Conflict of Interest Policy for Nonprofit Board Members Template

CONFLICT OF INTEREST POLICY AND DISCLOSURE STATEMENT

Document ID: COI-NP-2024-001
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: [State/Province], [Country]

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1. LEGAL COMPLIANCE NOTICE

This document serves as a template for institutional governance. It is intended to align with general principles of nonprofit corporate law (e.g., IRS Form 990 Part VI requirements in the United States). Legal counsel should review this document to ensure compliance with specific state statutes, as requirements regarding "interested director" transactions and self-dealing vary significantly by jurisdiction.

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2. PARTIES AND RECITALS

This Conflict of Interest Policy (the “Policy”) is adopted by [Nonprofit Organization Legal Name] (the “Organization”), a nonprofit corporation organized under the laws of [Jurisdiction], with its principal place of business at [Principal Address]. This Policy applies to all Board Members, Officers, and key employees (collectively, "Covered Persons").

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3. PURPOSE AND SCOPE

The purpose of this Policy is to protect the interests of the Organization when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the Organization, or might result in a possible excess benefit transaction. This Policy is intended to supplement but not replace any applicable state or federal laws governing conflicts of interest applicable to nonprofit and charitable organizations.

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4. DEFINITIONS

4.1. Financial Interest: A person has a financial interest if the person has, directly or indirectly, through business, investment, or family: (a) An ownership or investment interest in any entity with which the Organization has a transaction or arrangement; (b) A compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement; or (c) A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement.

4.2. Interested Person: Any director, principal officer, or member of a committee with governing board-delegated powers who has a direct or indirect financial interest, as defined above, is an interested person.

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5. PROCEDURES

5.1. Duty to Disclose: In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board-delegated powers considering the proposed transaction or arrangement.

5.2. Determining Whether a Conflict Exists: After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he or she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.

5.3. Procedures for Addressing the Conflict: (a) An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he or she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest. (b) The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. (c) After exercising due diligence, the governing board or committee shall determine whether the Organization can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest. (d) If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Organization’s best interest, for its own benefit, and whether it is fair and reasonable.

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6. VIOLATIONS OF THE POLICY

If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose. If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

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7. RECORDS OF PROCEEDINGS

The minutes of the governing board and all committees with board-delegated powers shall contain: (a) The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing board’s or committee’s decision as to whether a conflict of interest in fact existed. (b) The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.

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8. ANNUAL STATEMENTS

Each director, principal officer, and member of a committee with governing board-delegated powers shall annually sign a statement which affirms that such person: (a) Has received a copy of the conflict of interest policy; (b) Has read and understands the policy; (c) Has agreed to comply with the policy; and (d) Understands the Organization is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.

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9. EXECUTION

FOR THE ORGANIZATION: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Company: [Organization Legal Name] Date: [Date]

FOR THE BOARD MEMBER / COVERED PERSON: Signature: _____________________________________ Printed Name: [Full Name] Title: [Board Position] Date: [Date]

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10. STEP-BY-STEP EXECUTION AND FILING GUIDE

1. Drafting: Open this file in your word processor. Use "Find/Replace" (Ctrl+H) to replace all bracketed items [ ] with your organization's specific data.
2. Legal Review: Submit the populated draft to your legal counsel to ensure the "Conflict of Interest" definitions align with your state’s Nonprofit Corporation Act.
3. Approval: Present this document to the Board of Directors for a formal vote to adopt it as part of your institutional Bylaws or Governance Manual. Record this vote in the Board Minutes.
4. Execution:
   • Digital: Use DocuSign or Adobe Sign. Set up a workflow where the Board Secretary initiates the signature request to each Director.
   • Physical: Print two originals. The Board Chair signs first; the Director signs second.
5. Retention: Store the original signed documents in the Corporate Minute Book. Digital copies should be maintained in a secure, encrypted cloud repository (e.g., SharePoint/Box) with restricted access limited to the Corporate Secretary or Legal Department.
6. Annual Refresh: Re-distribute the Disclosure Statement (Section 8) annually during the first board meeting of the fiscal year.