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Conflict of Interest Policy
Purpose
A charitable organization should adopt and implement policies and procedures to ensure that all conflicts of interest, actual or perceived, within the organization and the board are appropriately managed through disclosure, recusal, or other means. A conflict of interest can arise whenever a trustee, committee member, or staff person's duty of loyalty to the charitable organization comes into conflict with a competing financial or personal interest that he or she (or a relative) may have in a proposed transaction.
For public charities, financial transactions between the charity and its board members - as well as other individuals who are in a position to exercise substantial influence over the affairs of the organization - are covered by the prohibition against "excess benefit transactions." If any payments to such insiders exceed fair market value, the insiders, and possibly members of the organization's board, will be subject to penalty excise taxes.
A written conflict of interest policy that is enforced provides safeguards to prevent transactions that may violate the law or a fiduciary's duties of care and loyalty to the organization. A written policy can also help boards spot transactions that give the appearance of a conflict of interest before they occur.
This policy is intended to supplement but not replace any applicable laws governing conflicts of interest applicable to nonprofit and charitable corporations.
Applicability
The policy set forth in this statement applies to all trustees, committee members, and employees ("interested persons") of the Foundation and applies to transactions between the Foundation and an interested person or a family member of the interested person, including spouse, parent, sibling, child, stepchild, grandparent or grandchild. It is difficult to define all potential conflict of interest transactions, but at least the following should be considered:
- Official relationship with banks, vendors, or other entities with which the Foundation regularly does business.
- Official relationship with investment managers or brokers with which the Foundation does business.
- Official relationship with an applicant or recipient of a grant from the Foundation.
- Acceptance of gifts or favors from businesses and charities that have dealings with the Foundation.
In this context, "official relationship" means serving as an officer, director, employee, partner, proprietor, or owner of 10% or more of the stock of an entity that does business with the Foundation.
Policies and Procedures
Acceptance of Gifts prohibited
Trustees, committee members, and employees shall not accept gifts, entertainment, or other favors from businesses or charities that have dealings with the Foundation. This does not include incidental gifts, such as reasonable meals in connection with business meetings or low-cost promotional gifts.
Duty to disclose
Trustees, committee members, and employees of the Foundation shall disclose any transactions or relationships involving a possible conflict of interest in regard to the Foundation.
Duty to recuse
When any matter involving a conflict of interest is under consideration by the Foundation, the interested person should abstain from any preliminary or final involvement with the matter, including initial review and discussion, as well as any vote at the committee or full board level.
Records of proceedings
The minutes of the board and all committees with board-delegated powers shall contain the names of persons who disclosed or otherwise were found to have an actual or possible conflict of interest, the nature of the conflict of interest, and any action taken. Whenever a trustee or committee member abstains from participation in a committee or board vote due to a potential conflict of interest, the abstention should be formally recorded in the meeting minutes.
Periodic review
To ensure that the Foundation operates in a manner consistent with its charitable purposes and that it does not engage in activities that could jeopardize its status as an organization exempt from federal income tax, an annual review for any conflicts of interest shall be conducted by the Executive Director and reported to the Chairman of the Board of Trustees and the Audit Committee.
Confidentiality
All information concerning actual or potential conflicts of interest on the part of the trustees, committee members or officers of the Foundation shall be held in confidence unless the best interests of the Foundation dictate otherwise.
Administration of Policy
The Audit Committee of the Board of Directors shall have responsibility for overseeing the enforcement of this policy and shall report to the Board of Directors at least annually.
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