Conflict of Interest Policy

[ORGANIZATION NAME] Adopted: _______________ | Last Reviewed: _______________

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1. Purpose

This policy protects the integrity and tax-exempt status of [Organization Name] (the “Organization”) by establishing clear procedures for identifying, disclosing, and managing conflicts of interest.

The Organization is committed to operating in a manner consistent with its charitable mission. No director, officer, or key employee should use their position to obtain personal financial benefit at the Organization’s expense or act in a way that places personal interests above the Organization’s interests.

This policy supplements, but does not replace, applicable state and federal laws governing conflicts of interest for nonprofit organizations.

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2. Who This Policy Covers

This policy applies to all:

• Members of the Board of Directors
• Officers (e.g., Executive Director, President, Secretary, Treasurer)
• Key employees with significant authority or financial responsibility

Together, these individuals are referred to as “covered persons” throughout this policy.

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3. Definitions

Financial Interest A covered person has a “financial interest” if they have, directly or indirectly, through business, investment, family, or other relationships:

• An ownership or investment interest in any entity with which the Organization has, or is considering, a transaction or arrangement
• A compensation arrangement with any entity or individual with which the Organization has, or is considering, a transaction
• A potential ownership, investment, or compensation arrangement with any entity about which the covered person has information by virtue of their role

Compensation includes direct and indirect remuneration, as well as gifts or favors of more than nominal value.

Conflict of Interest A financial interest becomes a “conflict of interest” when the Board determines that the financial interest could influence the covered person’s judgment or actions on behalf of the Organization. The appearance of a conflict is treated with the same seriousness as an actual conflict.

Interested Person Any covered person who has a financial interest in a matter being considered by the Board or a committee.

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4. Duty to Disclose

Covered persons must promptly disclose any actual or potential conflict of interest. Disclosure must be made:

• Before the Board or any committee votes or takes action on a matter in which the covered person has a financial interest
• As soon as the covered person becomes aware of a potential conflict, even if no vote is imminent
• Annually, through the signed Annual Acknowledgment at the end of this policy

When disclosing, the covered person should describe the nature of their financial interest and all material facts relevant to the Board’s evaluation.

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5. Managing Conflicts of Interest

Step 1 — Disclosure The interested person discloses their financial interest to the Board Chair (or the full Board) and provides all relevant information.

Step 2 — Recusal After disclosure and an opportunity to answer questions, the interested person must:

• Leave the meeting room (or otherwise remove themselves from the discussion)
• Refrain from participating in deliberations or the vote on the matter
• Not attempt to influence the outcome

Step 3 — Board Determination The remaining disinterested directors will:

• Determine whether a conflict of interest exists
• If a conflict exists, investigate whether the Organization can obtain a more advantageous transaction from a disinterested party
• Determine whether the proposed transaction is in the Organization’s best interest and is fair and reasonable
• Vote on whether to proceed

Step 4 — Documentation The minutes of the meeting must record:

• The nature of the conflict and the interested person’s name
• That the interested person recused themselves
• The substance of the Board’s deliberations
• The result of the vote, including the names of those voting

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6. Compensation Decisions

A covered person who receives, or may receive, compensation from the Organization must not:

• Be present during deliberations about their own compensation
• Vote on any matter related to their own compensation or benefits

This applies to board members who are also compensated staff, and to any key employee whose compensation is being reviewed or approved.

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7. Violations

If the Board has reason to believe a covered person has failed to disclose an actual or potential conflict of interest, the Board will investigate. If a violation is confirmed, the Board may take appropriate action, including:

• Requiring the person to make a full disclosure
• Voiding any affected decision or transaction
• Removing the individual from their role

The IRS may impose “intermediate sanctions” — financial penalties — against both the individual and the Organization in cases of serious violations involving excess benefit transactions.

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8. Annual Review and Acknowledgment

This policy will be reviewed by the Board at least once per year. All covered persons must sign the Annual Acknowledgment upon initial adoption of this policy and again at each annual review thereafter.

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Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. It is designed to align with IRS guidance for 501(c)(3) organizations, but state laws vary. Organizations in New York, California, and certain other states may have additional requirements. Adapt this policy to your organization’s needs and consult a nonprofit attorney if you have questions.

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Annual Acknowledgment

I have received, read, and understand the Conflict of Interest Policy of [Organization Name]. I agree to comply with this policy and to promptly disclose any actual or potential conflict of interest that arises during my service.

I confirm that, to the best of my knowledge, I have disclosed all current financial interests that may constitute a conflict of interest as defined by this policy.