Imagine you’re a board member for an organization that needs to print marketing materials for its upcoming banquet. Your friend owns a business that could take care of the printing, but you’re not sure whether his business would provide the best or cheapest option. Would you suggest that the organization consider your friend for the job?
It’s hard to make an objective decision on behalf of an organization when that decision affects you personally as well. That’s why our Accountability Standards include a Conflict of Interest Policy that prohibits interested parties from approving or voting on a conflicted transaction.
Directors, officers, and key employees are all required to fully disclose – annually, in writing, and as situations arise – any potentially conflicting relationships or transactions. This helps to ensure that the board's deliberations are independent and free of bias from board members or key employees who may have a personal interest in the outcome.
By keeping board decisions free from such bias, nonprofits are better able to make informed decisions in support of the communities they serve.
Why does this matter to donors?
The Conflict of Interest Policy is important for donors because it helps to ensure that the organization is making the most out of your donations, and is only spending money and energy as necessary in order to advance their mission.
In order to meet this Standard, nonprofits must ensure there is a written policy addressing director, officer, and key employee conflicts of interest that prohibits an interested party from approving or voting on any conflicted transactions. The policy must also discuss the need for annual discussion of new conflicts of interest should they arise.
To learn more about the Council's Accountability Standards or to download the complete list, click here.