Conflicts of interest are likely to arise, so it’s important for boards to have a plan for how to address them when they surface.
Every set of bylaws should include a conflict of interest policy.
A policy governing conflicts of interests is perhaps the most important policy a nonprofit board can adopt.
The term conflict of interest is often used in connection with an elected public official or judge.It is not unusual for public officials to divest themselves of anything that could even be construed as creating a conflict, including stocks, pensions, board memberships and former clients.In order to understand what a conflict of interest means, it may help to examine what is meant by "interest." Almost everyone has personal or professional interests, whether it be a hobby, an investment in a business, or a desire to help friends and family members succeed in their own interests.The board member sees that this is a profitable market and uses the knowledge that gained from board experience to start up a company that manufactures the same types of products.In this situation, the board member is now in direct financial competition with the organization that he serves on the board of directors.