A Conflict of Interest Policy that is effectively communicated and enforced ensures that decisions about the operations of a nonprofit organization and the use of its assets are made solely in terms of benefit to the organization and not to individuals with positions of authority within the organization. Best practice is for all nonprofits to have a conflict of interest policy.
Key Elements of a Conflict of Interest Policy
DEFINING THE POLICY
In general, a Conflict of Interest Policy should include the purpose of the policy; define the individuals to whom the policy pertains; areas where potential conflicts of interest may arise; procedures for disclosing and addressing conflicts and recording potential conflicts.
IMPLEMENTING THE POLICY
Each member of the board of directors, trustees and key staff should receive and review a copy of the policy and complete a Conflict of Interest Questionnaire annually. The questionnaire should be signed by the individual confirming that they have:
- provided true and complete answers to the questionnaire
- received a copy of the policy
- read and understand the policy
- agree to comply with the policy
An administrator should be designated to ensure that all questionnaires are completed, signed and submitted annually. The questionnaires should be maintained by the administrator in a secure central location.
ENFORCING THE POLICY
Effective communication with board members, trustees and key staff regarding the purpose of the policy and the importance of adhering to it is essential in ensuring that the policy is clearly understood. Proper enforcement of the policy will ensure that decisions made and transactions entered on behalf of the organization are made in its best interest.
Roberta Katz Consulting helps nonprofit organizations build and maintain strong finance departments by creating, implementing and enforcing organizational policies and procedures that ensure the safeguarding of the organizations’ assets. Schedule a complimentary consultation to discuss how I can assist your organization.
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