Of course. Here is a comprehensive overview of conflict of interest (COI) policies, including their purpose, key components, best practices, and a sample template.

What is a Conflict of Interest (COI) Policy?

A Conflict of Interest Policy is a formal, written document that outlines the procedures for identifying, disclosing, and managing situations where an individual's personal interests could improperly influence their professional judgment or obligations to an organization.

The core principle is loyalty. The policy ensures that decisions made by employees, board members, and volunteers are in the best interest of the organization, not for personal gain.

Why is a COI Policy Crucial?

• Protects Integrity and Reputation: It safeguards the organization's public image and trust among stakeholders, donors, clients, and the community.


• Legal and Fiduciary Duty: For non-profits and corporations, board members have a legal fiduciary duty to act in the organization's best interest. A COI policy is a key tool for fulfilling this duty.


• Prevents Fraud and Abuse: It creates a transparent process to prevent self-dealing, nepotism, and misuse of organizational assets.


• Ensures Sound Decision-Making: By mitigating bias, it helps ensure that organizational resources are used effectively and missions are advanced.


• Mandatory for Compliance: Many grant-making bodies, government agencies, and accrediting organizations require a formal COI policy.

Key Components of an Effective COI Policy

A robust policy typically includes the following sections:

1. Purpose and Philosophy

• A clear statement of why the policy exists, emphasizing the organization's commitment to ethical conduct and integrity.

• Specifies all individuals bound by the policy (e.g., all employees, board members, volunteers, key contractors, and sometimes even family members of covered persons).

• Provides a clear definition and includes specific examples relevant to the organization. Common examples include:


• Financial Interests: An employee has a significant financial stake in a vendor the organization is considering.


• Outside Employment: A manager's second job is with a direct competitor.


• Nepotism: Hiring, supervising, or promoting a close family member.


• Gifts and Gratuities: Accepting substantial gifts from a vendor seeking a contract.


• Use of Assets: Using the organization's property, information, or reputation for personal benefit.


• Board Conflicts: A board member voting on a grant that would benefit another organization they lead.

• Mandates that covered persons have an ongoing responsibility to disclose any actual or potential conflicts.


• Specifies the process: to whom disclosures should be made (e.g., a supervisor, CEO, or a designated Ethics Officer/Board Committee) and how (typically via a written annual disclosure form, plus ad-hoc disclosures as new conflicts arise).

• Outlines the steps taken once a conflict is disclosed.


• A designated committee (often a subset of the board for senior-level conflicts) reviews the disclosure.


• The committee determines if a conflict exists and, if so, develops a management plan. This could involve:


• Recusal: The person is removed from all discussion and voting on the matter.


• Restructuring Duties: Changing job responsibilities to eliminate the conflict.


• Divestiture: Requiring the individual to sell a financial interest.


• Recusal from Supervision: Removing the person from any supervisory role over a relative.


• Documentation: All decisions and management plans must be meticulously recorded in meeting minutes.

• Assures that disclosures will be handled as confidentially as possible, sharing information only with those who have a legitimate need to know.

• Clearly states that failure to disclose a conflict or violating the policy may result in disciplinary action, up to and including termination for employees or removal from the board.

• Requires all covered persons to sign a statement annually affirming that they have read, understood, and complied with the policy.

Best Practices for Implementation

• Tailor the Policy: Don't just copy a template. Ensure the examples and rules are relevant to your specific organization's size, industry, and risks.


• Train and Communicate: A policy is useless if no one knows about it. Conduct regular training sessions for all covered persons.


• Lead by Example: The board and senior leadership must be the most diligent in adhering to the policy. Their behavior sets the tone for the entire organization.


• Make it a Living Document: Review and update the policy regularly (e.g., every 1-2 years) to address new challenges.


• Foster a Culture of Openness: Encourage disclosure by treating it as an act of integrity, not an admission of wrongdoing. The goal is to manage conflicts, not to punish people for having them.

Sample Conflict of Interest Policy Template

(This is a general template. Consult with legal counsel to adapt it for your organization.)

Policy on Conflict of Interest

Article I: Purpose
The purpose of this policy is to protect the interests of [Organization Name] when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer, director, or key employee. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations.

Article II: Persons Covered
This policy applies to all members of the Board of Directors, officers, and key employees of [Organization Name].

Article III: Definitions

• Conflict of Interest: A conflict of interest arises when a covered person's personal, financial, or other external interests could be seen as influencing their ability to act in the best interests of [Organization Name].


• Financial Interest: A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:


• An ownership or investment interest in any entity with which the Organization has a transaction or arrangement;


• A compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement; or


• A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement.

• Annual Disclosure: Each covered person shall annually complete and sign a Disclosure Statement (see Exhibit A) identifying any potential conflicts of interest.


• Ongoing Disclosure: In addition to the annual disclosure, covered persons have a duty to disclose any new potential conflicts as they arise.

• The Board Chair shall appoint a Conflict of Interest Committee consisting of [e.g., three] disinterested board members.


• When a conflict is disclosed, the Committee shall:


• Determine whether a conflict of interest exists.


• If a conflict exists, determine whether the transaction is fair and reasonable to the Organization.


• Develop and implement a management plan to address the conflict. This may include, but is not limited to, recusal from all discussions and votes related to the matter.

• The names of the persons who disclosed a conflict.


• The nature of the conflict.


• Any action taken to address the conflict.

Article VIII: Certification
Each covered person shall sign the following statement annually:
"I have received a copy of the Conflict of Interest Policy, have read and understood it, and have agreed to comply with its terms. I have completed the Annual Disclosure Statement to the best of my knowledge."

Disclaimer: This information is for educational purposes only and does not constitute legal advice. You should consult with a qualified attorney to draft or review a conflict of interest policy tailored to your organization's specific needs and legal requirements.