Nonprofit Conflict of Interest Policy: What Form 990 Asks

Important note: This guide is general planning information, not legal, tax, or accounting advice. It describes what the IRS forms ask and where the questions sit; it does not tell you what your organization should adopt. Verify current requirements against the forms and instructions for your own tax year, and with a qualified professional.

On this page

• Start with the return you actually file
• The form says it out loud
• A nonprofit conflict of interest policy on Form 990: the four questions
• The policy that is not where you would look
• What answering “No” actually costs
• Where a real obligation would come from
• Bookkeeping and Form 990 preparation
• Frequently asked questions
• Sources

Start with the return you actually file

Somebody forwards the board a list. A nonprofit conflict of interest policy. A whistleblower policy. A document retention policy. A gift acceptance policy. The list arrives with the quiet suggestion that a real nonprofit has all four, and that yours is behind.

We see this land most often in organizations with three staff and a working board, where the person reading the list is also the person who would have to write the policies, on a weekend, unpaid. So it is worth saying the useful thing first, before any of the detail: these questions live on one return only, and it is not the one most small organizations file.

They live on Form 990 — the long return. Form 990-N, the electronic postcard, asks for eight items and none of them is a policy: an EIN, the tax year, legal name and mailing address, other names used, a principal officer’s name and address, a website if there is one, confirmation that annual gross receipts are “$50,000 or less,” and, if applicable, a statement that the organization “has terminated or is terminating.” Form 990-EZ does not ask either. We searched the full text of the 2025 Form 990-EZ for each of the four terms. Conflict of interest appears zero times. Whistleblower, zero. Document retention, zero. Gift acceptance, zero.

That is worth pausing on, because Form 990-EZ has a Part VI of its own, titled “Section 501(c)(3) Organizations Only.” It is an unrelated section that happens to carry the same number. Two streets in the same town can both have a number 12; arriving at the wrong one and finding a stranger’s front door does not mean you were given a bad address. If you have been reading “Form 990 Part VI” guidance and cannot find these questions on your own return, that collision is the likeliest reason.

Which return your organization files is a separate question with its own thresholds, and we cover it in Form 990 filing requirements. Settle that first. Everything below assumes the answer was the full Form 990. The official federal and state pages behind all of this are collected in our compliance resource finder.

The form says it out loud

Here is the part that is easiest to miss, and it does not require any interpretation. It is printed on the return.

Part VI is divided into three sections. Section A covers the governing body. Section B is headed:

Section B. Policies (This Section B requests information about policies not required by the Internal Revenue Code.)

The IRS is not being coy. Its own published answer to the question says the same thing in plain terms:

In general, the policies and practices described in Part VI aren’t required by the Internal Revenue Code.

So a checklist that presents these four policies as things a compliant nonprofit must have is describing something other than federal tax law. That does not make the list worthless. It makes it a different kind of thing, and knowing which kind changes what you do about it.

The reframe worth carrying into your next board meeting is this. Part VI is not one list. It is two documents stacked on one page, and the line number tells you which one you are reading. Section B records choices your organization made. Section C is where the form points at a duty that exists outside it — line 18 names section 6104 by number.

Think of a library card application. One box asks for proof of address, because the library has a rule about who it serves. Another asks whether you would like email reminders about due dates. Both are printed on the same sheet in the same typeface, and a person filling it out quickly experiences them as equally official. They are not. One is a condition; the other is a preference the library would like on record.

Section C is the proof-of-address half. Line 18 begins: “Section 6104 requires an organization to make its Forms 1023 (1024 or 1024-A, if applicable), 990, and 990-T (section 501(c)(3)s only) available for public inspection.” That sentence names a statute by number. No line in Section B does — line 16b refers to “applicable federal tax law,” but it cites nothing.

A nonprofit conflict of interest policy on Form 990: the four questions

Here is what the 2025 Form 990 actually asks, in the order it asks. We are quoting the return rather than paraphrasing it, because paraphrase is where “asks about” quietly turns into “requires.”

Line 12a reads, in full:

Did the organization have a written conflict of interest policy? If “No,” go to line 13

That instruction is the whole shape of it. Answer no, and the form sends you past the follow-ups. There is no penalty branch, no explanation required, no schedule to complete. The form simply moves on.

If you answer yes, two follow-ups arrive. Line 12b asks: “Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts?” Line 12c asks:

Did the organization regularly and consistently monitor and enforce compliance with the policy? If “Yes,” describe on Schedule O how this was done.

Worth noting before you answer: a policy adopted once and never mentioned again still supports a yes on 12a, but 12b and 12c ask what happened afterward.

Line 13: “Did the organization have a written whistleblower policy?”

Line 14: “Did the organization have a written document retention and destruction policy?”

No follow-ups on either. Yes or no, and the form continues.

Line 16b, which most lists omit, reaches organizations that answered yes to 16a — which asks whether the organization did “invest in, contribute assets to, or participate in a joint venture or similar arrangement with a taxable entity during the year.” Line 16b then asks whether they “follow a written policy or procedure requiring the organization to evaluate its participation in joint venture arrangements under applicable federal tax law, and take steps to safeguard the organization’s exempt status with respect to such arrangements.”

The policy that is not where you would look

Gift acceptance is the fourth item on the list this article opened with, and it is not in Part VI.

It is on Schedule M, the noncash contributions schedule, at line 31: “Does the organization have a gift acceptance policy that requires the review of any nonstandard contributions?”

That placement matters more than it sounds, because Schedule M is conditional. The instructions state that an organization must complete it if it answered yes to Form 990, Part IV, line 29 or 30 — which means, in the instructions’ own words, “an organization that reported more than $25,000 of aggregate noncash contributions on Form 990, Part VIII, line 1g, or that during the year received contributions of art, historical treasures, or other similar assets, or qualified conservation contributions.”

Below those thresholds the question is never put to you. Which is a reasonable design: a policy for reviewing nonstandard gifts is answering a problem you do not have until someone offers you a boat.

What answering “No” actually costs

Not nothing. Just not what people fear.

Form 990 is a public document. Section 6104 is the reason; Section C is where the form reports how you met it. The IRS lists what the statute reaches: the Form 990-series returns of all organizations for their three most recent tax years; the Form 1023, 1023-EZ, 1024 or 1024-A of organizations that filed on or after July 15, 1987, or had a copy on that date; and the Forms 990-T of a section 501(c)(3) organization for its three most recent tax years, if filed after August 17, 2006.

So what a No costs is disclosure, not a penalty the Code imposes. Your answers to 12a, 13 and 14 sit on a public return that funders, journalists, charity raters and your next major donor can read for three years running.

There is one more line worth knowing, because it is the one that reaches you whichever way you answered. Line 19 asks you to “Describe on Schedule O whether (and if so, how) the organization made its governing documents, conflict of interest policy, and financial statements available to the public during the tax year.” The policy is optional. A description of what you did about disclosing it is not.

The instructions to Form 990 are explicit about why the IRS asks at all:

Even though the information on policies and procedures requested in Section B generally isn’t required under the Code, the IRS considers such policies and procedures to generally improve tax compliance. The absence of appropriate policies and procedures can lead to opportunities for excess benefit transactions, inurement, operation for nonexempt purposes, or other activities inconsistent with exempt status.

That is the strongest claim the agency makes, and it is worth quoting exactly rather than upgrading. “Generally improve tax compliance” is not “protects you from audit.” Anyone telling you otherwise is adding something the source does not say.

The same paragraph then says something a checklist cannot: “Whether a particular policy, procedure, or practice should be adopted by an organization depends on the organization’s size, type, and culture.” The agency that wrote the questions is the one telling you the answer is not uniform.

Where a real obligation would come from

If federal tax law does not require these policies, and something in your situation clearly does, the requirement is coming from somewhere else. There are three usual places, and they are worth checking in this order.

• Your own governing documents. Bylaws frequently commit an organization to a conflict of interest process. If yours do, the commitment is one your organization made to itself, and it stands whatever the IRS asks.
• State law. Charitable registration and reporting are state matters, and states set their own conditions. Part VI hints at this itself: line 17 asks you to “List the states with which a copy of this Form 990 is required to be filed.” We cover what starts a state duty in charitable solicitation registration.
• Funders and grantmakers. A foundation may require a written conflict of interest policy as a condition of a grant. That is a contract term, not a tax rule.

The IRS also encourages a conflict of interest policy at the application stage. On its Form 1023 page it calls the policy “a strategy we encourage organizations to adopt” and describes its purpose as helping “ensure that when actual or potential conflicts of interest arise, the organization has a process in place under which the affected individual will advise the governing body about all the relevant facts concerning the situation.” Encourage, not require, in the agency’s own wording. If you are still at that stage, Form 1023 vs 1023-EZ covers the application itself.

If your board adopts a nonprofit conflict of interest policy anyway, it is doing so as a governance decision rather than a federal compliance one. A practical way to close this out at your next meeting. Find your most recent Form 990 and read lines 12a through 14 and line 19 as they were actually answered. Then ask one question: is there anything in our bylaws, our state filings, or a current grant agreement that says otherwise? That is a short agenda item, and it produces a specific answer instead of a resolution to write four policies. If the answer turns out to be yes somewhere, you now know which document to satisfy, which is a much smaller job than satisfying a list.

Bookkeeping and Form 990 preparation

Frequently asked questions

Sources

Every source below was opened and checked on 2026‑09‑03. IRS forms are revised each tax year; the date is part of the citation.

• Internal Revenue Service — Form 990 (2025), Part VI — Governance, Management, and Disclosure
• Internal Revenue Service — Exempt organizations annual reporting requirements — Governance (Form 990, Part VI)
• Internal Revenue Service — Form 990, Part VI — Governance: use of Part VI information
• Internal Revenue Service — Form 1023: purpose of conflict of interest policy
• Internal Revenue Service — Schedule M (Form 990) (2025) — Noncash Contributions, line 31
• Internal Revenue Service — Form 990-EZ (2025) — Short Form Return of Organization Exempt From Income Tax
• Internal Revenue Service — Instructions for Form 990
• Internal Revenue Service — Public disclosure and availability of exempt organizations returns and applications
• Internal Revenue Service — Form 990 series which forms do exempt organizations file
• Internal Revenue Service — Annual electronic filing requirement for small exempt organizations — Form 990-N (e-Postcard)
• Internal Revenue Service — Schedule O (Form 990) — Supplemental Information to Form 990 or 990-EZ
• Internal Revenue Service — Governance and Related Topics — 501(c)(3) Organizations
• Internal Revenue Service — Form 990, Part VI — Governance, Management, and Disclosure: FAQs and Tips
• Internal Revenue Service — Publication 557 — Tax-Exempt Status for Your Organization
• Internal Revenue Service — Exempt organization public disclosure and availability requirements
• Internal Revenue Service — Form 990, Part VI — Governance: who must complete
• Internal Revenue Service — Form 990, Part VI — governance policies adopted after close of tax year
• Internal Revenue Service — Instructions for Form 990 (PDF) — Part VI, Section B