Sarbanes-Oxley Act of 2002

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Conflict of Interest Policy

A policy governing conflicts of interests is perhaps the most important policy a nonprofit board can adopt. To have the most impact, the policy should be in writing and the board (and staff) should review the policy regularly. Often people are unaware that their activities are in conflict with the best interests of the nonprofit so a goal for many organizations is to simply raise awareness and cultivate a “culture of candor.” It is helpful to take time at a board meeting annually to discuss the types of situations that could result in a conflict between the best interests of the nonprofit – and the self-interest of a staff member or board member.

A conflict of interest policy should (a) require those with a conflict (or who think they may have a conflict) to disclose the conflict/potential conflict, and (b) prohibit interested board members from voting on any matter that gives rise to a conflict between their personal interests and the nonprofit’s interests. Beyond those two basics, it is helpful for each nonprofit to determine how conflicts at the board and staff level will be managed. Keep in mind that the revised 990 asks not only about whether the nonprofit has a written conflict of interest policy, but also about the process that a nonprofit uses to manage conflicts as well as how the nonprofit determines whether board members have a conflict of interest.[1]

Document Retention Policy

The Sarbanes-Oxley Act’s prohibition of the destruction of documents that are subject to review in litigation provides an additional rationale for every nonprofit adopting a document retention policy. This will create a regular business practice of systematic document destruction in accordance with an approved schedule. Having a written policy, and regular business practice of document destruction according to a schedule, lets people know what documents to retain (and for how long). Such a policy is not only a prudent practice but also sound risk management.

The process of developing a document retention policy involves: (1) Identifying what types of paperwork (and electronic files) your nonprofit generates; (2) Determining the appropriate (and legal) length of time to retain them; and (3) Recording those retention times on a written schedule.

Unfortunately there is no one regulation or guideline that governs document retention for all nonprofits. Laws relating to document retention are state-specific in many cases (such as those governing employment/payroll). In some cases the length of time to retain a document should be governed by the time period that a potential claimant has to bring a claim in that state, which can differ from state to state. Also, many nonprofits, particularly those engaged in providing health-care services or those serving minor children, are subject to retention requirements that are specific to, or prudent for, the services they provide.[2]


Whistleblower Protection Policy

Resources

Sarbanes-Oxley General

Independent Sector: Sarbanes-Oxley Act and Implications for Nonprofits

Independent Sector: Sarbanes-Oxley Act and Implications for Nonprofits

Guidestar: Sarbanes-Oxley Act and Implications for Nonprofits

IRS.gov: Governance and Tax Exempt Organizations

Conflict of Interest Policy

National Council of Nonprofits Conflict of Interest

Blue Avocado 3-Dimensional View of Nonprofit Conflict of Interest

Sample Conflict of Interest Policies

Montana Nonprofit Association Sample Conflict of Interest Policy

Nonprofit Risk Management Center Sample Conflict of Interest Policy and Other Resources (Word Doc)

Smartgivers.org Sample Conflict of Interest Policy

IRS.gov Sample Conflict of Interest Policy

Document Retention Policy

National Council of Nonprofits: Document Retention Policies

BlueAvocado.com: Sample Document Retention Policy

Charities Review Council: Sample Document Retention Policy

Whistleblower Retention Policy

Charities Review Council: Sample Whistleblower Protection Policy

BlueAvocado.com: Sample Whistleblower Protection Policy

Articles

Sarbanes-Oxley: Ten Years Later | Nonprofit Quarterly | December 30, 2012

Notes

  1. http://www.councilofnonprofits.org/conflict-of-interest
  2. http://www.councilofnonprofits.org/document-retention-policies