How-To Tips: Implementing Practice 5a

Maintain policies and practices, including a written code of ethics and a conflict of interest policy, to ensure the governing body and staff act in an ethical and legal manner.

A code of ethics sets expectations for ethical, legal, and professional behavior by everyone involved with the organization. It sets expectations - rules and principles - for behavior within the organization. While an individual or team within the organization may write the code, everyone at all levels should participate and provide feedback to ensure the document is understood and enacted. A review of the mission and values of the organization is a good place to start.

While these samples policies illustrate form and relevant content, each nonprofit will need to tailor the code of ethics based on mission, values, board structure, staff composition, and applicable law.

Conflict of interest may be addressed in the code of ethics or with a separate policy that defines conflict of interest and the appropriate actions to take when potential, perceived, or actual conflicts of interest exist. Many organizations look at two areas of conflict of interest: 1) those involving opportunity for private gain or pursuit of personal interests on the part of governing body, staff, or volunteers; and 2) those involving the interests or potential of gains of another organization to which a governing body member, staff, or volunteer belongs.

While a written code of ethics and conflict of interest policy support organizational effectiveness and responsible decision making, in the wake of the Sarbanes-Oxley legislation of 2002 and increased scrutiny of nonprofits, they also serve as important examples of the organization's commitment to legal compliance and ethical behavior.

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