Approved by Council June 2019
Section 1.01 Purpose:
The purpose of this policy is to protect the Society’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of a member of Council or employee or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflicts of interest applicable to nonprofit and charitable Corporations.
Section 1.02 Policy:
Anyone making decisions on behalf of the Society should always act based on the best interests of the organization, and no individual associated with the Society should use his/her position for personal benefit, for the benefit of friends or relatives, or to further any outside interests or personal agenda. This standard applies to all transactions and decisions, whether or not covered by the detailed policies and procedures below.
Section 1.03 Definitions:
(A) An interested person may be an Elective Councilor, officer, or member of Council or a member of a standing committee of Council of the Society (e.g., Finance Committee, Audit Committee, Investing Trustees), or an employee.
(B) A potential conflict of interest exists whenever the personal, professional or financial interest of an interested person is opposed to that of the Society, or when such an interest or any conflicting fiduciary duty might influence the interested person’s actions and judgment on behalf of the Society. A potential conflict also exists when there is an appearance that an interested person’s actions may be influenced by a competing interest or duty.
(C) A conflict of interest exists whenever an interested person’s competing interest or fiduciary duty is substantial enough that the interested person cannot reasonably be expected to exercise independent judgment and take action in the best interest of the Society.
Conflicts of interest may arise under numerous scenarios, including but not limited to:
- decisions about an interested person’s compensation (as a contractor or employee);
- decisions about transactions with entities in which an interested person holds an ownership interest;
- decisions about transactions with an entity for which an interested person is employed;
- decisions involving another nonprofit organization for which an interested person serves as an officer, director, employee, or volunteer.
- decisions about standings on policies that may conflict with the policy of a governmental organization or agency in which an individual is employed.
Conflicts (or the appearance of conflicts) may also arise when the Society is contemplating a transaction with a close relative or domestic partner of an interested person, or any entity in which such a related person has an ownership interest or which employs such a person.
Conflicts of interest will generally not be considered to arise when the potential benefit to the interested person is tenuous or remote, such as an interested person with investments in a mutual fund which holds a small amount of stock in a particular company. In addition, the fact that an interested person is also a director, officer, member or volunteer of a not-for-profit organization that obtains or seeks funds from institutions or individuals from which the Society also obtains or seeks funds shall not by itself be deemed to be a conflict of interest if there are otherwise no indications that the interested person has a conflict of interest.
Section 1.04 Procedure:
Whenever a member of Council, member of a committee of Council, or employee becomes aware of a potential conflict of interest, whether financial or otherwise, s/he shall make the situation known to the Executive Committee and provide all facts material to understanding the nature and scope of the conflict, including whether the interested person believes his or her ability to make an independent decision based solely on the best interest of the Society has been compromised. If the interested person involved does not make this disclosure, another member of Council, member of a committee of Council, or employee with knowledge of the potential conflict should draw it to the Executive Committee’s attention.
The interested person with the potential conflict must retire from the meeting and not participate in final discussion and voting on the existence of the conflict. If a conflict is found to exist, the interested person may be invited to provide any relevant information that could be of use to the Council in making its decision, but shall again retire and not participate in the final discussion and voting regarding the transaction. The Council’s decision shall be based on consideration of whether the transaction:
a. is in the organization’s best interest and for its own benefit;
b. is fair and reasonable to the organization; and
c. is the most advantageous transaction or arrangement the organization can obtain with reasonable efforts under the circumstances.
Section 1.05 Annual Distribution, Acknowledgment, and Disclosure:
This conflict of interest policy shall be distributed annually to all members of Council, members of a standing committee of Council of the Society (i.e., Finance Committee, Audit Committee, and Investing Trustees), and employees. All covered individuals shall sign an annual disclosure form to acknowledge that they have received a copy of this policy, understand it, agree to abide by its terms, and to report any conflict or potential conflict of interest.