Transparent Engagement

The information below clarifies how University policy concerning transparency is implemented at HKS.

Defining potential conflicts of interest

One of the great challenges of any policy is defining a real or potential conflict of interest. The University policy focuses exclusively on financial conflicts of interest. That policy states:

An individual financial conflict of interest is a set of circumstances that reasonable observers would believe creates an undue risk that an individual’s judgment or actions regarding a primary interest of the University will be inappropriately influenced by a secondary financial interest.

The University policy emphasizes that “to recognize the existence of a financial conflict of interest is not to pass judgment on the character or actions of an individual and does not per se imply wrongdoing.”

This recognizes that the existence of a conflict stems from the circumstances, not the intentions or motives of a faculty member.

The challenge in this case, of course, is to determine what a reasonable observer would believe constitutes an undue risk of inappropriate influence.

The HKS implementation plan is designed to identify potential conflicts and then determine what, if any, actions should be taken to minimize the conflict of interest. We have adopted a standard based on language used by the American Economic Association (AEA) detailing disclosure requirements for authors making submissions to any of its journals.

For purposes of the Harvard Kennedy School implementation plan, we define a potential financial conflict of interest as a case where a faculty member receives financial support from or holds an equity interest in (excluding diversified assets not directly managed by the faculty member): any individual, group, or organization that has a financial, ideological, or political stake related to the academic activities of that faculty member. In addition, certain pro bono activities, such as service as an unpaid board member for a non-profit organization also creates a potential conflict of interest if the organization has a financial, ideological or political stake in the academic activities of the faculty member.

We define “academic activities” to include research, written work, case studies, teaching, lectures and presentations, media appearances, public policy recommendations, and/or similar work.

What is expected of faculty?

Internal disclosure

Faculty are required to report internally to the Dean all of their outside professional activities during the calendar year (including pro bono activities, consulting, service on boards, and activities compensated with honoraria, wages, salaries, equity, or pensions). In cases where compensation is received from an outside source, the level of compensation received is reported in broad categories. Such reports have been required for HKS faculty for many years, and serve the dual purpose of tracking both potential conflicts of interest and potential conflicts of commitment.

The annual reporting form is designed to identify potential conflicts of interest. Faculty are asked to indicate whether the reported outside activity was performed for, or compensation or research support was received from, a firm or organization that has a financial, political and/or ideological stake in their academic work. Faculty are also asked in their annual reporting to identify certain equity positions and other relevant interests of immediate family members. These reports are required on an annual basis, and additional ad hoc reports should be filed when circumstances change in ways that may implicate the policy.

All internal reports will be maintained in a confidential and secure format, and available only to a limited number of school officials with a direct need to know, or to University officials with a need to know in a specific instance (e.g. university attorneys, sponsored research or compliance officials assisting HKS), or in response to a valid subpoena. The information from these annual reports will be used only for compliance with Kennedy School and Harvard University policies (conflict of interest, conflict of commitment, and related policies) and for determining eligibility for extra compensation or summer salary from HKS.

In addition, HKS principal investigators will be required to confirm that their HKS annual report is updated as applicable prior to the submission of new sponsor proposals, regardless of sponsor type (U.S. government, private foundation, etc.) Additional disclosure requirements may be imposed on recipients of PHS grants under federal rules.

Identification and management of conflicts

In cases where a potential conflict is identified on the annual internal disclosure form (i.e., cases where the outside individual or organization has a financial, political, or ideological stake in the faculty member’s academic work), the faculty member would generally be expected to publicly disclose those interests in cases where:

• the total compensation exceeds $5,000 during the preceding 12 months
• the faculty member has an equity or other financial interest exceeding $5,000 in a publicly traded company
• the faculty member has an equity interest or entitlement to financial interest in a nonpublicly traded for-profit company
• the faculty member holds a position as an officer, board member or director of any nonprofit organization, advocacy organization or for-profit entity
• any other relevant financial compensation, research funding, or financial interest of the faculty member or family member (spouse or dependent children).

Mechanisms for public disclosure are discussed below.  In most cases, we would expect that public disclosure would be sufficient to achieve our goal of transparent engagement. But there may be special cases where the risk of serious conflict of interest is so great or circumstances so unique, that alternative strategies are needed. Either the faculty member or the School may identify such cases. In those situations, the School will work with the faculty member to create a management plan to manage or eliminate the conflict. Management could include a range of approaches, from disinterested peer review of research design to changes in either the financial relationship or the academic activities of the faculty member. Since situations will differ, management will also differ.<

Form of public disclosure

In cases where public disclosure is expected, its exact form will likely differ with circumstance. For example, a footnote in an article describing the interested parties from whom financial support has been received might be appropriate. In some public settings, oral disclosure might be appropriate. Generally, faculty members are responsible for determining the form of public disclosure with help and advice available from the School. In cases where the potential for conflict of interest is unusually high, the form of public disclosure may be covered in the management plan.

The School will also provide an opportunity for any faculty member to voluntarily list his or her outside activities on a public website linked to the faculty member’s profile page on hks.harvard.edu or other personal web page accessible from the HKS profile page. The advantage of such full public disclosure is that one can often refer to a simple web address for most public disclosure situations, and one would not necessarily need to identify detailed interests in each specific case. This would also simplify issues of teaching where such a page could be referenced in a syllabus.

Confidentiality

A faculty member is expected to disclose fully all relevant information to the Dean when submitting the internal reporting forms. Where a faculty member has a legal obligation to keep a financial interest confidential, and public disclosure is required or undertaken under this policy, he/she should disclose as much information as possible consistent with that obligation. This could be done, for example, by disclosing that consulting work was performed for “a large investment bank” if the specific entity could not be named for a certain period of time. In general, the School strongly discourages such confidentiality arrangements.

How will the School oversee and manage all of this?

The Academic Dean will be responsible for review of internal disclosures. Initial examinations of potential conflicts of interest and plans for mitigation will be handled by one or more staff members designated and working with the Academic Dean. A standing faculty committee will be appointed by the Dean to advise the Academic Dean on identification of and management plans for potential conflicts. If an individual case is disputed, the Dean will be responsible for final determination of the existence of a conflict which needs to be managed, the need for a management plan in individual cases, or for the cessation of the particular conflicted activity. Failure to submit an annual report, to report financial interests in good faith with adequate supporting information, or to comply with a management plan may result in sanctions.

Who is covered?

The policy covers all HKS faculty.

The internal disclosure requirements apply to all full-time HKS faculty, including visiting faculty, any faculty member with an HKS teaching appointment of 25% FTE or greater, and certain other faculty members as determined by the Dean. Other Harvard faculty with Category C and Category E appointments at HKS are covered by their home school’s policies.

A separate, abbreviated reporting form will be required of faculty teaching less than 25 percent at HKS.

A faculty member’s reportable financial interests include those of his/her spouse and dependent children, as spelled out in the annual reporting form. (The obligation to update the annual reports during the year if a potential conflict develops applies to family members’ interests also).

Are some activities simply prohibited?

There are some activities that the University simply prohibits, or where prior authorization is required. They are described in the University policy and include, for example:

• Use of Harvard resources for outside activities
• Exploitation of staff or students in connection with an outside activity
• Unauthorized use of the Harvard name in outside activities
• Commercial relationships (investing, paid consulting) with student-owned businesses
• Subcontracting with an entity in which a faculty member or family member has a financial or fiduciary interest
• Certain management or fiduciary duties in an outside entity (note: duties of this sort require approval from the Dean).

All faculty members should carefully read the entire University policy, and request advice or guidance if they are unclear as to requirements in that policy.

Conclusion

The Harvard Kennedy School is proud of its energetic involvement in the world. Our mission requires an understanding which can only come from direct experiences with the entities we research and study. We must also be mindful that our capacity for impact hinges critically on our credibility. Hence, the goal of transparent engagement is vital. We appreciate the involvement and cooperation of the faculty in this enterprise.

Revised July, 2012