A Conflict of Interest Policy serves as an ethical roadmap for a nonprofit, ensuring that those in positions of power do not use their influence for personal or financial gain. Its primary purpose is to protect the organization’s integrity and tax-exempt status.
Why It Is Essential
- Protects Public Trust: It demonstrates to donors and the community that the mission always comes before the personal interests of board members or staff.
- Ensures Legal Compliance: It helps the organization avoid "excess benefit transactions," which can result in heavy IRS fines.
- Standardizes Decisions: It provides a clear, objective process for handling situations where a board member has a connection to a vendor or business deal, allowing the organization to proceed safely if the deal is truly in the nonprofit's best interest.
IRS Accountability: On the annual Form 990, the IRS specifically asks if the organization has this policy and how it is monitored.
Clan Campbell Society (North America) Conflict of Interest Policy
Article I: Purpose
The purpose of this policy is to protect the Society’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or trustee.
Article II: Disclosure:
Any Trustee, Officer, or member of a committee with Board-delegated powers who has a direct or indirect financial interest in a transaction must disclose the existence of the financial interest to the Board.
Article III: Recusal:
The interested person shall leave the Board meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
Article IV: Records of Proceedings
Minutes must record the names of those disclosing financial interests, the nature of the interest, the board's conflict determination, and any votes taken.
Article V: Compensation
Voting board members compensated by the organization cannot vote on matters related to their compensation.
Article VI: Annual Statements
Each Trustee and Officer shall annually sign a statement which affirms such person has received a copy of the policy, has read and understands it, and has agreed to comply with it.