Sample Conflict of Interest Policy

Board Café

Sample Conflict of Interest Policy

I've recently joined the board of directors of the Asian Pacific Islander Wellness Center, an HIV/AIDS organization in San Francisco. Like many community-based organizations, this one has an exceptional executive director, well-regarded services, a great board . . . and financial concerns given government cutbacks. As a board, we have to hold the executive accountable for financial matters, and as individual board members, we endeavor to help find appropriate responses to cutbacks, raise more money, and advocate with public officials for stabilized funding. I hope you feel as good about your board volunteer work as I do about mine. -Jan Masaoka

There are always plaques and clocks. Three additional ideas: a) Write a paragraph or two that details the specific ways the board member has contributed to the organization, have all the board members sign it, and frame it nicely. b) Several board members and the executive director can take outgoing board members to dinner, with toasts for work well done. c) Consider a "Pass the Torch" award for a board member who has done a great job of bringing a successor into the picture, such as someone new to run the annual picnic or to become the treasurer.

These laws are established at the state level - for example, in Ohio and New York, the minimum number is three, while in California the minimum number is one. Contact the State Attorney General for information on your own state. While you're doing that, you can also find out the legal minimum requirement for a quorum-the percentage of board members who must be present for official action to be taken. In some states, one-third of board members are required for quorum, while other states require one-half.

Last month the Board Café looked at Sarbanes Oxley, the new regulations for for-profit corporations aimed at preventing corporate abuse. Although these regulations are not applicable for nonprofits, a sound practice is establishing a conflict of interest policy which board members sign.

This issues "Main Course" article:

Three straightforward safeguards can go a long way towards preventing and avoiding conflicts of interest. First, the organization can establish a policy related to conflict of interest, which is signed by all board members at the time they join the board and perhaps renewed annually. The statement may be a simple declaration or it may require detailed information about the board members' financial interests.

Second, establish disclosure as a normal habit or practice. Board members should find it customary for someone to say, for example, "This next agenda item relates to joining a collaboration with other mental health agencies that receive county funds. Because I am on the staff of one of the agencies involved, I have a potential conflict of interest and I am going to excuse myself from the room for this discussion." In another situation a board member might say, "I have started to date the Clinic Director and as a result feel that I must resign from the board. I would like to continue as a member of the Fundraising Committee, but not as a board member." Disclosures and excusal from voting should be recorded in the meeting's minutes.

Third, if major purchases are involved, competitive written bids should be obtained to ensure that prices and product are comparable if there will be a financial benefit to a board member.

Perhaps even more than written policies, board and staff leadership must establish by example and attitude an atmosphere of personal integrity. Some situations may need only a brief informal comment to maintain that climate. In other situations a decision may be delayed because of the need to ensure that the decision has been made truly in the best interests of the organization. Each of us, by our words and actions every day, contributes towards a culture of integrity and responsibility.

Sample conflict of interest policy
The standard of behavior at the _______ Nonprofit is that all staff, volunteers, and board members scrupulously avoid any conflict of interest between the interests of the Willow Organization on one hand, and personal, professional, and business interests on the other. This includes avoiding actual conflicts of interest as well as perceptions of conflicts of interest.

I understand that the purposes of this policy are: to protect the integrity of the Willow Organization's decision-making process, to enable our constituencies to have confidence in our integrity, and to protect the integrity and reputation of volunteers, staff and board members.

Upon or before election, hiring or appointment, I will make a full, written disclosure of interests, relationships, and holdings that could potentially result in a conflict of interest. This written disclosure will be kept on file and I will update it as appropriate.

In the course of meetings or activities, I will disclose any interests in a transaction or decision where I (including my business or other nonprofit affiliation), my family and/or my significant other, employer, or close associates will receive a benefit or gain. After disclosure, I understand that I will be asked to leave the room for the discussion and will not be permitted to vote on the question.

I understand that this policy is meant to be a supplement to good judgment, and I will respect its spirit as well as its wording.

Signed: __________________
Date: ____________________

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