A conflict of interest policy documents the procedures a board director must take when there is a conflict between their own personal interests and the best interests of the organization they serve. Such a policy requires a board director with a conflict (as well as those who believe they have a conflict) to disclose said conflict.
A conflict of interest policy includes many elements, including:
An explanation of what constitutes a conflict of interest
How to disclose a conflict of interest
The process taken to review any potential conflicts of interest that have been reported
Disciplinary action taken for not abiding by the conflict of interest policy
An undisclosed conflict of interest can have serious consequences for an organization. Establishing a conflict of interest policy is a key step to take to reduce the risk of a conflict of interest on a board of directors.
