One component of a robust corporate compliance program is delineating expectations for behavior for staff members, board members, volunteers, and others acting on behalf of the organization. By doing so, a health center provides safeguards preventing these individuals from using their positions for purposes motivated by private gain and from inappropriately disclosing confidential information while maintaining compliance with related regulations.
Note: Legal liability is governed by state corporation law. Please seek legal advice to learn about the laws in your state.
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Conflict of Interest
Sample Conflict of Interest Policies and Annual Disclosure Forms
Additional Conflict of Interest Resources
Standards of Conduct
Sample Standards/Codes of Conduct
Additional Standards of Conduct Resources
CONFLICT OF INTEREST
In general, a conflict of interest is a conflict between the private interests and the official responsibilities of a person in a position of trust. A board member’s Duty of Loyalty requires that member to act in the best interest of the charity, rather than in his or her personal interest or in the interest of some other person or organization, and avoid conflicts of interest that are detrimental to the organization.
According to the electronic US Code of Federal Regulations Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, specifically § 75.327: General Procurement Standards, (c)1, a conflict of interest arises when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of these parties, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.
The Health Resources and Services Administration (HRSA) Health Center Program Compliance Manual, Chapter 13: Conflict of Interest addresses Health Center requirements related to Conflict of Interest, along with behaviors that would demonstrate compliance with the requirements as well as related considerations.
A conflict of interest policy should:
- Require officers, directors, and employees act for the benefit of the organization without regard for personal interest
- Include written procedures for determining whether a relationship, financial interest, or business affiliation is or could be a conflict of interest
- Require those with a real or potential conflict of interest to disclose that conflict/potential conflict
- Prohibit board members from voting on any manner in which there is a conflict
- Describe a course of action if a conflict is identified
- Include any provisions required by state law
- Address regulations specific to the Health Center Program, including provisions that:
- Prohibit conflict of interest by board members, employees, consultants and those who furnish goods or services to the health center.
- State that no board member shall be an employee of the health center or an immediate family member of an employee (exceptions may apply).
- Ensure that the Chief Executive may serve only as a non-voting ex-officio member of the board (exceptions may apply).
Also note that the Internal Revenue Service (IRS) considers a conflict of interest to be present when a person in a position of authority over an organization, such as an officer, director, or manager, enjoys a financial benefit from a decision he or she could make in his or her organizational capacity. The annually required IRS Form 990 (Return of Organization Exempt From Income Tax) asks:
- Whether the organization has a written conflict of interest policy
- Whether officers, directors, and key employees are required to disclose annually interests that could give rise to conflicts
- Whether the organization regularly and consistently monitors and enforces compliance with the policy
SAMPLE CONFLICT OF INTEREST POLICIES AND ANNUAL DISCLOSURE FORMS
American Institute of CPAs
Not-for-Profit Conflict of Interest Policy
Community Health Association of Mountain/Plains States (CHAMPS)
Annual Conflict of Interest and Compensation Disclosure Statement
CompassPoint
Sample Conflict of Interest Policy
Internal Revenue Service (IRS)
Sample Conflict of Interest Policy, as included in the instructions for completing Form 1023, the Application for Exemption under Section 501(c)(3) (Note: drafted for large health care organization)
Montana NonProfit Association, 2006
Conflict of Interest Policy and Annual Statement for Directors and Officers and Members of a Committee with Board Delegated Powers
Nonprofit Risk Management Center
Resources for Developing or Revising Conflict of Interest Policies
Public Council Law Center
Sample Conflict of Interest Policy
ADDITIONAL CONFLICT OF INTEREST RESOURCES
blue avocado
Nonprofit Conflict of Interest: A 3-Dimensional View
BoardSource
Coming to Terms with a Conflict of Interest
Managing Conflicts of Interest: The Board’s Guide to Unbiased Decision Making (for purchase)
CompassPoint
Conflict of Interest Policies
Hurwit and Associates Nonprofit Law Resource Library
Sample Bylaw Provision: Conflicts of Interest
Internal Revenue Service (IRS)
Instructions for Form 1023 (the Application for Exemption under Section 501(c)(3)): Purpose of Conflict of Interest Policy
National Association of Community Health Centers (NACHC)
Identifying, Disclosing, and Managing Board Members’ Conflicts of Interest (Governance Legal Brief 1)
National Council of Nonprofits
Conflict of Interest Resources
Nonprofit Quarterly
Charity Conflicts of Interest: A Guide
STANDARDS OF CONDUCT
Nonprofit organizations are encouraged to adopt a set of principles to guide the organization’s decision making and activities, as well as the behavior of its employees, volunteers, and board members. Creating a formal statement, often called Standards of Conduct or Code of Conduct, provides these individuals with guidelines for making ethical choices and ensures there is accountability for those choices.
HRSA Health Center Program participants are required to maintain written standards of conduct. According to the electronic US Code of Federal Regulations Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, specifically § 75.327: General Procurement Standards and summarized in the Health Center Program Compliance Manual, Chapter 13: Conflict of Interest:
- The health center must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, or administration of contracts that comply with all applicable federal requirements.
- No employee, officer, or agent of the health center may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest.
- Officers, employees, and agents of the health center may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.
- The health center’s standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the health center.
- If the health center has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian tribe, the health center also must maintain written standards of conduct covering organizational conflicts of interest.
Individual states may also delineate specific legal requirements (see the Additional Standards of Conduct Resources section below for links to available Region VIII resources).
SAMPLE STANDARDS/CODE OF CONDUCT FORMS
American Heart Association
Ethics Policy
Center for Nonprofit Leadership
Code of Ethics for Board Members
Community Health Association of Mountain/Plains States (CHAMPS)
Standards of Conduct for Board of Directors, Officers, Employees, and Agents with Annual Acknowledgement Form
HRSA Health Center Program Samples and Templates Resource Center (disclaimers apply)
Sample Code of Conduct for Board Members
ADDITIONAL STANDARDS OF CONDUCT RESOURCES
Colorado Nonprofit Association
Principles and Practices for Nonprofit Excellence
Montana Nonprofit Association
Principle: Governance and Leadership
National Council of Nonprofits
Code of Ethics for Nonprofits
Principles and Practices
North Dakota Association of Nonprofit Organizations
Best Practices for North Dakota Nonprofits