Handling Financial Interests
If your nonprofit has received a federal tax exemption under subchapter 501(c)(3) of the Internal Revenue Code, it is subject to ongoing oversight by the IRS. To maintain exempt status, the members of your organization must avoid conflicts of interest. An example might be if a director voted in favor of approving a contract for his private construction business. While you are not required to have a conflict of interest policy in place, this can be a helpful when applying for exempt status, and in guarding against any claims that a conflict exists. The policy might require that a member or officer fully disclose the conflict in advance and obtain consent from the board or abstain from voting on the issue.
