What is a Conflict of Interest Policy?

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.

Further Reading

• Conflict of Interest on Nonprofit Boards
• What are Board of Director Responsibilities?
• The Complete Guide to D&O Questionnaires