Conflict of Interest

What is conflict of interest?

A conflict of interest arises when a board or a staff member is in a situation where his decision making may be impaired by personal, financial, or other business concerns that may not promote the best interest of the organization. A conflict of interest may be real or perceived. Both can have detrimental effects for the organization or its reputation.

It is impossible to avoid conflicts of interest. They are natural. They are not illegal. But they must be managed every single time. The board must ensure it has drafted a strong conflict-of-interest policy with disclosure and recusal guidelines and that this policy is enforced without failure.

Here are some sample conflict-of-interest policies:

The IRS Purpose of a Conflict of Interest Policy https://nonprofitaccountingbasics.org/reporting-operations/policies

IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, Appendix A, Sample Conflict of Interest Policy https://www.irs.gov/instructions/i1023#en_US_202412_publink100031682

North Carolina Pro Bono Resource Center https://ncprobono.org/npmanual/coipol

Boardable, Conflict of Interest Policy: A How-To Guide & Free Template http://Conflict of Interest Policy: A How-To Guide & Free Template