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Three Tips to Prevent Conflicts of Interest at Your Nonprofit

From Amy Coates Madsen, Director of the Standards for Excellence

There have been a series of high-profile conflict of interest situations and ethical challenges in the nonprofit sector in the last few weeks and months. To many, these high-profile stories have served as a wake-up call to nonprofit board and staff leaders that they should be more focused on their governance in a way that is as ethical as possible.

Here are three quick tips to start your journey of preventing conflicts of interest at your organization:

  1. Nonprofits should have a conflict of interest policy in all employee and board handbooks – and make sure everyone knows what it means.
    • A good conflict of interest policy should identify the types of conduct or transactions that raise conflict of interest concerns, set forth procedures for disclosure of actual or potential conflicts, and provide for review of individual transactions by uninvolved members of the board of directors.
    • The conflict of interest statement should provide space for the board member, employee or volunteer to disclose any known interests that the individual, or a member of the individual’s immediate family, has in any business entity which transacts business with the organization
  2. Add a note to all board meeting agenda items that ask, “Does anyone present have a conflict with this situation?”
  3. Address how conflicts of interest is an important risk management practice – in the same category as crisis management, emergency plans, and directors’ and officers’ insurance.

To request more information regarding conflicts of interest, please visit the Standards for Excellence website or fill out this survey. With so many high-profile situations involving ethics and accountability, we hope to provide as many resources as possible to ensure more ethical governance in our sector.

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About the Author: Lydia Alcock