A Conflict-of-Interest Form Is Not the Same as Managing a Conflict
Many nonprofits ask board members and senior employees to complete an annual conflict-of-interest disclosure. The forms are collected, filed and rarely examined again.
Months later, the organization considers hiring a board member’s company, awarding work to an employee’s relative or entering a partnership involving someone with influence over the decision. The relationship may be disclosed somewhere, but nobody knows who should review it or what safeguards are required.
Disclosure is only the beginning. A nonprofit also needs a repeatable process for evaluating and managing conflicts.
Define What Must Be Disclosed
A conflict does not automatically mean misconduct has occurred. It means a person’s private interests could affect—or appear to affect—their judgment on behalf of the nonprofit.
Potential conflicts may involve:
- Ownership in a vendor or contractor
- Employment by a partner organization
- Family or personal relationships
- Gifts or financial benefits
- Outside consulting work
- Compensation decisions
- Loans or business transactions
- Board service with another organization
- Access to confidential opportunities
- Participation in grant or procurement decisions
The IRS explains that a conflict-of-interest policy should require an affected person to disclose the relevant facts so the governing body can evaluate the situation. See the IRS explanation of conflict-of-interest policies.
Create a Process Employees Can Follow
The policy should explain what happens after a possible conflict is identified.
A practical process should establish:
- Who receives the disclosure
- Who determines whether a conflict exists
- When legal review is required
- Whether the affected person must leave the discussion
- Who may vote on the decision
- How alternatives are evaluated
- What documentation belongs in the minutes
- How recurring conflicts are monitored
- What happens when someone fails to disclose a relationship
The National Council of Nonprofits’ conflict-of-interest guidance emphasizes that nonprofits need both a written policy and a process for managing disclosed conflicts. It also recommends regular disclosures by people in positions of influence.
This helps the organization retain institutional knowledge about how similar situations were handled without assuming that every future case should produce the same result.
Preserve the Decision Record
A decision involving a conflict should be understandable later.
The official record should identify the nature of the relationship, who was excluded from deliberation or voting, what alternatives were considered and how the final decision served the nonprofit’s interests.
Board minutes remain authoritative for formal board actions. Signed contracts remain authoritative for transaction terms. Procurement and accounting systems remain authoritative for vendor and payment records.
SharePoint should serve as the organized knowledge source for the approved policy, blank disclosure forms, review procedures, responsibility charts and general examples. Completed disclosures, legal advice and sensitive deliberations require restricted access.
The IRS Form 990 instructions explain that a conflict-of-interest policy should define covered conflicts, identify the people subject to the policy and establish procedures for managing them. Review the current Form 990 instructions for the governance questions organizations may need to answer.
Make the Process Searchable
Copilot Studio provides the conversational layer. Through Maisy, authorized users could ask:
- Who must disclose this relationship?
- May the affected board member participate in the discussion?
- Who determines whether a conflict exists?
- Where is the current disclosure form?
- What must be recorded in the minutes?
- Who reviews transactions involving insiders?
Maisy can retrieve approved procedures under the user’s existing Microsoft 365 permissions. It should not decide whether a particular transaction is legally permissible, determine whether someone acted improperly or approve a conflicted transaction.
Those decisions remain with disinterested board members, leadership, legal counsel, accountants and other qualified advisers.
How Maisy Helps
Pixeldust begins by identifying recurring conflict questions, existing disclosure practices, decision authorities, related-party transactions and records that currently depend on personal memory.
Pixeldust then resolves conflicting procedures, assigns content owners, reviews permissions and organizes approved guidance in SharePoint. Maisy is configured through Copilot Studio and tested with realistic questions involving vendors, family relationships, compensation and board decisions.
This helps the nonprofit retain institutional knowledge about conflict management while keeping ethical judgments, legal interpretation and formal approvals under responsible human control.