3. Adopt a Conflict of Interest Policy

Adopt and enforce a conflict of interest policy tailored to your organization’s specific needs and consistent with laws in your state. Few actions will undermine the credibility of a charitable organization faster than having its tax-exempt funds not used exclusively for charitable purposes. Adhering to a well-defined conflict of interest policy will help preempt even the perception that funds are being used for personal gain by the managers or board members. Many states have laws that govern conflict of interest situations and all organizations should consult their state laws to ensure that their conflict of interest policy affords them the necessary protections.

A conflict of interest policy should:

• Define conflict of interest;
• Specify the persons who will be covered by the policy;
• Require regular disclosure of information related to conflicts of interest; and
• Specify procedures for handling potential or actual conflicts of interest when they arise.
  

Resources:

The following publications and articles provide helpful insights on what it means to build a culture of accountability:

The Internal Revenue Service has a Sample Conflict of Interest Policy available on its website.

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