New Year, New Start: Reviewing Your Conflict-of-Interest Policy and Annual Board Disclosure Forms
The start of a new year is the perfect opportunity for your organization’s board of directors to review its conflict-of-interest policy to ensure that the policy is comprehensive and up-to-date. While such a policy is not required by the IRS, the agency considers it a good governance practice that ensures an organization’s compliance with the rule against officers, directors and key employees benefiting financially from the organization’s activities.
The IRS underscores the importance it places on conflict of interest policies by asking nonprofits on the Form 990 whether they have a written policy, and if so, to describe how the organization regularly and consistently monitors and enforces compliance with the policy. Organizations must also state whether officers, directors and key employees are required to annually disclose interests that could give rise to a conflict.
Organizations should thus make it an annual practice to review their policy with their board. The organization’s directors, officers and key employees should also use that opportunity to complete an annual disclosure form to highlight any new business or personal relationships that may give rise to a conflict of interest.
Please check these resources for more information on conflict-of-interest policies.
