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

Conflicts of interest occur when a person or organization is influenced by personal gain or consideration, rather than acting in the best interests of their organization. In Washington, nonprofit organizations must be aware of the potential for conflicts of interest, and must strive to ensure that their activities do not present the risk of a conflict of interest. Generally, a conflict of interest for a nonprofit organization could involve activities such as an employee of the organization receiving an improper financial benefit from the organization, or a board member using their position to influence the organization to benefit themselves or a relative. For example, if a nonprofit organization donates money to a charity, and an employee of the organization is a board member of the charity, that could represent a conflict of interest. Other conflicts of interest could involve decisions to purchase items or services for the organization from a company owned by an employee or a board member, or a decision to hire an employee or board member’s relative. Conflicts of interest can give the impression of improper activity and can create serious legal and ethical issues for a nonprofit organization, so it is important that all board members, employees, and volunteers are aware of this potential and take steps to avoid it. Nonprofit organizations should develop a formal conflict of interest policy and should have a process in place to review decisions and potentially identify or detect a conflict of interest.

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

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