Conflicts of Interest Policy

1. Purpose

The purpose of this policy is to protect the organization’s interests when entering into a transaction or arrangement which might benefit the private interest of an officer or director or which may otherwise be viewed by the organization’s stakeholders as unethical. This policy supplements the California Non-Profit Public Benefit Corporation Law.

2. Definitions

Interested Person – Any director or principal officer who has a direct or indirect financial interest and/or special interest, as defined below, is an interested person. If a person is an interested person with respect to any affiliate of this organization, they are an interested person.
Financial Interest – A person has a financial interest if they have directly or indirectly, through business, investment or family:
1. any ownership or investment interest in any entity with which this organization has a transaction or arrangement, or a compensation arrangement with this organization or with any entity or individual with which this organization has a transaction or arrangement, or
2. a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which this organization is negotiating a transaction or arrangement.
Special Interest – A person has a special interest if they are:
1. a member of an entity which may or may not be not-for-profit in nature with which this organization has a transaction and/or arrangement,
2. an employee, employer, family member or close associate of any person who may be under consideration for any award, privilege or honor bestowed by the organization.
Compensation – includes direct and indirect remuneration as well as gifts or favors that are substantial in nature.
Family – the term “family” shall include; spouse and/or domestic partner, child, parent and grandparent.
Close Associate – the term “close associate” shall include co-workers, persons who sit on the same board as the subject and persons with whom the subject (in a representative capacity) shall conduct substantial business.

3. Procedures

Duty to Disclose – In connection with any actual or possible conflicts of interest an interested person must disclose the existence of and nature of their interest to the directors or to the board committee considering the proposed transaction, arrangement, award, privilege or honor.
Determining Whether Conflict of Interest Exists – After disclosure of the interest, the interested person shall leave the board/committee meeting while the interest is discussed and voted upon. The remaining board/committee members shall decide if a conflict of interest exists.
Procedures for Addressing the Conflict of Interest – Where a special interest exists, the interested person shall merely recuse themselves from all discussion. Where a financial interest exists, the chair of the board/committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. After exercising due diligence the board/committee shall determine whether this organization can obtain a more advantageous transaction or arrangement with reasonable efforts 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 attainable under circumstances that would not give rise to a conflict of interest, the board/committee shall, by majority vote of the disinterested directors, determine whether the transaction or arrangement is in the best interests of the corporation, for its benefit and whether the proposed transaction or arrangement is fair and reasonable to this organization and shall make its decision as to whether to enter into this transaction or arrangement in conformity with such determination.
Violations of this Policy – If the board/committee has reasonable cause to suspect or believe that a director or officer has failed to disclose actual or possible conflicts of interest, it shall inform the director/officer of the basis for such suspicion and afford the director/officer an opportunity to explain the alleged failure to disclose. If, after hearing the response of the director/officer and making such further investigation as may be warranted in the circumstances, the board/committee determines that the director/officer has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action in accordance with this organization’s Disciplinary Action & Grievance Policy.

4. Records of Proceedings

The minutes of the Board and all Committees shall contain:

the names of the persons who disclosed or otherwise were found to have an interest in connection with an actual or possible conflict of interest, the nature of the interest, any action taken to determine whether a conflict of interest was present, and the board/committee decision as to whether the conflict of interest existed; and
the names of the persons who were present for discussions and votes relating to the transaction, arrangement, award, privilege or honor, the content of the discussion, including (in the case of a financial interest) any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection therewith.

5. Compensation Committees

Voting by Compensated Party – A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from this organization for services, is precluded from voting on matters pertaining to their compensation.
Composition of Committee – Senior staff members who receive compensation, directly or indirectly, from this organization, whether as employees or independent contractors, are precluded from membership on any committee whose jurisdiction includes compensation matters.

6. Annual Statements

Each director and principal officer shall annually sign an annual statement which affirms that such person:

has received a copy of this organization’s Policies & Procedures Manual, which includes this policy,
has read and understands this policy,
has agreed to comply with this policy, and
understands that this organization is a charitable organization and that, in order to maintain its federal tax exemption, it must engage primarily in activities which accomplish one or more of its tax exempt purposes.

7. Periodic Reviews

To ensure that this organization 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, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:

Whether compensation arrangements and benefits are reasonable and are the result of arms-length bargaining.
Whether any acquisition of businesses or activities from non-charitable entities or individuals results in inurement or impermissible private benefit.
Whether any partnership or joint venture arrangements or arrangements with management service organizations involving non-charitable entities or individuals conform to written policies, are properly recorded, reflect reasonable payments for goods and services, further this organization’s charitable purposes and do not result in inurement or impermissible private benefit.
Whether arrangements to provide services and agreements with other service providers, employees and third-party payers further this organization’s charitable purposes, and do not result in inurement or impermissible private benefit.

8. Use of Outside Experts

In conducting the periodic reviews provided for in Section 7 of this policy, this organization may, but need not, use outside experts such as, but not exclusively, a CPA contracted to conduct an audit of the organization’s books and activities.

Approved: by the Board 04.06.98 Amended 03.06.01