Nepotism is the act of favoring one's family members in a situation where doing so is considered inappropriate. For instance, a manager in a firm is generally expected to promote the most competent persons, in order that the firm may succeed. For that manager to promote an incompetent relative over a more-qualified employee is nepotism.

The word nepotism comes from the Latin word for nephew. This results fron the tendency for popes and bishops, historically, to raise their bastard sons as "nephews" and to give them preference. Some biologists have suggested that a tendency towards nepotism is instinctual, a form of kin selection.

Several popes are known to have engaged in nepotism, often by elevating nephews and other relatives to the cardinalate. Often, such appointments were used as a means of continuing a papal "dynasty". For instance, Pope Callixtus III, of the Borgia family, made two of his nephews Cardinals; one of them, Rodrigo, later used his position as a Cardinal as a stepping stone to the papacy, becoming Pope Alexander VI. Coincidentally, Alexander—one of the most corrupt popes—elevated Alessandro Farnese, his mistress's brother, to the cardinalate; Farnese would later go on to become Pope Paul III. Paul also engaged in nepotism, appointing, for instance, two nephews (aged fourteen and sixteen) Cardinals. The practice was finally ended when Pope Innocent XII issued a bull in 1692. The papal bull prohibited popes in all times from bestowing estates, offices, or revenues on any relative, with the exception that one qualified relative (at most) could be made a Cardinal.

Nepotism is a common accusation in politics when the relative of a powerful figure ascends to similar power seemingly without appropriate qualifications. For example, in America, politically powerful families such as the Kennedy family and Bush family in American politics are sometimes accused of nepotism by critics. Recently, U.S. Senator Frank Murkowski appointed his daughter Lisa Murkowski to fill the remaining two years of his seat and was accused of nepotism. Families elsewhere have also dominated politics of their homeland, such as Tun Abdul Razak, second Prime Minister of Malaysia and his son, Najib Tun Razak, current Deputy Prime Minister of Malaysia , or Minister Mentor Lee Kuan Yew (first Prime Minister of Singapore) and his son, Lee Hsien Loong, whom recently succeeded Goh Chok Tong as Prime Minister of Singapore.

The current record for nepotism and cronyism amongst leaders of states is held by President Maumoon Abdul Gayoom of the Maldives, who at the last count had at least eleven family members, in-laws and cronies in his cabinet, plus numerous close relatives and friends in the highest government posts.

Nepotism has also been known humorously as payrola.

See also: cronyism