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Conflict of Interest Policy basics

When running a charitable organization, it's important to avoid both the appearance and the actuality of any private benefit to individuals who are in a position of authority. What this means is that those individuals who support or manage the charitable organization, should not also financially benefit from it. A Conflict of Interest Policy allows you to clearly set rules and maintain the credibility of your organization.

Use the Conflict of Interest Policy document if:

  • You run a non-profit organization.
  • You want to keep your non-profit compliant.
  • You want to document you organization's rules.

The Internal Revenue Service (or IRS) plays an important role in the oversight of charitable organizations and recommends the adoption of a Conflict of Interest Policy. Within such a policy, both the President and the Secretary sign and certify their interest in protecting the organization from any arrangements that might benefit the private interests of an officer or director. The policy then defines who is an "interested person" within the organization, requires those with a conflict to disclose the conflict or potential conflict, and identifies the procedures in place for addressing any conflicts.

In addition to the appearance of impropriety, charitable organizations will lose their tax-exempt status if they operate in a manner inconsistent with their charitable purposes. Lastly, the Conflict of Interest Policy includes an attachment, the Annual Conflict of Interest Statement. Directors and officers can complete this statement on an annual basis to identify any current or potential conflicts.

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