Not-for-profit board officers, directors, trustees and key employees must avoid any conflict of interest because it’s their duty to do so. Any direct or indirect financial interest in a transaction or arrangement that might benefit one of these individuals personally could result in the loss of your organization’s tax-exempt status — and its reputation.
Here’s a quick checklist to gauge whether your nonprofit is doing what it takes to avoid conflicts of interest:
- Do you have a conflict-of-interest policy in place that specifies what constitutes a conflict and lists exceptions?
- Do you require board officers, directors, trustees, and key employees to annually pledge to disclose interests, relationships and financial holdings that could result in a conflict of interest?
- Do they understand that they must speak up if issues arise that could pose a possible conflict?
- Do you provide training in conflicts of interest?
- Do you have procedures in place that outline the steps you’ll take when a possible conflict of interest arises?
- Are individuals with possible conflicts asked to present only the facts, and then remove themselves from any discussion of the issue?
- Do you keep minutes of the meetings where the conflict of interest is discussed, noting those members present and voting, and indicating the final decision reached?
- Do you put projects out for bid — with identical specifications — to multiple vendors?
- Do you supply a written contract to each vendor that details the service the company will provide, specific deliverables, cost estimates and a time frame for delivery?
If you answered “no” to any of these questions, contact us. We can help you make sure that you have an adequate conflict of interest policy in place and a full set of procedures to support it.