Non Profit Conflict of Interest Policy Template

CONFLICT OF INTEREST POLICY AND DISCLOSURE AGREEMENT

Document ID: GOV-COI-2024-001
Effective Date: [Effective Date]
Version: 1.0
Governing Jurisdiction: [State/Province of Incorporation]

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STATUTORY & LEGAL COMPLIANCE NOTICE

Disclaimer: This document is intended as a legal template. While drafted to reflect best practices for non-profit governance (consistent with IRS Form 990 requirements and the Model Non-Profit Corporation Act), it does not constitute specific legal advice. Non-profit regulations vary significantly by jurisdiction. Counsel should review this document against local state statutes, charitable solicitation acts, and organizational bylaws before adoption.

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I. PARTIES AND RECITALS

This Conflict of Interest Policy (the “Policy”) is adopted by [Non-Profit Organization Legal Name] (the “Organization”), a non-profit corporation organized under the laws of [Jurisdiction], with its principal office located at [Principal Address].

WHEREAS, the Organization is a tax-exempt entity, and its directors, officers, and employees (collectively, "Covered Persons") have a fiduciary duty to act in the best interests of the Organization; and

WHEREAS, the purpose of this Policy is to protect the tax-exempt status of the Organization and to ensure that its assets are used solely for its charitable mission, avoiding any appearance of impropriety in its dealings.

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II. DEFINITIONS

1. "Interested Person" means any director, principal officer, or member of a committee with governing board-delegated powers who has a direct or indirect Financial Interest.
2. "Financial Interest" means a person has a financial interest if they have, 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.

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III. 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 Board of Directors or committee members considering the proposed transaction or arrangement.

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IV. PROCEDURES FOR ADDRESSING CONFLICTS

1. Duty to Recuse: After disclosure of the Financial Interest and all material facts, and after any discussion with the Interested Person, the Interested Person shall leave the 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.
2. Addressing the Conflict: If a conflict exists, the Board may appoint a disinterested person or committee to investigate alternatives to the proposed transaction. After exercising due diligence, the Board 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.
3. Approval: If a more advantageous transaction is not reasonably attainable under circumstances not producing a conflict of interest, the Board shall determine by a majority vote of the disinterested directors whether the transaction is in the Organization's best interest, for its own benefit, and whether it is fair and reasonable.

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V. VIOLATIONS OF THE POLICY

If the Board 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 response, the Board determines the member has failed to disclose a conflict, it shall take appropriate disciplinary and corrective action.

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VI. RECORDS OF PROCEEDINGS

The minutes of the 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; b. The content of the discussion, including any alternatives to the proposed transaction; and c. A record of any votes taken in connection with the proceedings.

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VII. 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 Policy; b. Has read and understands the Policy; c. Has agreed to comply with the Policy; and d. Understands that 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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VIII. MISCELLANEOUS

1. Severability: If any provision of this Policy is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law.
2. Entire Agreement: This Policy constitutes the entire agreement regarding conflicts of interest between the signatory and the Organization, superseding all prior oral or written understandings.

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IX. EXECUTION & FORMAL SIGNATURE BLOCKS

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

FOR [INDIVIDUAL / BOARD MEMBER]: Signature: _____________________________________ Printed Name: [Name of Interested Person] Title: [Role, e.g., Director] Date: [Date]

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X. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Customization: Open this document in your preferred word processor. Use the "Find and Replace" function to replace all bracketed items (e.g., [Organization Name]) with your entity's specific information.
2. Bylaw Review: Verify that the "Procedures for Addressing Conflicts" (Section IV) aligns with your organization's existing Bylaws. If the Bylaws stipulate a different voting threshold (e.g., supermajority), amend Section IV accordingly.
3. Approval: Present the final draft to the Board of Directors for formal adoption. Ensure the meeting minutes reflect the motion, second, and unanimous approval (or specific vote count) of this Policy.
4. Execution: Distribute copies to all directors, officers, and key employees. Have each individual sign the signature block or a standalone "Annual Conflict of Interest Disclosure Form" incorporating these terms by reference.
5. Digital Execution: Use a secure platform like DocuSign or Adobe Sign to capture signatures. Ensure the final signed PDF is stored in a secure, centralized digital repository (e.g., SharePoint, Google Drive with restricted access).
6. Retention: Maintain signed copies as part of your permanent corporate records for at least seven (7) years to satisfy potential IRS audit requirements regarding governance.