Nonprofit Director Conflict Transaction Approval Rules in Washington

At a glance

Requirements one by one

Covered transactions and disclosure

Section 24.03A.615(1) reaches a corporation's contract or transaction with its member, director, or officer, and a contract or transaction with another entity in which a director or officer has one of the listed positions or a financial interest. For the board or member approval route, the material facts about both the relationship or interest and the transaction must be disclosed or known to the decisionmakers.

Board and member approval

Under § 24.03A.615(1)(a), the board must act in good faith by an affirmative majority of disinterested directors. That route works even if the disinterested directors number less than a quorum. Subsection (1)(b) instead allows eligible members, if any, to specifically approve in good faith after disclosure or knowledge; it states no separate exclusion of interested member votes.

Fairness route

Section 24.03A.615(1)(c) independently protects a transaction that is fair to the corporation when the board or members authorize, approve, or ratify it. The fairness measurement time differs from a later litigation date.

What trips people up

The statute allows interested directors, and directors with a similar position in the other entity, to count toward the board meeting quorum (§ 24.03A.615(2)). The articles or bylaws can provide otherwise under subsection (3), so the statutory route may not be the corporation's full approval rule.

A board action without a meeting has its own narrow rule. Section 24.03A.570(2) excludes an interested director who abstains in writing from the consent signer count only if the board records a benefit and fairness or better-arrangement determination and all noninterested directors approve. That written-consent mechanism must be read alongside the conflict transaction rule; interest alone does not excuse a signature.

Common questions

Does a good-faith member vote require only disinterested members?

Section 24.03A.615(1)(b) requires a good-faith specific vote by members entitled to vote after disclosure or knowledge. It does not state a separate disinterested-member denominator.

Does the section protect a contract against every challenge?

Its stated result is that a qualifying contract or transaction is not void or voidable solely for the specified relationship, interest, presence, participation, or counted vote (§ 24.03A.615(1)).

Statutes and sources

• Wash. Rev. Code § 24.03A.615(1)-(3): “is not void or voidable solely for that reason” if disclosed approval or fairness applies; subsection (2) permits interested directors in the quorum. Official section text, accessed 2026-10-02.
• Wash. Rev. Code § 24.03A.570(2): interested-director written abstention, recorded determination, and all noninterested directors' approval for the board-consent exception. Official section text, accessed 2026-10-02.