Nonprofit Policy Spotlight: Conflict of Interest
When you truly believe in a cause or issue your favorite nonprofit is addressing, you want everything to be in place to achieve utmost success. This most certainly means adopting well written and well thought out policies and procedures.
Make a smart paradigm shift in 2018. Stop thinking about adopting policies and procedures as something you “must” do…just another administrative hassle. Instead, realize that adopting the right policies and procedures protects you and your fave nonprofit, and even more importantly, sets you up for success.
A conflict of interest policy is inarguably one of the most essential policies a nonprofit board adopts. A conflict of interest policy addresses two critically important issues:
- Requires board members with a conflict (or a potential conflict) to disclose it.
- Excludes individual board members from voting on matters in which there is a conflict.
Who is is responsible, and who gets the credit, for your nonprofit being a nonprofit? If you think about it, it’s the IRS! No less an authority than the Internal Revenue Service (IRS) highly encourages nonprofits to adopt specific types of governance policies to limit exposure to abuse, vulnerabilities, and engagement of nonexempt activities. One important such policy is a conflict of interest policy.
Note the IRS Form 990 (essentially the tax return form for nonprofits) directly asks whether the nonprofit has a conflict of interest policy, how the organization determines when board members have a conflict of interest, and what steps are taken following such a determination.
If your nonprofit already has a conflict of interest policy already in place, great! It may be a good time to hold a board meeting to review it.
If your organization does not have a conflict of interest policy, and/or you’re unsure of what specifics it should include, don’t hesitate to take me up on my free consultation offer.
If you have any questions or want to discuss further shoot me an email or give me a call at 515-371-6077.