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CONFLICTS OF INTEREST
Discussion
"A conflict of interest arises when a person in a position of
authority over an organization, such as a director, officer, or manager, may
benefit personally from a decision he or she could make." [IRS]
The reality is that potential conflicts of interest are virtually unavoidable in the nonprofit arena.
Most individuals are willing to serve on boards because they have a personal or
professional interest in the purpose or activities of the organization. At the same time, it is essential that boards successfully manage potential conflicts in order to preserve the public trust and
to withstand IRS
and VA scrutiny.
Because potential conflicts of interest are an inherent element of most nonprofits, a great deal of guidance is available to help boards identify potential conflicts and to orchestrate resolutions that pass public, VA and IRS scrutiny.
NPC
boards face particularly troubling conflict of interest situations.
Individual board members may find that their responsibilities as an NPC board
member and their responsibilities as employees of the VA create potential
conflicts of interest.
The nonprofit duties of care and loyalty require board members to exercise
reasonable care in their performance as board members. Yet they must also
remain loyal to VA. Fortunately, VA and NPC interests are generally congruent
rather than conflicting.
In August 2010, NAVREF submitted a draft sample
NPC conflict of interest policy to the VA Office of General Counsel for review
and ideally, a determination that it would satisfy the NPC statutory
requirement. NPCs in need of a sample policy may wish to consider using
the sample NPC policy linked below. It contains the elements stated in
Handbook 1200.17, section 9. Conflicts of Interest, b. Conflict of Interest
policy. These include:
- A description of when a conflict of interest may
occur;
- Training on the policy for affected NPC personnel;
- Disclosure of potential conflicts; and
- A statement of acknowledgement and agreement to comply.
Useful Resources:
Helpful Link
BoardSource - http://www.boardsource.org
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