Conflict of Interest Policies in Grant Management: Requirements and Best Practices

The Role of Conflict of Interest Policies in Grant Compliance

A conflict of interest occurs when an individual's personal, financial, or professional interests could influence, or appear to influence, their judgment in carrying out their responsibilities related to a federal grant. The Uniform Guidance at 2 CFR 200.112 requires federal awarding agencies to establish conflict of interest policies, and 2 CFR 200.318(c) requires non-federal entities to maintain written standards of conduct covering conflicts of interest in procurement. Beyond these specific provisions, many federal programs have additional conflict of interest requirements that grantees must follow.

Conflict of interest policies are not merely a bureaucratic formality. They are essential safeguards that protect the integrity of grant-funded programs, maintain public trust in how federal dollars are spent, and shield organizations from legal and financial liability. Organizations without adequate conflict of interest policies face audit findings, disallowed costs, and reputational damage. For a broader perspective on ethics in the grant ecosystem, see our overview of the grant landscape, ethics, and foundations.

What Federal Regulations Require

The Uniform Guidance imposes several specific requirements related to conflicts of interest that every federal grantee must address.

Procurement Conflicts

Under 2 CFR 200.318(c)(1), no employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a federal award if they have a real or apparent conflict of interest. Such a conflict arises when any of the following has a financial or other interest in the entity selected for the contract:

The employee, officer, or agent
Any member of their immediate family
Their partner
An organization that employs or is about to employ any of the above

This requirement extends to the entire procurement process, from developing specifications to awarding the contract to overseeing performance. Even the appearance of a conflict can trigger compliance concerns.

Organizational Conflicts

Some federal programs, particularly research grants from agencies like the National Institutes of Health and the National Science Foundation, have detailed financial conflict of interest regulations that require investigators to disclose significant financial interests and mandate institutional review and management of identified conflicts. These program-specific requirements often exceed the general provisions in 2 CFR 200 and must be followed in addition to the Uniform Guidance.

Developing an Effective Conflict of Interest Policy

A comprehensive conflict of interest policy should address the following elements to satisfy both federal requirements and organizational best practices.

Scope and Applicability

Define who is covered by the policy. At minimum, this should include all employees, officers, and board members. Best practice extends coverage to consultants, volunteers, and anyone else who participates in decision-making related to federal awards. The broader the coverage, the more effectively the policy protects the organization.

Definition of Conflicts

Clearly define what constitutes a conflict of interest, including both financial and non-financial conflicts. Financial conflicts involve situations where an individual or their family members have a financial stake in a decision. Non-financial conflicts can arise from personal relationships, professional affiliations, or other circumstances that could compromise objectivity.

Disclosure Requirements

Establish a process for disclosing potential conflicts. This typically involves annual disclosure forms completed by all covered individuals, supplemented by real-time disclosure requirements when a specific conflict arises in connection with a particular transaction or decision. The policy should specify what information must be disclosed, to whom it must be disclosed, and the timeline for making disclosures.

Review and Management Procedures

Describe how disclosed conflicts will be reviewed and managed. Options include recusal from the conflicted decision, divestiture of the financial interest, or implementation of a management plan that mitigates the conflict while allowing limited participation. The policy should identify who has authority to review disclosures and determine appropriate management actions.

Enforcement and Consequences

Specify the consequences for failing to disclose a conflict or for violating the policy. Consequences should be proportionate to the severity of the violation and may range from a written warning to termination of employment or removal from a board position. Clear enforcement provisions give the policy credibility and deter violations.

Implementing the Policy in Practice

A written policy that sits in a filing cabinet provides no protection. Effective implementation requires active, ongoing engagement with the policy across the organization.

Annual training: Conduct training for all covered individuals on what constitutes a conflict of interest, how to recognize potential conflicts, and how to make disclosures. Training should include real-world examples relevant to your organization's work.
Annual certifications: Require all covered individuals to complete an annual conflict of interest disclosure form and certify that they have read and understand the policy.
Meeting-level disclosures: At board meetings and other decision-making sessions, include a standing agenda item for conflict of interest disclosures related to the matters under consideration.
Procurement-specific checks: Before awarding any grant-funded contract, verify that no one involved in the procurement decision has a conflict with the selected vendor.

Building these practices into your organizational operations demonstrates to auditors and federal agencies that your conflict of interest policy is more than a document. It is a living part of your compliance culture. Strong organizational systems, as discussed in our guide on organizational capacity and partnerships, are the foundation for effective conflict management.

Common Mistakes to Avoid

Organizations frequently encounter problems with conflict of interest compliance in several predictable areas:

Failing to update the policy when federal regulations or program-specific requirements change
Limiting the policy to board members while ignoring staff who make procurement and programmatic decisions
Not documenting how conflicts were managed when they are disclosed, leaving no evidence for auditors
Treating disclosure forms as a one-time exercise rather than requiring ongoing, real-time disclosure

Addressing these gaps proactively strengthens your compliance posture and reduces the likelihood of audit findings. Understanding the compliance requirements outlined in the post-award management guide helps you see how conflict of interest policies fit within your broader compliance framework.

Learn more about grant writing strategies at Subthesis.

Protect Your Organization and Federal Awards

A strong conflict of interest policy is a cornerstone of responsible grant management. If you want to develop comprehensive compliance systems that meet federal standards, enroll in The Complete Grant Architect course and learn how to build the policies and practices that keep your organization compliant and competitive for federal funding.