A ‘conflict of interest’ policy is important to governance. It leads to a reputation of trustworthiness, solid ethical values and good risk management. But sometimes, if a policy exists for a nonprofit, it may not be current. Is it time to check or create a policy?
There is probably not one of us who hasn’t posed the question ‘could that be a conflict of interest’? The best answer is to check the policy. Recent research reveals that 95% of nonprofits have a policy, but many board members do not know what is in it. Guidelines for protecting you include:
- Do all of your board members sign a conflict of interest policy statement – preferably once a year?
- Do board members regularly disclose any new possible conflicts?
- Does your conflict of interest policy include the board’s process for handling a conflict?
- If a conflict arises, should the board member in question be excused from the discussion?
- Does the policy clarify the consequences and actions forward for violating the policy?
An excellent source for creating and/or updating a policy can be found in BoardSource’s Nonprofit Policy Sampler that provides general guidelines on issues, standards of operation, and processes for disclosure. Even if you have a good policy it might be wise to visit the website and review your policy.
(1] BoardSource.org, ‘Is it Time to Dust Off Your Nonprofit Conflict of Interest Policy?, Erin Berry, Marketing and Communications Director, BoardSource, March 17, 2016