My significant other is a member of a research project that I coordinate. How to allocate funding? I'm responsible for a large research project, with many members and some substantial funding for traveling to conferences. However, I'm now in a relationship with one of its members. How should I proceed regarding allocating funds to my significant other? I'm worried that I may be accused of being unethical if I allocate whichever amount to them. What should I do? Namely, I would like to declare a conflict of interest, but there does not seem to be a way to deal with this conflict without some drastic consequences.
I served for a couple of years on the Conflict of Interest Committee of my institution. During that time I learned many useful and sometimes counterintuitive things about the subject. The principles that should guide you in thinking about what to do to avoid exposing yourself to any accusations of policy or ethics violations are:


You should avoid putting yourself in a conflict of interest with respect to the grant and your significant other, if at all possible. 

The point of the “if” qualifier is that, as you seem to believe, it may not in fact be possible to avoid without taking unreasonably drastic measures such as you or your SO resigning your roles.
You should avoid creating the appearance of an unmanaged conflict of interest, period. No exceptions.

The point of “appearance” is that it’s not just the conflict that needs to be avoided but also the appearance of one. You may be the most ethical person on the planet, or you may even know certain facts that not everyone knows that explain away the conflict and make you confident what you are doing is fine, but the appearance of a conflict can invite consequences that are just as bad, and possibly worse (e.g. a headline in the New York Times followed by calls for your resignation, a public lynching or whatnot), than the conflict itself.

The point of “unmanaged” is that if you can’t avoid a conflict - and one of the surprising things I learned is that conflicts can not always be avoided, nor is avoiding all conflicts at any cost even a desirable goal to have - then the next best thing is to find a way to manage the conflict. For example, at many institutions one can set up a conflict management plan, which may involve additional levels of oversight (for example a department chair or dean signing off on your funding allocation decisions pertaining to your significant other, and maybe additional reporting requirements such as you filing a letter of explanation justifying any such decision).
This goes without saying, but you should find out all applicable rules and policies that govern your situation.


The bottom line is, you should ask for guidance from your institution and your funding agency on how to address the situation. Have in writing documents, written (or at least reviewed and approved) by people in authority, which specify how you are expected to handle the situation. Then follow what these documents say.