Conflict of interest policy

Conflict of interest policy of [ORGANIZATION NAME]

Adopted by the Board of Directors on [DATE].

Article I. Purpose

The purpose of this policy is to protect the interests of [ORGANIZATION NAME] (the "Organization") when it is considering a transaction or arrangement that might benefit the private interest of an officer or director, or that might result in a possible excess benefit transaction. This policy adds to, and does not replace, any state and federal laws on conflicts of interest that apply to nonprofit and charitable organizations.

Article II. Definitions

1. Interested person

Any director, principal officer, or member of a committee with powers delegated by the Board, who has a direct or indirect financial interest as defined below, is an interested person.

2. 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 Organization has a transaction or arrangement;
• a compensation arrangement with the Organization, or with any entity or individual with which the Organization has a transaction or arrangement; or
• a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement.

Compensation includes direct and indirect pay, as well as gifts or favors that are not insubstantial.

A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest has a conflict of interest only if the Board or the committee decides that a conflict of interest exists.

Article III. Procedures

1. Duty to disclose

When there is an actual or possible conflict of interest, the interested person must disclose the financial interest and must be given the chance to disclose all material facts to the directors and committee members considering the proposed transaction or arrangement.

2. Deciding whether a conflict of interest exists

After the interested person has disclosed the financial interest and all material facts, and after any discussion with them, the interested person leaves the meeting while the Board or committee discusses and votes on whether a conflict of interest exists. The remaining directors or committee members decide.

3. Handling a conflict of interest

1. The interested person may make a presentation at the Board or committee meeting. After the presentation, they leave the meeting during the discussion of, and the vote on, the transaction or arrangement.
2. The chair of the Board or committee will, if appropriate, appoint a disinterested person or committee to look into alternatives to the proposed transaction or arrangement.
3. After exercising due diligence, the Board or committee decides whether the Organization could get a more advantageous transaction or arrangement, with reasonable effort, from a person or entity that would not create a conflict of interest.
4. If a more advantageous transaction or arrangement is not reasonably possible without a conflict of interest, the Board or committee decides, by a majority vote of the disinterested directors, whether the transaction or arrangement is in the Organization's best interest, for its own benefit, and fair and reasonable. It then decides whether to enter into the transaction or arrangement.

4. Violations of this policy

1. If the Board or committee has reasonable cause to believe a member has failed to disclose an actual or possible conflict of interest, it will tell the member why, and give the member a chance to explain.
2. If, after hearing the member's response and investigating further as needed, the Board or committee decides the member has failed to disclose an actual or possible conflict of interest, it will take appropriate disciplinary and corrective action.

Article IV. Records of proceedings

The minutes of the Board and of all committees with powers delegated by the Board will record:

• the names of the people who disclosed, or 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 decide whether a conflict of interest was present; and the decision of the Board or committee as to whether a conflict of interest in fact existed; and
• the names of the people who were present for discussions and votes relating to the transaction or arrangement; the content of the discussion, including any alternatives to the proposed transaction or arrangement; and a record of any votes taken.

Article V. Compensation

1. A voting member of the Board who receives compensation, directly or indirectly, from the Organization for services may not vote on matters about that member's compensation.
2. A voting member of any committee whose responsibilities include compensation, and who receives compensation, directly or indirectly, from the Organization for services, may not vote on matters about that member's compensation.
3. Nothing in this article stops a voting member of the Board or of a committee who receives compensation from the Organization, alone or with others, from giving information to a committee about compensation.

Article VI. Annual statements

Each director, principal officer and member of a committee with powers delegated by the Board will sign a statement each year saying that the person:

• has received a copy of this conflict of interest policy;
• has read and understands the policy;
• has agreed to comply with the policy; and
• understands that the Organization is charitable and, to keep its federal tax exemption, must engage mainly in activities that accomplish one or more of its tax-exempt purposes.

Article VII. Periodic reviews

To make sure the Organization operates in a way that is consistent with its charitable purposes, and does not engage in activities that could put its tax-exempt status at risk, it will carry out periodic reviews. The reviews will cover at least:

• whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm's length bargaining (a deal negotiated as if between strangers); and
• whether partnerships, joint ventures and arrangements with management organizations follow the Organization's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes, and do not result in inurement (charity money flowing to insiders), impermissible private benefit or an excess benefit transaction.

Article VIII. Use of outside experts

When carrying out the periodic reviews in Article VII, the Organization may, but does not have to, use outside advisors. If it uses outside experts, the Board is still responsible for making sure the periodic reviews are done.

Annual conflict of interest statement

Name: [NAME]

Role: [DIRECTOR, OFFICER OR COMMITTEE MEMBER]

Year covered: [YEAR]

By signing below, I confirm that:

1. I have received a copy of the conflict of interest policy of [ORGANIZATION NAME].
2. I have read and understand the policy.
3. I agree to comply with the policy.
4. I understand that [ORGANIZATION NAME] is charitable and, to keep its federal tax exemption, must engage mainly in activities that accomplish one or more of its tax-exempt purposes.

Interests I am disclosing (businesses I or my family own, work for or are paid by, that do or may do business with [ORGANIZATION NAME]; write "None" if none):

• [INTEREST 1]
• [INTEREST 2]

Signed: [SIGNATURE]

Date: [DATE]