Nonprofit Director Conflict Transaction Approval Rules in District of Columbia
At a glance
| Governing act and covered transactions | D.C. Nonprofit Corporation Act; contracts/transactions with members, directors, designated-body members, officers, or linked entities (§ 29-406.70(a)) |
|---|---|
| Interest and related-person trigger | Covered fiduciary as party; other-entity director/officer/similar role or financial interest for director, designated-body member, or officer (§ 29-406.70(a)) |
| Disclosure and knowledge | Board/member routes require known or disclosed material relationship/interest and contract/transaction facts (§ 29-406.70(a)(1)–(2)) |
| Board or committee approval | Good-faith board authorization by affirmative majority of disinterested directors, even if below quorum (§ 29-406.70(a)(1)) |
| Member approval and vote | Members entitled to vote, if any, specifically approve in good faith after material facts disclosed or known (§ 29-406.70(a)(2)) |
| Fairness route and time | Alternative fairness to corporation when board or members authorize, approve, or ratify (§ 29-406.70(a)(3)) |
| Interested participation and quorum | Interest-holder presence, participation, or counted vote does not alone defeat protection; interested directors count for board quorum (§ 29-406.70(a), (b)) |
| Burden, effect, and separate authorization | Not void or voidable solely for the specified interest, presence, participation, or counted vote when one route is met (§ 29-406.70(a)) |
| Special coverage and later changes | Articles or bylaws may restrict application; designated-body members expressly covered (§ 29-406.70(a), (c)) |
Requirements one by one
Covered interests and approval
Section 29-406.70(a) reaches a nonprofit transaction with a member, director, designated-body member, or officer. It also covers a transaction with another entity where a director, designated-body member, or officer holds a listed role or financial interest. The board route requires disclosure or knowledge of material relationship or interest facts and transaction facts, followed by the good-faith affirmative vote of a majority of disinterested directors even if they are fewer than a quorum (§ 29-406.70(a)(1)).
The member route, where members are entitled to vote, requires disclosure or knowledge of the stated material facts and their specific good-faith approval (§ 29-406.70(a)(2)). The independent route asks whether the transaction was fair to the corporation when authorized, approved, or ratified by the board or members (§ 29-406.70(a)(3)).
What trips people up
The section's effect is limited: a qualifying transaction is not void or voidable solely because of the covered interest or relationship, interested presence or participation, or a counted vote (§ 29-406.70(a)). Interested directors can count toward the board quorum under subsection (b). The articles or bylaws may restrict the section under subsection (c).
Common questions
Must disinterested directors make up a normal quorum?
No. Section 29-406.70(a)(1) accepts their majority approval even if the disinterested directors are fewer than a quorum.
Does fairness have a specified time?
Yes. Section 29-406.70(a)(3) tests fairness when the board or members authorize, approve, or ratify the transaction.
Statutes and sources
- D.C. Code § 29-406.70(a)–(c): covered interests, approval, fairness, quorum, and effect. Official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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