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 has a sample policy for health care organizations http://www.irs.gov/pub/irs-utl/topice00.pdf

NC General Statute www.ncnonprofits.org/faq/ch55a831.pdf

Office of Minnesota Attorney General www.ag.state.mn.us/pdf/charities/ConflictInterestPolicy.pdf

BoardSource guide http://www.boardsource.org/Bookstore.asp?Item=182

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