Conflicts of interest are complex, and nonprofit organizations should have clear policies in place to ensure they remain compliant with regulations and bylaws. 

To make things easy, organizations can use a nonprofit conflict of interest policy template as a guide for creating a policy of their own. In this article, we will explain what nonprofit conflict of interest policies are, share templates to help you get started, and provide tips for implementing a policy at your organization.

Let’s get started.

What Is a Nonprofit Conflict of Interest Policy?

First things first, what even is a conflict of interest?

A conflict of interest in a nonprofit organization occurs when a board member, employee, or volunteer has an outside financial or personal interest that could influence the performance of their duties. This could include anything from accepting gifts from vendors to participating in business transactions with relatives or friends. 

A conflict of interest policy helps ensure these situations are avoided.

A conflict of interest policy is a set of guidelines created by an organization to outline the procedures to be followed when potential conflicts between individual interests and organizational interests arise. It is especially important for nonprofits to have a conflict of interest policy in place as they rely on public trust for donations. 

A strong conflict of interest policy helps preserve that trust by ensuring board members and key staff members, like the Executive Director, are not taking advantage of their positions for personal gain.

Additionally, nonprofits should have conflict of interest policies that protect them from potential legal liabilities and ensure that all employees are acting ethically and with the nonprofit's best interests in mind. 

A nonprofit conflict of interest policy should clearly define various types of conflicts so that all parties are aware of what constitutes a conflict and it should also outline the expectations for what steps to take when potential conflicts arise. 

By having a conflict of interest policy, nonprofits can maintain trust with their supporters and ensure that those involved with the organization make decisions based on the nonprofit’s best interests. 

Types of Conflicts of Interest

Conflicts of interest can come in many different forms, but nonprofit organizations should be aware of these three common types: personal, financial, and organizational. 

This section outlines the definitions of each kind of conflict of interest and provides examples to help nonprofit employees understand how conflicts may arise in their own organizations. 

Personal Conflicts

Personal conflicts of interest occur when an individual's personal interests interfere with their work for the nonprofit. An example of a personal conflict of interest might be if someone working at a nonprofit has a family member applying to work at that same organization and they are supposed to be a part of the hiring process. 

​​While having family members work together isn't inherently bad, you wouldn’t want to have an unfair hiring process or be accused of nepotism. A great way to avoid this conflict of interest is to have a policy in place that prohibits family members from participating in the hiring process.

Financial Conflicts

Financial conflicts of interest occur when someone within the nonprofit could financially benefit from a decision that they are a part of deciding. 

For example, say the nonprofit needed to rent a new facility space. It would be a conflict of interest for a board member to vote yes on renting a new facility if they work in real estate and own the building in question.

Organizational Conflicts

Organizational conflicts of interest occur when one party's interests are prioritized over the organization’s best interests.

An example of an organizational conflict could be if a board member also sits on the board of a competing organization. This could be a conflict of interest because they may be voting on decisions that could benefit their other organization more than the nonprofit they are serving.

Organizations need to have nonprofit conflict of interest policies that outline which types of conflicts are prohibited and that guide board members on how to handle them if they arise. This helps ensure that all decisions made within the nonprofit are ethical, transparent, and support the nonprofit's mission.

The Role of a Conflict of Interest Policy

A nonprofit conflict of interest policy is an important document that helps organizations establish and maintain ethical standards for decision-making. It sets out clear guidelines for nonprofit staff, board members, and volunteers for identifying potential conflicts of interest, what steps should be taken when they occur, and how these issues can be efficiently resolved. 

A clear nonprofit conflict of interest policy can help nonprofit organizations ensure that decisions are made in the nonprofit’s best interests rather than any individual's.

The conflict of interest policy should include guidelines for:

• Disclosing conflicts of interest
• Procedures for managing and approving related party transactions
• Definitions of different types of conflicts of interest
• Record keeping of disclosures and conflicts
• Penalties for violating policies
• Annual statements all leadership and board members must sign to renew the policy

It is important to note that nonprofit conflict of interest policies should be reviewed regularly, as the laws surrounding nonprofit organizations are constantly changing. 

Additionally, nonprofit boards should ensure that all staff and board members are aware of the nonprofit’s conflict of interest policy and receive periodic training on how to adhere to the policy. 

Ultimately, nonprofit organizations must have a clear conflict of interest policy in place in order to guarantee transparency and ethical decision-making processes.

Nonprofit Conflict of Interest Templates

Below we’ve provided a few nonprofit conflict of interest policy template samples. Use these templates as a starting point for your organization and adjust as needed. 

Free Nonprofit Conflict of Interest Policy Template

Introduction

This policy outlines the standards of ethical conduct for employees and volunteers of ____________ ("Organization") when engaging in activities that may involve a conflict of interest. This policy is intended to protect the interests of the Organization, its clients, and other stakeholders.

Purpose

The purpose of this conflict of interest policy is to provide guidance to employees and board members of ____ nonprofit Organization on how to identify, disclose, and manage real or perceived conflicts of interest in the workplace.

This policy aims to help ensure that all participants make decisions in a fair and impartial manner that benefit the Organization as a whole. It also helps protect the Organization from potential financial losses, legal action, or reputational damage due to unethical activities.

Pledge of Duty

Employees, board members, and volunteers of the ____ Organization are expected to conduct themselves in an ethical manner at all times. 

This includes:

• Disclosing any real or perceived conflicts of interest in a timely manner

• Refraining from taking advantage of opportunities that may benefit them personally at the expense of the Organization

• Not engaging in activities that may harm the reputation of the Organization

• Not taking part in any activity or transaction to which they are not fully committed

• Abiding by all applicable laws and regulations relating to their duties as representatives of the Organization.

Procedures

• Duty to disclose: All employees, board members, and volunteers of the ___ Organization must disclose any real or perceived conflicts of interest in a timely manner. This includes disclosing both direct and indirect financial interests as well as personal relationships that may be relevant to their role within the Organization.

• Investigating potential conflicts: If a potential conflict of interest is identified, it must be reviewed and investigated to determine the nature and extent of the conflict. 

• Addressing conflict of interests: If a conflict of interest is found to exist, the agent must take steps to address it. This may include recusing themselves from any decision-making related to the conflict or taking other measures as necessary.

• Disciplinary action: If an agent is found to have violated this policy, they may be subject to disciplinary action, up to and including termination of their role with the Organization. 

Records

All disclosures, investigations, and resolutions related to conflict of interests must be documented and retained in accordance with the Organization's record-keeping policies.

The Conflict of Interest Policy will be reviewed by the ___ Organization's management team on an annual basis or as needed. Any changes to the policy will be approved by the Board of Directors.

Annual Statement

An annual statement must be signed by all employees, board members, and volunteers of the ___ Organization to certify that they have read, understood, and comply with this policy. 

The statement will also ask them if they are aware of any potential conflicts of interest that have not been disclosed. This statement should be reviewed at least once a year.

The __ Organization's Conflict of Interest Policy was reviewed and approved by the Board of Directors on ____.

Date. ___________________________________________________________________

Board Chair Signature.__________________________________________________

Rocket Lawyer Conflict of Interest Policy Template

Rocket Lawyer provides tons of business document templates for use—including a conflict of interest policy template. A great thing about this template is that once it’s complete, you can easily invite others in your organization to sign it.  

Business in a Box Conflict of Interest Policy Template

Another conflict of interest policy template you can check out comes from Business in a Box. Their thousands of templates can be easily downloaded and edited in Word docs. 

Implementing a Conflict of Interest Policy

Nonprofit organizations must ensure that their policies are clear, up-to-date, and explained thoroughly to all staff members, board members, and volunteers.

Once you develop your policy, there are a few steps to take to ensure it is implemented properly:

• Make sure that all board members and staff are aware of the policy and understand the contents within.

• Train all relevant personnel on how to identify potential conflicts of interest, as well as how to address them if they arise.

• Ensure that records of all relevant disclosures are properly kept in accordance with the policy.

• Periodically review and update the conflict of interest policy to ensure it remains compliant with all applicable laws, regulations, and best practices. 

• Require all board members and staff to sign an annual statement re-affirming their commitment to the conflict of interest policy.

• Make sure that any penalties for violating the policy are clearly outlined in the document itself and communicated widely across the organization.

Having a clear, up-to-date conflict of interest policy will help ensure that decisions made at a nonprofit are focused on advancing the organization’s mission first and foremost. 

Wrapping Up: The Next Steps

Nonprofit organizations should have an up-to-date conflict of interest policy to ensure ethical decision-making and protect the nonprofit from potential disputes. 

Use the conflict of interest policy templates included in this article as a starting point for creating your own customized policy that meets the specific needs of your organization.

For more helpful nonprofit resources, templates, and tips, check out the Instrumentl blog for additional insights.