INTRODUCTION
The purpose of the Conflicts of Interest policy is to protect the Organization’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of one of its officers or directors, or that might otherwise result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable corporations/organizations and is not intended as an exclusive statement of responsibilities.
SECTION 1 – RESTRICTION ON INTERESTED DIRECTORS
No person actively serving on the Board of Directors or within 1 year of their active service may be an “interested person” defined as follows:
- Any person currently being compensated by the Organization for services rendered to it within the previous twelve (12) months, whether as a full-time or part-time employee, independent contractor, or otherwise, excluding any reasonable compensation paid to a director; and
- Any brother, sister, parent, spouse, in-law relative of any such person. However, any violation of the provisions of this section shall not affect the validity or enforceability of any transaction entered into by the interested person.
SECTION 2 – DUTY TO DISCLOSE
In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors who are considering the proposed transaction or arrangement.
SECTION 3 – ESTABLISHING A CONFLICT OF INTEREST
After the disclosure of the financial interest and all material facts, and after any discussion with the interested person, the interested person shall leave the Board meeting while the potential conflict of interest is discussed and voted upon. The remaining Board members shall decide if a conflict of interest exists.
SECTION 4 – ADDRESSING A CONFLICT OF INTEREST
Should the Board establish that a proposed transaction or arrangement establishes a conflict of interest, the Board shall then proceed with the following actions:
- Any interested person may render a request or report at the Board meeting, but upon completion of said request or report the individual shall be excused while the Board discusses the information and/or material presented and then votes on the transaction or arrangement proposed involving the possible conflict of interest.
- The President or other designated officer shall, if deemed necessary and appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
- After exercising due diligence, the Board shall determine whether the Organization can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.
- If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Board shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the best interest of the Organization, for its own benefit, and whether it is fair and reasonable. It shall make its decision as to whether to enter into the transaction arrangement in conformity with this determination.
SECTION 5 – VIOLATIONS OF CONFLICT OF INTEREST POLICY
Should the Board have reasonable cause to believe an interested person has failed to disclose actual or possible conflicts of interest, the Board shall then inform the interested person of the basis for such belief and afford the interested person an opportunity to explain the alleged failure to disclose.
If, after hearing the interested person’s explanation, and after making further investigation as may be warranted in consideration of the circumstances, the Board determines the interested person intentionally failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
SECTION 6 – PROCEDURES AND RECORDS
All minutes of the Board Meetings, when applicable, shall contain the following information:
- The names of all the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the Board’s decision as to whether a conflict of interest in fact existed.
- The names of the persons who were present for discussions and any votes relating to the transaction or arrangement, the content of the discussions, including any alternatives to the proposed transaction or arrangement, and a record of any vote taken in connection with the proceedings.
SECTION 7 – ACKNOWLEDGEMENT OF CONFLICTS OF INTEREST POLICY
Each director, principal officer, and member of a committee with Board delegated powers shall be required to sign a statement which affirms that such person:
- Has received a copy of the conflicts of interest policy;
- Has read and understands the policy;
- Has agreed to comply with the policy; and
- Understands that the Organization is charitable, and in order to maintain its federal tax exemption, it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
SECTION 8 – VIOLATION OF LOYALTY – SELF-DEALING CONTRACTS
A self-dealing contract is any contract or transaction (i) between this Organization and one or more of its Directors, or between this Organization and any corporation, firm, or association in which one or more of the Directors has a material financial interest (“Interested Director”), or (ii) between this Organization and a corporation, firm, or association of which one or more of its directors are Directors of this Organization.
Said self-dealing shall not be void or voidable because such Director(s) of corporation, firm, or association are parties or because said Director(s) are present at the meeting of the Board of Directors or committee which authorizes, approves or ratifies the self-dealing contract, if:
- All material facts are fully disclosed to or otherwise known by the members of the Board and the self-dealing contract is approved by the Interested Director in good faith (without including the vote of any membership owned by said interested Director(s));
- All material facts are fully disclosed to or otherwise known by the Board of Directors or committee, and the Board of Directors or committee authorizes, approves, or ratifies the self-dealing contract in good faith—without counting the vote of the interest Director(s)— and the contract is just and reasonable as to the Organization at the time it is authorized, approved, or ratified; or
- As to contracts not approved as provided in above sections (a) and/or (b), the person asserting the validity of the self-dealing contract sustains the burden of proving that the contract was just and reasonable as to the Organization at the time it was authorized, approved, or ratified.
Interested Director(s) may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof, which authorizes, approves, or ratifies a contract or transaction as provided for and contained in this section.
AMENDMENTS AND REVISIONS
This document may be amended by a simple majority of all directors then in office, and only in the period between the seating of new officers and the second to last Sunday in September (per the BoD Elections document). Such action is authorized only at a duly called and held meeting of the Board of Directors setting forth the proposed bylaw revisions with explanations and consequences the changes may have. All directors must attest that they understand the changes and the impact of those changes prior to their vote.
Any changes to this document must be noted, explained and made available to the general membership within seven (7) days of the passing vote.
This document was last modified on Jan. 7, 2021.