Can a Conflict of Interest be an Obstacle to Serving on a Nonprofit’s Board?

May 17, 2018

Empty boardroomIt is probably impossible to find a board member who will never have a conflict of interest. An active board member often has numerous professional and personal affiliations and, undoubtedly, some of them cross paths with your organization. He or she may have been chosen as a board member partly because of these associations or the contacts they might provide.

However, if these associations develop into a conflict of interest and become a major obstacle to fulfilling the duty of loyalty — one of the main legal obligations of board members — it may be necessary to re-evaluate the board member’s suitability for current board service. Examples of conflicts that warrant reconsideration of a board member or candidate include the following:

  • The board member or candidate is a close relative of the chief executive of your organization.
  • The board candidate is the chief executive of an organization with a similar mission and program structure.
  • The board candidate is affiliated with an organization that competes for funding with your organization.

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From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

The Standards for Excellence® Institute, a program of Maryland Nonprofits, provides the best possible resources to nonprofits nationwide, helping build their capacity to effectively and efficiently meet the needs of their communities. Members of Maryland Nonprofits gain access to an online community with an expansive library of resources and customizable templates. Membership with Maryland Nonprofits is designed to help you raise more money, develop your board, build relationships, learn, save on the things you need to run your organization, and amplify your voice in Annapolis. Join today.