The Importance (And Simplicity) of Conflict of Interest Policy
Considering all of the challenges associated with operating a youth sports league, conflict of interest can seem somewhat trivial. Most organizations have never faced a conflict of interest problem and some may feel it unnecessary to spend time on something they likely won’t need.
Even if one wanted to implement a conflict of interest policy, raising the topic among colleagues on a Board of Directors can be uncomfortable. Typically, volunteer Boards respond to pressing needs, so it wouldn’t be surprising for someone to ask “why are you suggesting this now…is there some sort of problem?”.
None of us want add on unnecessary work or appear as though we are accusing our fellow Board members of something unseemly. Still, there are three key reasons that Boards should address conflict of interest proactively:
- It is a fundamental way to build trust. Taking an affirmative stand as a Board of Directors that your organization takes conflict of interest seriously sends a powerful signal to parents, sponsors and other partners, yet it is astonishing how few non-profits actually do so. This is not to suggest that organizations who neglect this area are involved in “self-dealing”. Far more likely is that well-intentioned people assume ho would to leap the conclusion that volunteers for a non-profit would try to benefit personally? Sadly, it does happen, and it is enough of a concern that….
- The IRS now wants to know. Yes, starting a few years back, the IRS began asking every nonprofit whether or not the organization has a conflict of interest policy in place. The form 990, which every nonprofit must file annually, also asks if leadership and employees are required to disclose their interests and what process the organization has in place to monitor its transactions to prevent conflicts. So yes, it’s a serious matter, but luckily….
- It is so easy to do! Here on our website you can download a sample policy and a sample annual acknowledgement and disclosure form that you can adapt for use in your organization. Our sample policy is crafted based on the IRS’ own guidance. Establish a policy that fits your organization, adopt it formally as a Board, and add a process to have Board members and employees (and anyone else with decision-making power) acknowledge it each year and disclose their interests.
Preventing conflict of interest has long been a best practice of successful non-profits and the IRS has now made it a formal part of annual filings. Players, parents, sponsors and partners want to know they are dealing with an organization of deep integrity and this is a great way to publicly demonstrate that. Now is the time!
For more information, visit the SportsOrganized.Com website, which hosts resources to help youth sports organizations pursue organizational excellence. Or drop us a line at firstname.lastname@example.org with any questions, comments or suggestions you might have. We especially love to hear from organizations about best practices that work well. Share your knowledge with others!