand. This inevitably leads to less transparency and a greater distrust -- two things that are counter to what a non-profit association is chartered with achieving. The recent run of resignations and the problems underlying them have yet to be presented in a satisfactory manner that the membership, public, Raleigh business members and others will accept.

When the Board of Directors is in obvious turmoil, the last thing you would expect is that a statement comes out saying there isn't any problem. In effect, this is exactly what happened. Nobody was accountable. No corrective actions mentioned. Everything was just peachy inside the IBMA. Wrong! This is an example of more ethics issues and, further illustrates why the board should not write their own statement letters.

Most corporations have a Chief Information Officer (CIO) which is responsible for all communications -- internal and external. The IBMA should have a staff person who is NOT a member of the board and NOT the Executive Director who creates and disseminates IBMA communications. This person would be tasked with maintaining the IBMA image, keeping the association transparent to its stakeholders and members, communicating a consistent message, and handling crisis management for issues like the current fiasco.

Jon is a master with words. That is undeniable. However, he is also adept at using them to obfuscate the situation and even, as a sword in his quest for power. He has also taken the words of others, twisted them around and then used them in a manner for which to originator did not intend. Words are more powerful than weapons and Jon is a master of using them to achieve his own objective. Unfortunately, his objective and the IBMA objective are often not in agreement.

Having a Communications Director staff position within the IBMA would help to resolve this Conflict of Interest. The board would no longer be responsible for drafting and distributing their own communications (except for the minutes). All communications would come from the IBMA Communications Director. In this manner, there is a separation of power between the board and the message that gets communicated to the members and others. The reason should be obvious by now. This should be a staff position. As noted above, the position cannot be held by a Board member or Executive Director for ethical reasons.

The IBMA has been stumbling since the mid 1990s over these same concerns. It is likely that much of this could have been eliminated or greatly reduced if a strong Conflict of Interest and Ethics Policy were in place and a Communications Director staff member handled all the communications. The combination of these elements goes a long way in keeping an association functioning with trust, transparency and honesty.

Over the years, I have written about the problems within the IBMA many times and each article pretty much reads like the ones before it. I would much rather write about all the good things the IBMA does and even more. I get no joy in writing about another thunderstorm within the association's Board of Directors. If the IBMA is serious about addressing their ethics, Conflict of Interest, and communications issues, then hopefully, they can fix the other problems in the process. A clearly defined policy will address accountability and transparency with the goal of maintaining the public trust.

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