A conflict of interest occurs when an individual’s personal interests—or the interests of their family, friends, or organizations they belong to—interfere with their ability to make unbiased decisions in their professional capacity, particularly in the context of fundraising and nonprofit governance. In the fundraising sphere, conflicts of interest are particularly crucial because they can undermine donor trust and organizational integrity. For instance, a board member who is also a significant donor may have a conflict if they’re involved in funding decisions that could favor their financial interests over those of the nonprofit or its mission. Organizations should have a clear conflict of interest policy in place that requires individuals to disclose potential conflicts and recuse themselves from related decision-making processes. This fosters transparency and upholds ethical standards.
In reality, conflicts of interest can also arise from personal relationships, loyalties, or affiliations that can affect judgment and decision-making within the nonprofit sector.
A conflict of interest in fundraising arises when an individual's personal interests conflict with their responsibilities to the organization, potentially compromising the integrity of decisions made regarding fundraising activities.
Nonprofits can prevent conflicts of interest by implementing a robust conflict of interest policy, requiring board members and staff to disclose any potential conflicts, and ensuring transparency in decision-making processes.
While conflicts of interest are not inherently unethical, failing to disclose or manage them can lead to ethical breaches. Transparency is essential to ensure that personal interests do not negatively impact the organization's mission or fundraising efforts.