Section 1. Purpose of Conﬂict of Interest Policy
The purpose of this conﬂict of interest policy is to protect this corporation’s interest when it is contemplating entering into a transaction or arrangement that might beneﬁt the private interest of an ofﬁcer or director of the corporation or any “disqualiﬁed person” as deﬁned in Section 4958(f)(1) of the Internal Revenue Code and as ampliﬁed by Section 53.4958-3 of the IRS Regulations and which might result in a possible “excess beneﬁt transaction” as deﬁned in Section 4958(c)(1)(A) of the Internal Revenue Code and as ampliﬁed by Section 53.4958 of the IRS Regulations. This policy is intended to supplement but not replace any applicable state and federal laws governing conﬂict of interest applicable to nonproﬁt and charitable organizations.
Section 2. Deﬁnitions
(a) Interested Person. Any director, ofﬁcer, member of a committee with governing board delegated powers, or any other person who is a “disqualiﬁed person” as deﬁned in Section 4958(f)(1) of the Internal Revenue Code and as ampliﬁed by Section 53.4958-3 of the IRS Regulations, who has a direct or indirect ﬁnancial interest, as deﬁned below, is an interested person.
(b) Financial Interest. A person has a ﬁnancial interest if the person has, directly or indirectly, through business, investment, or family:
- an ownership or investment interest in any entity with which the corporation has a transaction or arrangement,
- a compensation arrangement with the corporation or with any entity or individual with which the corporation has a transaction or arrangement, or
- a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the corporation is negotiating a transaction or arrangement.
Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.
A ﬁnancial interest is not necessarily a conﬂict of interest. Under Section 3, paragraph (b), a person who has a ﬁnancial interest may have a conﬂict of interest only if the appropriate governing board or committee decides that a conﬂict of interest exists.
Section 3. Conﬂict of Interest Avoidance Procedures
(a) 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 and members of committees with governing board delegated powers considering the proposed transaction or arrangement.
(b) Determining Whether a Conﬂict of Interest Exists. After disclosure of the ﬁnancial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conﬂict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conﬂict of interest exists.
(c) Procedures for Addressing the Conﬂict of Interest. An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conﬂict of interest.
The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. After exercising due diligence, the governing board or committee shall determine whether the corporation 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 governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the corporation’s best interest, for its own beneﬁt, and whether it is fair and reasonable. In conformity with the above determination, it shall make its decision as to whether to enter into the transaction or arrangement.
(d) Violations of the Conﬂict of Interest Policy. If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conﬂicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conﬂict of interest, it shall take appropriate disciplinary and corrective action.