Church Governance & the Board

Annual Conflict-of-Interest Disclosures: How to Run Them

Published 2026-09-18 · Church Governance & the Board

Short answer: once a year, every board member, officer and key employee signs a conflict of interest disclosure form saying they've read the policy and listing any relationship that could put their interests against the church's. The board reviews what comes back, decides how each disclosed interest will be handled, and records both. A policy nobody signs annually isn't a control. It's a document.

Your church adopted a conflict-of-interest policy at some point. It's in a binder. Nobody has signed anything since.

That's the normal state of affairs, and it's worth fixing, because the annual signing is where the policy stops being paper. It surfaces relationships the board didn't know about, usually innocent ones, before a transaction makes them awkward. If your church hasn't adopted a policy yet, start with the church conflict of interest policy your board needs.

Who has to sign?

Everyone whose judgment the church relies on when it spends money or makes commitments:

• Every board member or director, without exception, including the chair and the pastor if the pastor sits on the board.
• Every officer, meaning president, secretary and treasurer, whether or not they're also directors.
• Key employees: anyone who can commit the church financially or influence a decision about vendors, hiring or compensation. Executive pastor, business administrator, bookkeeper, facilities director.
• Committee members with delegated authority, particularly finance, compensation and building committees.

Don't narrow the list to make the process easier. The people most likely to have a conflict are exactly the people closest to the money, and "substantial influence over the organization" is the test that matters when a transaction is questioned later (IRC §4958, Excess benefit transactions).

What the form should ask

A disclosure form has one job: get real information onto paper in a way a person can honestly complete in five minutes. Four parts do that.

1. Acknowledgment. "I have received and read the conflict-of-interest policy dated ___, I understand it, and I agree to comply with it." This is the part that matters if anyone later says they didn't know.

2. Disclosure of interests. Specific prompts beat an open question, because an open question gets an honest "none" from someone who simply didn't think of it. Ask about:

• Businesses the signer or a family member owns or works for that do business with the church, or might
• Employment of the signer's family members by the church
• Compensation or benefits received from the church, in any form
• Loans, leases or property transactions between the signer and the church
• Board or leadership roles the signer holds in other organizations the church works with, funds, or receives from
• Gifts, discounts or hospitality received from a church vendor beyond a nominal amount

3. Definition of "family." Say what you mean: typically spouse, parents, children, siblings, and their spouses. Otherwise people apply their own definition and you get inconsistent answers.

4. Signature, printed name and date. Undated forms cause more trouble than they're worth.

Keep the form to one page, front and back at most. A four-page form gets skimmed.

When to run it, and how

Run it once a year, on a fixed date, as part of a board meeting rather than by email. The board meeting matters: forms handed out and collected in the room come back at a rate email never matches.

A workable sequence:

1. Pick the meeting. The first board meeting of the year is the natural home. Put it on the annual agenda cycle so it's never a decision.
2. Send the policy with the meeting packet, so people can read it before they sign something saying they read it.
3. Distribute the forms at the meeting, allow five minutes, and collect them before anyone leaves. Chase the absent within a week.
4. Have one person review every form, usually the secretary or the chair, and not someone whose own form raises a question.
5. Bring anything disclosed back to the board at the same meeting or the next one.
6. Record in the minutes that disclosures were distributed, how many were returned, and what the board decided about each disclosed interest. The line between enough detail and too much is drawn in what should and should not go in minutes.
7. File the signed forms with the corporate records, and keep prior years, because the pattern over time is often more informative than any single year. Records that show what the organization did, and why, are a baseline expectation of exempt status (IRS Publication 1828, Tax Guide for Churches).

New board members sign when they join, not at the next annual cycle. New key employees sign at hire.

What to do when someone discloses something

A disclosure isn't an accusation and it isn't a disqualification. Most disclosures describe a relationship that's entirely fine once it's known.

The board's job is to decide, on the record, how each one will be handled. There are three normal outcomes:

No action needed. The relationship exists but the church isn't transacting with it. Note it and move on.

Manage it. The relationship may come up. The board decides in advance what happens when it does: the interested person discloses at the time, doesn't participate in the discussion, leaves the room for the vote, and the minutes record all three. This is the most common and most useful outcome.

Decline the transaction. Sometimes the cleanest answer is that the church won't do this deal, not because anyone did anything wrong, but because the appearance isn't worth the saving.

What the board shouldn't do is receive a disclosure and say nothing. An unaddressed disclosure is worse than no disclosure, because the record now shows the board knew and didn't act.

A worked example: the roof bid

In January, a director discloses that his brother-in-law owns a roofing company. Nothing is pending; the board notes it and moves on.

In June the church needs a roof. The brother-in-law's company is one of the credible local options, and his bid comes in at $46,800 against $52,000 and $58,500 from the other two.

Here's what a clean process looks like:

1. The director restates the relationship at the meeting, and it goes in the minutes with the January disclosure referenced.
2. He answers factual questions about the bid, then leaves the room.
3. The remaining directors compare all three bids on scope, warranty, references and price, the same criteria they'd use if no one were related to anyone.
4. They vote. He isn't present and doesn't vote.
5. The minutes record: the disclosure, that he left, who voted, the tally, and the comparison the board relied on.

The board may well award him the contract. A conflict-of-interest process isn't a rule against dealing with people you know. In a small church that would leave the church unable to function. It's a rule about how the decision gets made and proved.

Note the piece people skip: the comparison. Without the other two bids in the file, the minutes show only that a relative got the work. With them, they show the board tested the price.

How churches get this wrong

Adopting the policy and never running the signing. By far the most common failure.

Only the "important" people sign. The bookkeeper who picks vendors and the building committee chair who selects contractors are exactly the people to include.

A form that asks one open question. "Do you have any conflicts of interest?" gets "no" from someone whose wife is on payroll, because they didn't think that counted. Prompt specifically.

Collecting forms and never reading them. Someone must review, and the review must reach the board.

Handling a disclosure verbally. If it isn't in the minutes, the process leaves no evidence it happened.

Treating a disclosure as an accusation. If disclosing gets a person interrogated, next year nobody discloses anything. The tone of the first disclosure sets the culture of the next ten.

Losing the forms. Signed disclosures belong with the permanent governance records, not in a drawer in the church office.

Common questions

Do small churches really need this?

Yes, and arguably more. In a church of eighty people, the treasurer's cousin is the plumber and the board chair's wife runs the daycare. Overlap is unavoidable, which is precisely why the process for handling it has to be explicit. Small churches don't have fewer conflicts; they have more, and less distance. The exemption application asks about the policy directly, which is a fair signal of how seriously it's taken (IRS, About Form 1023).

What if a board member refuses to sign?

Ask why, calmly. Sometimes the objection is to a specific clause and is reasonable. But a director who won't acknowledge the church's governance policy has raised a question the board has to answer. It's a board membership issue, and it belongs in the minutes.

Does the pastor sign one?

Yes. Compensation, family employment and vendor relationships all run through pastoral leadership. If the pastor sits on the board or influences spending, the pastor signs.

How long do we keep the signed forms?

Keep them for as long as your document retention policy specifies for governance records, and at minimum long enough to cover any transaction they relate to. Many churches keep them permanently with the minutes, which is simplest.

What if we discover a conflict that was never disclosed and money already moved?

Stop, don't correct it informally, and get advice before you act. An undisclosed insider transaction can carry consequences for both the individual and the people who approved it (IRS, Intermediate sanctions (excess benefit transactions)), and the sequence in which you address it matters. This is a point to consult a licensed attorney who works with churches rather than a point to handle at a board meeting.

The practical wrap

The annual disclosure is a fifteen-minute agenda item that produces a signed page per leader and a few lines in the minutes. That's the whole cost. What it buys is a board that knows its own relationships and a record showing it dealt with them in the open. That's worth a great deal on the day someone asks how a contract got awarded.

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Run the disclosure properly this year. The Conflict-of-Interest Policy Kit is the policy plus the annual signature form your board members and key staff complete. Adopt the policy, run the signing, file the forms. $49, instant download. See also what counts as a conflict of interest in a church for the specific situations that come up.

*Faith Docs provides self-help document templates, not legal advice. We are not a law firm. For representation, consult a licensed attorney.*