Most conflict statements cover economic interests that would affect the person involved or certain family or business relationships.  (See Ready Reference Page: “Conflict of Interest Policies Help Avoid Conflicts”). They normally require disclosure and recusal from decision making in significant cases where the relationship is relatively clearly determinable and economically impactful.

It would be a lot more difficult to determine other relationships that would require disclosure.  Would you require a director to disclose that a potential vendor was a grade school classmate, a sorority sister, a current neighbor, a fellow member of the orchestra boardor high school booster association, or a person who was very impressive answering the director’s questions following a public presentation?  Are you interested in romantic relationships that may be none of your business?  Even if you required disclosure of only “close” relationships, how would you define “close?”

You could use a standard similar to the standard for judges to recuse themselves where the facts of the situation (whatever they may be) could cause reasonable people to question whether the judge can be impartial.  But that rule applies to public issues where the judge individually, or on a small panel of judges, makes a binding decision adjudicating legal rights of other parties.  Protecting public faith in the rule of law may require more stringent standards than protecting the public in a decision to buy goods or services in an ordinary nonprofit.

Most nonprofit conflict policies allow a director to declare a conflict if the director thinks it is appropriate.  In addition, a director has a separate legal duty to act in good faith in what the director believes to be in the best interest of the organization.    We tend to think that is a sufficient obligation, but would be interested in hearing from others whether the judicial standard or a close relationship standard should be added to nonprofit conflict policies.