Conflicts, Confidentiality, Records, and Director Protection

Good governance protects candor and accountability. “Confidential” cannot mean everything the board knows, while “transparent” cannot mean careless disclosure of personnel, donor, child, legal, security, or negotiating information.

Conflict system

Annual questionnaires should capture employers, businesses, board roles, close relevant relationships, vendor/partner interests, gifts linked to service, and appearance conflicts. Directors update them as facts change.

For each transaction:

1. disclose facts before debate;
2. determine the conflict and process;
3. exclude influence—the interested person supplies requested facts, then leaves when required;
4. establish fairness through alternatives, bids, comparability, or appraisal;
5. use disinterested approval and verify quorum;
6. record relationship, recusal, information reviewed, and result;
7. monitor the agreement.

Wisconsin’s conflict-transaction statute provides rules and safe pathways; policy may demand more ¹. IRS guidance explains how a policy helps identify and manage private-benefit risk ².

Ask:

• Would we offer these terms to an unrelated party?
• How would this look on Form 990 or to staff and donors?
• Is the interested person’s participation necessary?
• Can trust be protected at reasonable cost?

The answer is not always “avoid.” It is always “surface and manage.”

Confidentiality categories

Policy must preserve protected reporting, cooperation with authorities, and whistleblower rights. Never promise absolute secrecy.

Before speaking externally:

1. Is this public?
2. Am I authorized?
3. Am I stating board policy or personal opinion?
4. Could this identify a child, donor, employee, complainant, negotiation, or security control?
5. Who should answer?

“I’m a director, but not the authorized spokesperson on that matter. I can connect you.”

Records are institutional memory

Wisconsin requires specified permanent/current corporate records and gives directors/member access rights under defined conditions ³. Maintain:

• articles, bylaws, IRS determination;
• minutes, written actions, resolutions, policies, charters;
• rosters, terms, filings;
• budgets, statements, audits/reviews, tax returns;
• material contracts, grants, restrictions, deeds, debt;
• conflict records;
• controlled executive evaluation/compensation records;
• insurance, claims, incident, and legal records;
• destruction holds for litigation, investigation, audit, or grant review.

Use a role-based repository with multifactor authentication, backups, and offboarding—not personal email as the only copy.

For each record type define:

owner · official copy · location · access · retention · disposal · legal-hold override

Permanent records often include articles, bylaws, approved minutes, major property records, and final returns. Other periods depend on tax, employment, grants, insurance, and contracts; adopt them with advice.

Public disclosure

Federal rules generally require public availability of specified exemption applications and recent annual returns, with donor-identifying exceptions ⁴. Know where public copies live, who handles requests, what is excluded, and that Form 990 is a public narrative. Never publish a donor schedule or working return just because “990s are public.”

Protection is layered

1. sound conduct and documentation;
2. entity separation/statutory limits;
3. indemnification and expense advancement;
4. insurance;
5. reasonable expert reliance;
6. preventive controls.

Wisconsin director/officer liability limits have boundaries ⁵. Indemnification has exceptions ⁶. D&O policies differ on claims-made dates, exclusions, defense, deductibles, limits, and reporting ⁷.

Ask annually:

• Who and which capacities are insured?
• Is coverage claims-made? What are retroactive/reporting dates?
• Are employment, cyber, abuse, tools, alcohol, vehicles, lodging, property, events, and volunteers addressed by suitable policies?
• Are defense costs inside shared limits?
• Which exclusions matter?
• Who notifies the carrier, how fast, and before admissions?
• Does indemnification align with bylaws and coverage?
• Is tail protection needed?

D&O generally should not be assumed to cover bodily injury, property damage, cyber loss, or abuse.

Incident rule

protect people → call required emergency/authority contacts → follow policy → preserve evidence → notify authorized leadership/insurer/counsel → limit statements → document facts → prevent retaliation

Do not concede liability, conduct amateur forensics, or “clean up” records.

At the first meeting each board year, update conflicts, confidentiality acknowledgments, speaking/incident routes, secure access, insurance understanding, record ownership, and one practice scenario.