Conflict of Interest Policy

About a Conflict of Interest Policy

A conflict of interest policy is needed to outline and prevent conflict between the personal interests of individuals and the organization's interests. In addition, a conflict of interest policy is necessary to set boundaries between employees and ensure proper protocol and procedures when conflict does arise.

Who Needs This Policy

A conflict of interest policy is for any organization with various lines of authority and decision making power that needs to ensure the organization's best interests are transparent and always upheld.

Note that some organizations may not have a standalone conflict of interest policy. But instead may have a series of guidelines or statements included in other vital policies. In this strategy, the "conflict of interest" policy is woven into the other organizational policies.

Examples of potential conflicts of interest issues to avoid

• A friend is hired over a more qualified candidate for a role.
  • A conflict of interest policy may require friends and family members to recuse themselves of a hiring decision.
• Intracompany relationships between an individual in a leadership role with another employee.
  • A conflict of interest policy may require relationships between subordinate employees to be disclosed to the board and, in some cases, may prohibit some relationships.
• A board of directors or employee using a donor list to solicit donors for another organization.
  • Organizations are advised to have a nondisclosure agreement to address these issues.
• Taking advantage of confidential information about another employee or information learned for your benefit.
  • Proper grievance policy and/or whistleblowing policies can ensure employees have a safe way to communicate these issues.
• Accepting a favor or gift from a donor over the company limit or in exchange for a personal benefit.
  • It is essential to have clearly written definitions of what is considered a gift or favor and how they are to be handled by staff and board members; for example, not accepting gifts over a certain value amount.
• Favoritism, either perceived or actual.
  • A conflict of interest policy may require any decision maker to recuse themselves from the decision-making process if they have a personal interest, current or prior relationship, or mutual interest in the outcome of the decision; for example, funding approvals, hiring, or awarding a contract.

What to include in the policy

Note that it may be necessary to have these items in multiple policies, such as a grievance policy, disciplinary policy, or hiring guidelines.

• State the purpose and define the terms
• Explain relevant interest
• Define a clear procedure, each part of the process needs structure and detailed steps. The more structured the better.
• A process on how to manage conflict and details of consequences for violating conflict of interest.
• An exclusion policy
  • Board members are prohibited from discussing and voting on any matter in which they have a conflict of interest.
• A disclosure policy
  • Those with potential conflicts need to be forthright and disclose it to the board, preferably when the need arises but at a minimum annually.
  • Board members must provide detailed information on affiliations with financial organizations, or professional societies that could hinder them from fulfilling their duty of loyalty.
  • All this information must be accessible among board members.
• How to investigating potential conflicts - define who is responsible and how the investigation will occur.
• Disciplinary action - consequences of violating a conflict of interest.
• A consent form with a signature