Booster Club Conflict of Interest Policy (With Sample Policy)

What Counts as a Conflict of Interest

The Form 990 instructions describe a conflict of interest as a situation in which a person in a position of authority over an organization “can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated.”

Why Booster Clubs Need a Written Policy

Form 990, Part VI, line 12a asks whether the organization had a written conflict of interest policy at the end of the year. Line 12b asks whether officers and directors must disclose interests annually, and line 12c asks whether the organization regularly and consistently monitors and enforces compliance. Federal tax law does not require the policy, but the IRS considers such policies to improve compliance. Some states go further. The New York Attorney General notes that New York law requires nonprofits to have a written conflict of interest policy. Requirements vary by state; see the club’s state page.

A documented disclosure and disinterested vote is also the best evidence that an officer met the duty of loyalty.

The Coach’s Spouse Problem

The most common booster club conflict is a close relationship between a board member and the school employee who leads the program: the coach, band director, or advisor. The coach asks for equipment, travel, or stipends; the spouse votes on the request. Even when every request is reasonable, other parents see a family deciding how to spend their donations.

School rules often address this directly:

• The University Interscholastic League (UIL, the Texas body governing school athletic and academic contests) states that coaches and directors serve in an advisory role “without vote” and should not have control or signature authority over booster club funds.
• California’s Fiscal Crisis and Management Assistance Team (FCMAT), a state agency that advises school districts, states that any district employee, coach, or teacher whose own children may benefit from a booster club’s operations may not serve as an officer, and that staff may not sign booster checks or invoices for clubs at their site.
• Some districts limit officers to one member of a family at a time.

Where district rules allow a coach’s spouse to serve, every decision on the coach’s requests, stipends, or travel is a conflict for that board member.

Procedure When a Conflict Arises

1. The interested person discloses the interest to the board before the item is discussed.
2. The interested person answers questions, then leaves the room for discussion and the vote.
3. The remaining board members decide whether a conflict exists.
4. If it does, the board considers whether a comparable arrangement is available from someone without a conflict, such as by getting other quotes.
5. The disinterested members vote on whether the transaction is fair, reasonable, and in the club’s best interest.
6. The secretary records the disclosure, who left the room, the alternatives considered, and the vote.

Sample Conflict of Interest Policy

The following is adapted from the IRS Sample Conflict of Interest Policy in Appendix A of the Instructions for Form 1023 (Rev. December 2024). The IRS notes that its sample does not prescribe specific requirements. Booster-specific additions are marked. The board should review the text against state law before adopting it.

Article I. Purpose. The purpose of this policy is to protect the interest of [Club Name] (the “Club”) when it considers a transaction or arrangement that might benefit the private interest of an officer, director, or committee member, or might result in an excess benefit transaction. This policy supplements, and does not replace, applicable state and federal law.

Article II. Definitions.

1. Interested Person. Any director, officer, or member of a committee with board-delegated powers who has a direct or indirect financial interest.
2. Financial Interest. A person has a financial interest if the person has, directly or indirectly, through business, investment, or family: (a) an ownership or investment interest in any entity with which the Club has a transaction or arrangement; (b) a compensation arrangement with the Club or with any entity or individual with which the Club has a transaction or arrangement; or (c) a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Club is negotiating. Compensation includes gifts or favors that are not insubstantial. A financial interest is not necessarily a conflict; the board decides under Article III.
3. Family (booster addition). A spouse or domestic partner, parent, child, sibling, or a spouse of any of them.
4. School relationship (booster addition). A director or officer who is a school or district employee assigned to the program the Club supports, or the family member of such an employee, has a conflict on any decision concerning that employee’s program requests, compensation, or travel.

Article III. Procedures.

1. Duty to disclose. An Interested Person must disclose the financial interest and all material facts to the board or committee considering the transaction.
2. Determining whether a conflict exists. After disclosure and discussion, the Interested Person leaves the meeting while the remaining members decide whether a conflict exists.
3. Addressing the conflict. The Interested Person may make a presentation but leaves during discussion and the vote. The president may appoint a disinterested person or committee to investigate alternatives. The board determines whether a more advantageous arrangement is reasonably available without a conflict. If not, a majority of disinterested directors present decides whether the transaction is in the Club’s best interest, for its own benefit, and fair and reasonable.
4. Violations. If the board has reasonable cause to believe a member failed to disclose a conflict, it informs the member and allows an explanation. If, after investigation, the board finds a failure to disclose, it takes appropriate corrective action, which may include removal as provided in the bylaws.

Article IV. Records of Proceedings. Minutes record the names of persons who disclosed or were found to have a financial interest, the nature of the interest, the board’s decision on whether a conflict existed, the names of persons present for the discussion and vote, the alternatives considered, and the vote.

Article V. Compensation. A board or committee member who receives compensation from the Club, directly or indirectly, may not vote on matters concerning that compensation, but may provide information to the board.

Article VI. Annual Statements. Each director, officer, and member of a committee with board-delegated powers signs a statement each year affirming that the person (a) has received a copy of this policy, (b) has read and understands it, (c) agrees to comply with it, and (d) understands that the Club is charitable and must engage primarily in activities that accomplish its tax-exempt purposes to keep its exemption.

Article VII. Periodic Reviews. The board periodically reviews whether compensation arrangements and benefits are reasonable and whether arrangements with outside businesses further the Club’s purposes and do not result in inurement, impermissible private benefit, or an excess benefit transaction.

Article VIII. Use of Outside Experts. The board may, but need not, use outside advisors for periodic reviews. Using them does not relieve the board of its responsibility.

The Annual Disclosure Statement

The secretary collects a signed statement from each board member at the first meeting of the year and from each new member. The form asks for:

1. The signer’s name, position, and date.
2. The four affirmations in Article VI.
3. Businesses the signer or a family member owns, works for, or receives compensation from that do or may do business with the Club.
4. Any school or district employment of the signer or a family member, and the program involved.
5. Other nonprofit boards the signer serves on that interact with the Club.
6. Any expected scholarship, award, or payment from the Club to the signer or a family member.
7. A promise to update the statement when circumstances change.