Nonprofit Conflict of Interest Policy Template

1. Purpose

• Ensure directors, officers, and key employees act in the best interests of [Organization Name] and comply with legal and ethical obligations.

2. Definitions

• "Interested Person": any director, officer, key employee, or committee member with governing board-delegated powers who has a direct or indirect financial interest.
• "Financial Interest": ownership, compensation arrangements, potential ownership/compensation, or fiduciary duties with entities doing business with the organization.

3. Duty to Disclose

• Interested Person must disclose financial interests to the board or committee prior to consideration of proposed transactions or arrangements.
• Annual disclosure statements required from all covered persons.

4. Determining Conflict of Interest

• Disinterested board or committee members review disclosures and determine whether a conflict exists.

5. Procedures for Addressing Conflicts

1. Interested Person may present information but must leave meeting during discussion and vote.
2. Chair appoints disinterested persons to investigate alternatives.
3. Board/committee determines whether organization can obtain a more advantageous arrangement without conflict.
4. If not feasible, board/committee may approve transaction if fair, reasonable, and in organization’s best interest.
5. Approval requires majority vote of disinterested directors, with documentation in minutes.

6. Violations of Policy

• If board/committee has reasonable cause to believe a member failed to disclose a conflict, it shall inform the member, allow explanation, and take disciplinary/remedial action if warranted (e.g., removal from position).

7. Records of Proceedings

• Meeting minutes must include names of persons with conflicts, nature of conflict, discussions, alternatives considered, and votes.

8. Compensation Committees

• Directors voting on compensation arrangements must be disinterested and rely on comparability data.
• Individuals receiving compensation shall not vote on their own compensation.

9. Annual Statements

• Each covered person signs annual statement affirming:
• Receipt of policy.
• Commitment to comply.
• Understanding of charitable and tax-exempt obligations.

10. Periodic Reviews

• Organization conducts periodic reviews to ensure compliance with policy and tax-exempt requirements, focusing on compensation, joint ventures, and partnership arrangements.

11. Use of Outside Experts

• When necessary, organization may use outside advisors but retains responsibility for final decisions.

12. Effective Date and Approval

• Policy effective on [Date], approved by Board of Directors.

Signatures

Board Chair: ____ Date: __

Secretary: ____ Date: __

Attachment – Annual Disclosure Statement

• Form for directors, officers, key employees to disclose financial interests and relationships.