Conflict of Interest Statements

At the present time, there is no requirement that a tax-exempt organization have a conflict of interest statement. For new organizations currently applying for exemption, however, the Internal Revenue Service asks a number of questions concerning relationships between the organization and its officers and board.

We anticipate that the Service will administratively begin requiring all tax-exempts to have such a statement soon. The requirement may be legislated by Congress. We recognize that many organizations currently have a brief statement of conflicts of interest in their packet of information for new Board members. The Service's requirements are likely to be much more substantial, however, and suggest that the statement be attested to each year.

We can search for potential conflicts of interest in an organization and recommend corrective action. We also prepare a draft Conflict of Interest Statement and an Annual Conflict of Interest Disclosure Questionnaire that we suggest the Board consider adopting. Our draft Conflict of Interest Statement is adapted from the Service's suggested language for new organizations, but tailored to the needs of our specific client.

Conflict of interest statements and annual conflict of interest disclosure questionnaires are another example of an organization being proactive in meeting anticipated requirements of Congress or the Internal Revenue Service.

©2008 Ronnie C. McClure, PhD, CPA