A conflict of interest is defined as when the
personal or professional concerns of a board member
or a staff member affect his or her ability to
put the welfare of the foundation or organization
before personal benefit. Conflicts of interest
may relate to both legal and ethical concerns.
It is therefore important for grantmakers to not
only comply with the letter of the law, but also
avoid actions that are, or could appear to be,
unethical.
For foundations trustees, the “duty of
care” responsibility requires him/her to
set aside personal or conflicting interests and
act solely in the interest of the foundation when
making decisions for or acting on behalf of the
foundation. Foundation staff may also encounter
conflicts of interest if personal or competing
concerns arise when making decisions about a grant,
contract or other transaction.
It is recommended that all foundations and public
charities adopt a conflict of interest policy.
The elements of a conflict of interest statement
may vary, but generally include:
• a definition of what constitutes a conflict
of interest
• persons who can be involved in conflicts
of interest
• procedures for disclosure of conflicts
and how they will be addressed by the organization
• a disclosure statement to be completed
by staff and trustees to acknowledge understanding
of the policy and identify other professional
or volunteer connections that could result in
a potential conflict
Sample Conflict of Interest Policies
Private foundations
> The
James Irvine Foundation
> William
T. Grant Foundation - Foundation "Transparency
Statement" with links to both employee
and trustee Conflict of Interest Policies
Health Conversion Foundation
> Maine
Health Access Foundation 
Community Foundation
> Telluride
Foundation
Self-Dealing and Intermediate Sanctions
Conflicts involving financial transactions by
foundation insiders – or “disqualified
persons” - are subject to severe penalties
under the “self-dealing” rules for
private foundations, and “intermediate sanctions”
for public charities.
Read more:
>> "Self-Dealing:
A Concise Guide for Foundation Board and Staff"
(PDF-12pages) Written by John Edie of PricewaterhouseCoopers,
this simple and useful guide covers definitions
of self-dealing and disqualified person; most
common problem areas; penalties for violations;
exceptions; recommended steps for foundations
in handling self-dealing issues; and additional
resources.
>> "Self-Dealing:
Critical Issues for Boards and Staff"
(PDF-10 pages) Notes from a teleconference
sponsored by the Forum of Regional Associations
of Grantmakers as part of their Building Grantmaker
Effectiveness & Accountability initiative.
Presenter: John A. Edie, PriceWaterhouseCoopers
Exempt Organizations Tax Services (December 2005).
>> “Intermediate
Sanctions: What You Need to Know About the IRS
Regulations” (PDF-34 pages)
Published by Independent Sector.
ADDITIONAL RESOURCES:
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