All organizations – especially those that conduct business and handle money – should have procedures in place to address conflicts of interest, and PA/PTAs are no exception. Generally, a conflict of interest is a situation in which the personal interests of a Board member, officer, or member of an organization (or the personal interests of certain persons connected to the Board member, officer, or member) could interfere, or could appear to interfere, with that person’s ability to make a decision that is in the best interests of the organization. For example, imagine that one of the members of your PA/PTA is also the president and sole owner of ABC Clothing Company, which makes T-shirts. Your PA/PTA wants to hire ABC Clothing Company to provide 200 T-shirts for graduating students. The PA/PTA member who owns ABC Clothing Company would have a conflict of interest with respect to that transaction. Because of this, it would be inappropriate for her to participate in the decision of whether to hire her company.
In general, conflict of interest procedures exist to make sure that an organization’s members and Board have all of the relevant information they need to make disinterested decisions that are in the best interests of the organization.
Chancellor’s Regulation A-660*
CR A-660 specifically addresses the issue of conflicts of interest, though it is somewhat vague about how they are defined.
For officers: In general, PA/PTA officers are explicitly prohibited from using their position as officers from benefiting themselves, family members or business associates. They cannot have a direct or indirect interest in any type of business dealing with the school where they are an officers. For instance, a PA/PTA officer would be prohibited from being employed by an after-school program operating at their school. In extraordinary circumstances, waivers may be granted by the DOE Ethics Officer. PA/PTA officers who have a conflict of interest are subject to removal if they fail to obtain a waiver.**
For members: CR A-660 prohibits PA/PTA members from acting in circumstances in which their personal interests conflict with their interests as PA/PTA members. PA/PTA members who have direct or indirect interests in any business transaction, financial interest, or business dealing with their school must refrain from participating in the matter. Such interest, whether direct or indirect, may be disclosed to the membership, and that disclosure must be recorded in the minutes of the relevant PA/PTA meeting. Furthermore, PA/PTA members who have a conflict of interest may not run for an officer position unless and until they obtain a waiver.
Officers and members concerned about a potential conflict should contact FACE and the DOE Office of Ethics and Conflicts of Interest at (212) 374-3438.
CR A-660 also requires that:
- If a PA/PTA decides to conduct an internal audit, a signatory of PA/PTA checks may not serve on or guide the work of the audit committee.
- The two required signatories named on a PA/PTA checking account cannot be related.
- If a PA/PTA has more than $50,000 in annual net income, the PA/PTA should hire a CPA or person with professional experience in accounting, business, or a related field to conduct the audit. This individual cannot be a member of the PA/PTA, be a relative of a PA/PTA member, or have any direct or indirect interest in PA/PTA funds.
New York Not-for-Profit Corporation Law
PA/PTAs that are incorporated in New York must also abide by the New York Not-for-Profit Corporation Law (the “NPCL”), which now requires that not-for-profit corporations obey certain rules if they engage in transactions or other arrangements that involve conflicts of interest. Generally, under the NPCL, a not-for-profit corporation (including a PA/PTA) can engage in a transaction or arrangement in which a Board member has a conflict of interest, as long as the Board and the conflicted Board member follow certain procedures. A Board member with a conflict as to a particular transaction or arrangement must disclose the conflict to the Board, and must not improperly influence discussions or decisions on the transaction or arrangement. The Board member must recuse himself or herself from any meeting at which the transaction or arrangement is discussed or voted on, and the disclosure, recusal, and resolution of the conflict must be documented in the meeting minutes. If the Board member has a substantial financial interest in the transaction or arrangement, the PA/PTA must consider alternative transactions or arrangements, to the extent available. Additionally, each PA/PTA that is incorporated as a New York not-for-profit corporation must adopt a conflict of interest policy, which codifies these procedures.
*This discussion of CR A-660 reflects the interpretations of PTAlink only, and has not been reviewed by the New York City Department of Education.