Filing Number: 15-03
Subject: Non-Profit
Keywords: appearance of impropriety, appointed official, board member, conflict, County official, Department of Community Services, federal government, financial interests, fundraising, grant, non-profit, recusal, solicitation, vote
Decision By: Johanna Bishop, James Keeley, Beatrice Patton Dixon, Paula Jenkins-Massie, Sally Jensen, Eric Monzo
Contact Email: admin@nccethics.org
 
Status: Active

Question:

            Whether an appointed official may serve as a member of a non-profit board which has received occasional federal funds administered by the official’s department.

Conclusion:

             The official may join the board of the non-profit if the official reveals the potential areas of improper appearance to both the non-profit and the appropriate County authority and recuses from any activities which may cause the appearance of conflict, including policy making, promotion, or other activities concerning the non-profit's relationship with the County.

Facts:

            The requester is a high ranking official in a County department that administers federal funds in accord with federal policy. The requester does not have a financial interest in the business of the non-profit as defined by the New Castle County Ethics Code. The non-profit serves the youth of New Castle County and has a yearly budget of over one million dollars. One of the non-profit’s programs involves training young people in the construction trades. In 2010 a committee composed of members of the official’s department awarded the non-profit two federal grants totaling $226,000 for the construction training program and in 2014 the committee awarded another federal grant for $175,000 for the same purpose. Although it has not made such application in the current fiscal year, the requester believes that the non-profit may apply for similar federal funding through the department in the future.

Code or Prior Opinion:

Code provisions
             The Ethics Code’s conduct rules at Section 2.03.104(A) prohibit exercise of official authority which creates an appearance that the decisions or actions of a County official or his or her department are influenced by factors other than the merits of the matter for decision. This prohibition exists because such conduct undermines public confidence in the impartiality of the individual or governmental body with which the employee or official is associated.1
 
             An improper appearance is created when a reasonable member of the public "with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, [would hold] a perception that the official's ability to carry out [official duties] with integrity, impartiality and competence is impaired." The standard for judging the creation of such an appearance for judicial public officials has been described in Delaware courts as "conduct [which] would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the official's ability to carry out [official duties] with integrity, impartiality and competence is impaired." In re Williams, 701 A.2d 825, 832 (Del. Super. 1997). In determining the relevant circumstances, the courts advise the Commission to look at the totality of facts. The Commission has long applied this standard to the conduct of County officials and employees.
 
             The Code recites special prohibitions on County officials concerning their involvement with outside interests which interact with the County government. Section 2.03.103B(2) prohibits the official from representing or assisting any private enterprise with respect to any matter before the County. This restriction extends to non-profits as well as private business or matters.2
 
Prior Opinions
             “The seminal rule regarding service on the board of a non-profit was announced long ago in Advisory Opinion 92-02, June 12, 1992. In that opinion, the Commission stated that ‘mere position on the board of directors of a non-profit which is not regulated by or does not contract with the County does not create, in itself, an appearance of impropriety. ... However, where the employee or official's County position figures prominently in the person's status with the non-profit, there is potential for an appearance to arise. This is particularly true when a private organization seeks regulation, contract, or benefit from the County or in fundraising. ...’ “. See, Advisory Opinion 11-05, August 17, 2011.
 
             In Advisory Opinion 11-05, the Commission advised an elected official to resign from the board of a non-profit which served the public on County property and was regulated by the County. Since the official’s County position included authority to oversee to some extent the non-profit’s County contract, the official would be required to recuse himself from all board responsibilities. By remaining on the Board without being able to participate in any Board functions or responsibilities, the Commission argued that the official could create the appearance that he was using his County status to benefit the private organization, in violation of New Castle Code Section 2.03.103B. See also, Advisory Opinion 10-06, May 12, 2010, in which an employee was prohibited from assuming a board seat on a non-profit that was pervasively regulated by his department. The Commission held, “Since the function of the board of this non-profit is to oversee activity which is conducted under extensive and continuous regulation by the employee's County department, the employee may not assume a seat without violating the Code provision against representation of a private entity before his department. Additionally, assumption of a leadership role in an organization extensively regulated by his department would create an appearance of partiality in decisions made by that department concerning the non-profit.”
 
             County officials and employees have been permitted to lend their names, but not identification of their official County status, to fundraising activities of non-profits. In Advisory Opinion 01-08, October 16, 2001, an employee was permitted to become involved in a non-profit’s fundraising. The Commission found that the Code “does not prohibit the requesting party from being the spokesperson for the organization, provided he does not promote the fact that he is an inspector for New Castle County. It further does not prohibit the organization from seeking funds from . . . individuals or contractors. In doing so, however, the Commission notes that precautions should be followed to minimize any possible appearance that the party being solicited will receive favorable treatment from the County or feels compelled to donate to the organization due to the requesting party's inspection responsibilities. Such safeguards include: (1) having an individual, other than the requesting party, sign any direct written solicitations being made to contractors; and (2) not mentioning the requesting party's Land Use employment in any such solicitation.”
 
             In Advisory Opinion 05-24, December 29, 2005, an elected official was permitted to become a board member of a non-profit community agency which received a small County grant for certain of its community activities as well as County administered federal grant. Both grants were received pursuant to written applications and the federal grant was awarded and monitored subject to federal criteria. The official was required to recuse himself from policy making, sponsorship and voting on matters affecting the non-profit’s activity with the County. The Commission held, “The totality of circumstances in this case show that the official will be able to recuse himself in those few occasions when matters concerning the non-profit come before his agency. In the instance of the federal community block grants, his County responsibility is largely non-discretionary. The application, criteria and approvals are restricted by federal regulations. His recusal can be easily accomplished without damaging the public's confidence that the grant is properly administered. In the matter of the other small County sponsored grant, his duty to oversee the conduct of the public's business must be balanced against the public's confidence that he is conducting its business impartially. That latter interest supercedes the former and mandates that the official recuse himself in the grant matters. If the official fully recuses himself as to both grants, a reasonable member of the public would not believe the board member's ability to carry out his County duties with integrity, impartiality and competence is impaired and the appearance of impropriety will be dissipated.”
 
             In Advisory Opinion 92-01, December 10, 1997, a County employee involved in community, housing and development, who exercised some discretion in the administration of HUD funds with regard to a particular type of project, was permitted to serve on the Board of Directors of a non-profit organization which could be an applicant for such funds. The Commission held that “a County employee involved in community, housing and development, who exercises discretion in the administration of HUD funds with regard to a particular project, may serve on the Board of Directors of a non-profit organization which may be an applicant for said funds. The employee, however, must exercise caution to ensure that he is aware of any potential areas which may result in appearances of impropriety, and recuse himself, when appropriate.”

Analysis:

             The official’s County status is not enmeshed with the proposed role on the non-profit and the role the non-profit fills in the community far exceeds its limited interactions with the County. The infrequent nature of activity between the non-profit and the County persuades the Commission that that the requester may accept the advisory board position without violating the Ethics Code. However, in joining the board, the official must be guided by the dictates of Advisory Opinions 05-24 and 92-01 and the restrictions imposed by Sec. 2.03.103B, which require the official to recuse from any issues regarding the non-profit which come before the County and recuse from any issues regarding the County which come before the official as a member of the board of the non-profit.
 
 

Finding:

            The official may join the board of the non-profit if the official reveals the potential areas of improper appearance to both the non-profit and the appropriate County authority and recuses from any activities which may cause the appearance of conflict, including policy making, promotion, or other activities concerning the non-profit's relationship with the County.
In issuing this Advisory Opinion, the Ethics Commission is applying the New Castle County Code of Ethics, which establishes the minimum level of ethical conduct required of County officials and employees.
 
                 BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION
                                       ON THIS 11th DAY OF MARCH 2015.
 
 
                                                                _______________________________
                                                               Johanna P. Bishop, Chairperson
                                                               New Castle County Ethics Commission
 
Decision: Unanimous
 

Footnotes:

1New Castle County Code Sec. 2.03.104. Code of conduct.
A. No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.103(A)(1) [conflict of interest], undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decision or action of the County employee, County official or governmental body are influenced by factors other than the merits.
 
2New Castle County Code Sec. 2.03.103. Prohibitions relating to conflicts of interest.
A. …
B. Restrictions on representing another's interest before the County.
1. …
2. No county official may represent or otherwise assist any private enterprise with respect to any matter before the County. This prohibition is to be considered personal to the County official and is not, for purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business, or other employer by which the County official is employed.
3. This subsection shall not preclude any County employee or County official from appearing before the County or otherwise assisting any private enterprise with respect to any matter in the exercise of his or her official duties.