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Wearing Two Hats in a Community Nonprofit Transaction
Monday, July 6th, 2009
Robert Wechsler
It is common for mayors and council members to take volunteer positions
on the boards of community nonprofits. Sometimes it's primarily
honorific, but sometimes it shows a special commitment to a particular
program or project, and sometimes it involves a leadership position.
Such a position can create real or apparent conflicts of interest.
According to an article in last week's Las Vegas Sun, a former Henderson (NV) mayor and council member served as chair and vice-chair, respectively, of the Henderson Space and Science Center Advisory Board, a board to help implement the founding of a science center in the city. At their last meeting as mayor and council member, they voted to give their board $21 million in construction funds for a new science center. An ethics complaint was filed against them.
They say that they did not benefit financially in any way. The complainant says that they might benefit financially in the future, once the science center is operational.
But the actual financial benefit is secondary, and can't be proved at this point. What is most important is that two top city officials voted to give substantial sums to an organization that they chaired, that was viewed by the community as theirs. They effectively used their government positions to give special consideration to their organization. However worthy a cause, it was their personal cause, a cause they had benefited with their positions as well as their votes, and to which they had closely tied their reputations.
This is a difficult situation to deal with in an ethics code. It's not a typical special consideration or preferential treatment situation, because any nonprofit supported by a local government is given preferential treatment over other nonprofits. And there is no clear personal or financial benefit to the official, except in so far as the official's identification with a specific project or organization is a personal benefit.
No matter what the ethics code says, however, it is hard for people to see someone handing himself $21 million and not think there is a conflict of interest, even if he is wearing perfectly legitimate hats on both sides of the transaction. When this transaction occurs on the very last day the official wears both hats, it looks that much more questionable. Whatever the law says, a mayor or council member should not allow such transactions to occur. If they are wearing two hats in the same transaction, they should not participate in the transaction. But even before the transaction becomes a possibility, an official should anticipate it -- it is, after all, the goal of the organization to get substantial city funds -- and not seek or accept the nonprofit hat at all.
Robert Wechsler
Director of Research-Retired, City Ethics
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According to an article in last week's Las Vegas Sun, a former Henderson (NV) mayor and council member served as chair and vice-chair, respectively, of the Henderson Space and Science Center Advisory Board, a board to help implement the founding of a science center in the city. At their last meeting as mayor and council member, they voted to give their board $21 million in construction funds for a new science center. An ethics complaint was filed against them.
They say that they did not benefit financially in any way. The complainant says that they might benefit financially in the future, once the science center is operational.
But the actual financial benefit is secondary, and can't be proved at this point. What is most important is that two top city officials voted to give substantial sums to an organization that they chaired, that was viewed by the community as theirs. They effectively used their government positions to give special consideration to their organization. However worthy a cause, it was their personal cause, a cause they had benefited with their positions as well as their votes, and to which they had closely tied their reputations.
This is a difficult situation to deal with in an ethics code. It's not a typical special consideration or preferential treatment situation, because any nonprofit supported by a local government is given preferential treatment over other nonprofits. And there is no clear personal or financial benefit to the official, except in so far as the official's identification with a specific project or organization is a personal benefit.
No matter what the ethics code says, however, it is hard for people to see someone handing himself $21 million and not think there is a conflict of interest, even if he is wearing perfectly legitimate hats on both sides of the transaction. When this transaction occurs on the very last day the official wears both hats, it looks that much more questionable. Whatever the law says, a mayor or council member should not allow such transactions to occur. If they are wearing two hats in the same transaction, they should not participate in the transaction. But even before the transaction becomes a possibility, an official should anticipate it -- it is, after all, the goal of the organization to get substantial city funds -- and not seek or accept the nonprofit hat at all.
Robert Wechsler
Director of Research-Retired, City Ethics
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