Writing
a Conflict of Interest Policy
Recent
moves to legislate improved accountability in the nonprofit
sector require that you should have a written conflict of
interest policy. While the specific content has yet to be
finalized, you might want to consider including the following:
A
definition. What will you – and maybe more importantly, your
community – consider a conflict of interest? Is it only something
where a director has a potential for financial gain?
A
written commitment to avoid conflicts of interest. Think about
also including “potential and perceived” conflicts since “reality”
is 9/10 perception.
An
iteration of who is covered by the terms of the policy. Is it
just the board, the board and staff, clients?
A
requirement that people disclose any conflicts. If you included
potential and/or perceived conflicts above, they would be included
in this requirement for disclosure.
A
clear statement of how and when disclosure should be made.
Typically boards are requiring that everyone complete a written
disclosure once a year and individuals actually facing a potential
for conflict make a verbal disclosure at the time that is then
noted in the minutes.
A
clarification of instances where a director or other covered
individual would be permitted to engage in business transactions
with the organization. For instance, foundations are
legally allowed to hire from within and pay reasonable compensation
for services that are necessary to their operations such as
legal and accounting services. However,
if your organization chooses to go this route your policy statement
should also include the conditions that would cover such an
engagement, such as what is reasonable compensation and whether
other bids must be entertained.
A
statement of the protocols that must be followed if such defined
business relationships will be permitted. For instance, a director
might be expected to recuse him or herself from both discussions
around the relevant topic and the voting, with note made of
this in the board minutes. (Check out your state laws. This
may currently be required.)
An
assertion regarding confidentiality, e.g., that what is said
in the boardroom will remain in the boardroom and/or that neither
client records nor donor names will be “borrowed,” bartered
or sold.
A
commitment to review this policy at least annually. (It appears
this item will be mandatory.)
An
indication of to whom the implementation of this policy will
fall, e.g., the governance committee.
