Let’s be Clear About the “CONFLICT OF INTEREST” Policy
Let’s be clear about the purpose of an organization’s Conflict of Interest Policy. As an executive director, you must avoid circumstances that may harm the organization. Therefore, it is essential to educate all stakeholders of the organization. Proper governance is a must including insuring all board members, staff, and volunteers understand what constitutes a conflict of interest and agree to be diligent in avoiding even the appearance of one.
To a great extent, the IRS determination of nonprofit status is centered around avoiding private advantages to people and unseemly monetary profit. Actions by Board members, staff, or volunteers that could result in private advantage or monetary gain can threaten an organization’s nonprofit status. Thus, the following principles must be included in the policy to maintain the highest ethical conduct and standards of care for the organization.
- Each board member must be prudent when representing the nonprofit.
- Board members must avoid acts of self-dealing that might affect the tax-exempt status.
- Board members must disclose if any member of the family has a personal or business interest or involvement with the organization. If the board considers such involvement, the board member must abstain from voting, recluse themselves from any discussion, and have this so noted in the meeting minutes.
Click here for a sample of a Conflict of Interest policy recommended by the IRS.
As an absolute commitment in writing, it must include:
I HAVE READ, UNDERSTAND, AND AGREE TO THE CONFLICT-OF-INTEREST POLICY AND ITS TERMS, AND MY ACTIONS HAVE BEEN AND WILL CONTINUE TO BE GUIDED THEREBY.
Name of the Director/Staff or Committee Member __________________________
Signature ___________________________________ Date _________________
Learn more about requirements for a Conflict of Interest Policy for nonprofit boards in LEADERSHIP: Governance, Board Policy & Volunteerism. And discuss how it affects staff and volunteers in Human Resources and Volunteers as part of the Sunshine Certificate in Nonprofit Management. Click here for the yearly schedule to find the next classes.
Source: Margaret Delmont Sanchez Magnify Fund