What type of activities could constitute a conflict of interest for a nonprofit organization?

A conflict of interest for a nonprofit organization can arise when an organization uses its resources or influence for the personal benefit of officers, employees, or members. In South Dakota, the Nonprofit Corporation Act lists some types of activities that could constitute a conflict of interest. First, an organization cannot directly or indirectly pay compensation to its officers or employees unless it is fair and reasonable for the services the individual provides to the organization. Directors and officers should also not use their influence to obtain financial or other benefits for themselves from doing business with the organization. Second, directors and officers should not use their positions to compete with the organization. For example, a nonprofit director cannot use his or her role to start a business that directly competes with the organization. Also, using confidential information acquired while serving on the organization’s board to benefit your own personal interests is not allowed. Finally, directors and officers should not have a financial interest in the organization’s vendors, contractors, or suppliers. This includes any type of indirect interest, such as holding stocks in the organization’s vendors or having a relative who is employed by a business that provides services or products to the organization. In South Dakota, nonprofits are encouraged to create a conflict of interest policy to identify and avoid conflicts of interest before they occur. This protects the organization and helps maintain its good standing with the public.

What type of activities could constitute a conflict of interest for a nonprofit organization?

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