Good Governance Procedures for Associations and Non-Profits: Why Every Association and Non-Profit must Adopt them: PART II: Conflict of Interest Policies

GMCS is providing this second part of the three part series on Association / Non-Profit Good Governance. In this series, we will explore the basic polices of good governance as noted on your organization’s tax returns.  These policies create a foundation to ensure that there are adequate policies in place to promote an environment of ethical activity and good governance.

These important policies are listed on your firm’s 990’s under, Part VI: Governance, Management and Disclosure: Section B. Policies.  An explanation of these basic polices are contained within the IRS 990 Instructions Document contained here…  They are as follows:

• A written whistle blower policy
• A written conflict of interest policy
• A document retention and destruction policy

A recent GMCS audit of (13) thirteen regional non-profit entities indicated that only (6) six out of the (13) thirteen had all of the proper policies in place as noted on their 990 documentation.  With roughly 46 percent of this small industry specific sample adhering to the basic procedures and administrative policies of good governance, maybe it’s time for your organization to review your non-profits or association’s 990’s  and policies to confirm that there are adequate polices in place to promote an environment of ethical activity and good governance.

Conflict of Interest Policy:

Another important document that association & non-profit leadership must ensure is in place is the “Conflict of Interest policy.”  Many prospective board members are often unaware that their activities or personal interests outside of the organization may be in conflict with the best interests of the organization.  A written conflict of interest policy raises awareness and creates a documented and defined process for disclosure and consideration of potentially conflicting interests of current and prospective board members and staff.  In many cases, these documents are signed at the time of a board member’s acceptance into the organization or whenever a new staff member is employed.  It is common practice update these records annually at board retreats and our employee evaluations.   

The Council for Nonprofits is an excellent resource for these polices and has a comprehensive web page on this topic with additional and detailed information and links to sample polices.

You may access that web page by going here…

Part 1: Whistle Blower Policies may be accessed here...