Conflict of Interest Policies

Adoption of a Conflict of Interest Policy, applicable to a nonprofit’s officers and directors and compliant with governing laws, is considered a management and governance best practice. As explained by BoardSource:

“board service in the nonprofit sector carries with it important ethical obligations. Nonprofits serve the broad public good, and when board members fail to exercise reasonable care in their oversight of the organization they are not living up to their public trust. In addition, board members have a legal responsibility to assure the prudent management of an organization's resources. In fact, they may be held liable for the organization's actions. A 1974 court decision known as the "Sibley Hospital case" set a precedent by confirming that board members can be held legally liable for conflict of interest because it constitutes a breach of their fiduciary responsibility.”

There are many examples of such policies that can be found through a web search of with the terms “conflict of interest policy nonprofit.”

In particular, the Nonprofit Resource Center of Texas has created a conflicts policy that you may find helpful. To access their policy, just click on the title to this post.

If you are interested in reviewing a sample policy provided by the Internal Revenue Service, just copy and paste this link into your browser: http://www.irs.gov/instructions/i1023/ar03.html

To access the BoardSource explanation, just copy and paste this link: http://www.boardsource.org/Knowledge.asp?ID=3.389