Conflict of interests can arise when a board member's company or his or her friends and family do business with the not-for-profit organization. Whether the conflicts are real or potential, avoiding the appearance of impropriety is critical in safeguarding the organization's reputation.

Grant Thornton LLP's most recent issue of ForwardThinking, a newsletter that suggests governance best practices for not-for-profit board members and executives, offers some action items for not-for-profit organizations to consider regarding conflicts of interest:

• Have board committees review all conflict-of-interest situations and serve as the ultimate decision maker on all such matters.
• Consider expanding the number of individuals required to sign the conflict-of-interest statement beyond the board and senior management.
• Make sure board members and employees are aware of the organization's significant vendors in order to avoid undisclosed conflict situations.
• Ensure that all business and family relationships among the board, and between the organization's board members and employees, are fully disclosed.