Not-for-profit board officers, directors, trustees and key employees must avoid conflicts of interest because it’s their duty to do so. Any direct or indirect financial interest in a transaction or arrangement that might benefit one of these individuals personally could result in the loss of your organization’s tax-exempt status — and its reputation.
- Do you have a conflict-of-interest policy in place that specifies what constitutes a conflict and lists exceptions?
- Do you require board officers, directors, trustees and key employees to annually pledge to disclose interests, relationships and financial holdings that could result in a conflict of interest?
- Do they understand that they must speak up if issues arise that could pose a possible conflict?
- Do you provide training in conflicts of interest?
- Do you have procedures in place that outline the steps you’ll take when a possible conflict of interest arises?
- Are individuals with possible conflicts asked to present only the facts, and then remove themselves from any discussion of the issue?
- Do you keep minutes of the meetings where the conflict of interest is discussed, noting those members present and voting, and indicating the final decision reached?
- Do you put projects out for bid — with identical specifications — to multiple vendors?
- Do you supply a written contract to each vendor that details the service the company will provide, specific deliverables, cost estimates and a time frame for delivery?
If you answered “no” to any of these questions, consider revising your conflict-of-interest policy. In addition, these conflicts should be brought to the attention of your auditor and may need to be disclosed in your financial statement footnotes. We can help you make sure that you have an adequate conflict-of-interest policy in place and a full set of procedures to support it as well as ensure you are meeting financial statement disclosure requirements.© 2018