Community Platform

The Nonprofit FAQ: Conflict of Interest

Select an FAQ   (26):

'Excess benefit transactions' and 990s
Nonprofits are required to report 'excess benefit transactions' on Form 990. Is that enough, or are there other things an organization might do?
Can a non-profit invest in for profit ventures?
The simple answer is "yes." But, as is often the case, the practical answer is that it's complicated.
Can a nonprofit be a business?
Many nonprofits undertake 'business' activities, and most are 'business-like' in their work. Nonprofits can't pay out profits as dividends to stockholders or as income to 'owners.'
Can a nonprofit make loans to officers or directors?
Some state laws forbid it. Avoiding 'intermediate sanctions' will require some care in any case.
Can a single board member wield too much power?
They can, and it's delicate to deal with the problem, but not necessarily evidence of corruption.
Can attorneys serve on boards?
Of course they can. But there are things to think about that don't apply to board members in other professions.
Can employees of a nonprofit also volunteer their time?
This is a very tricky problem, subject to complex rules under the Fair Labor Standards Act and many state laws. Great caution is advised.
Can Fundraisers be Paid a Percent of the Amount Raised?
This is a highly controversial issue on which the professional associations are unanimously agreed that such arrangements are unethical. Many views are expressed in this item.
Can I set up a corporate foundation for my company?
There are lots of things to worry about.
Can Members Review the Books & Financial Records?
An organization's by-laws should state the rights of its membership.
Can there be a separate board dedicated to fund raising?
In some situations, a group that does nothing but fund raising may be a very useful approach.
How can we ensure our nonprofit operates ethically?
While no one can guarantee that every organization will always be highly ethical, there are certain measures to take that guide toward ethical behaviors.
How should we dispose of outmoded computer equipment?
You need to keep records and make sure there are no grounds for concluding that insiders took advantage of the situation for personal gain.
How to comply with the 'Intermediate Sanctions' regulations
Federal law and IRS regulations impose severe penalties on individuals who profit unduly from nonprofit organizations. This item explains what to do to avoid questions.
How to Help the Attorney General Handle a Complaint?
An Assistant Attorney General offers advice on how to seek help when there appear to be abuses of nonprofit status.
My Board member says to use his/her relative as a vendor.
It is easy for conflicts of interest to develop in nonprofits. Here are some thoughts on how they should be viewed.
The Association of Fundraising Professionals Code of Ethics
Excerpts pertaining to fees for consulting from the Association of Fundraising Professionals' Code of Ethical Principles and Standards of Professional Practice
What are board policies?
Board policies are members' guidelines for working together. The Free Management Library offers several on-line samples and links to policy manuals.
What documents should a new employee receive?
New employees need a lot of information about the organization and its policies; there are also some requirements of employment laws that need to be observed.
What goes in a conflict-of-interest policy?
Here are some examples including one from the IRS.
What is included in the board manual?
Each board member gets a manual about how the board operates, including its structure, policies, the nonprofit's charter documents, etc.
What Is the Sarbanes-Oxley Act and Why Should Nonprofits Care?
Enacted in the wake of corporate scandals, 'SOX' sets new standards of accountability and board behavior. Strictly speaking, most apply only to publicly-traded corporations, but there's more to it than that.
What sorts of business deals can nonprofits do?
As corporations, nonprofits can enter into all sorts of contracts. But the arrangements can be complicated. Here's a book that may help.
What to do if you suspect damaging activities at a nonprofit
How to proceed if there are rumors or other signs of mismanagement, improper payments, insider self-dealing, conflict of interest, etc., involving a nonprofit organization.
Who can benefit from a nonprofit's activities?
Nonprofits are restricted to public purposes and may not be used as a source of private gain.
Who should see board minutes?
Organizations need to consider carefully how and when discussions and decisions of the board should be accessible to others.