My charity recently recruited some staff (not reporting to me directly) and my wife would have been a perfect fit for one of the jobs - would have loved to do it too!
It didn't even cross our mind that she should apply; it would have been simply wrong.
Whilst I admire your (and your wife's) principles, I don't think it would have been automatically wrong - provided that the conflict of interest was clearly declared and that you were clearly excluded from the recruitment process (which in any case is essential for marital bliss if your wife applied and didn't get the job!)