Conflict of Interest

What is conflict of interest for a board member?

It can take three forms:

How does a board create an ongoing atmosphere that supports the addressing of conflicts of interest?

What do you do if you think you may have a conflict of interest regarding something the board discusses?

To protect yourself, you want to be sure any disclosures made during a board meeting appear in the minutes. Another way is to use the board’s forms for disclosure. In both cases, there is a paper trail.

What could remedial action look like?

I. Application of Policy

This policy is intended to supplement, but not replace, federal and state laws governing conflicts of

interest applicable to nonprofit corporations. It applies to board members, as well as their relatives and associates who are hereinafter referred to as “interested parties.”

II. Definition of Conflict of Interest

A conflict of interest may exist when the interests or concerns of an interested party may be seen as

competing with the interests or concerns of Peninsula Rotary Foundation. The variety of situations that raise

conflict of interest concerns include, but are not limited to, the following:

Financial Interests – A conflict may exist where an interested party directly or indirectly benefits or

profits as a result of a decision, policy, or transaction made by Peninsula Rotary Foundation. Examples include situations where:

Peninsula Rotary Foundation contracts to purchase/lease goods, services, or property from an interested party.
Peninsula Rotary Foundation offers employment to an interested party.
An interested party uses their relationship with Peninsula Rotary Foundation to obtain employment, a contract, or another benefit.
An interested party is provided use of the facilities, property, or services of Peninsula Rotary Foundation in a manner that would not be available to other community members.
Peninsula Rotary Foundation adopts a policy that specifically creates a financial benefit to an interested party.
A financial interest is not necessarily a conflict of interest. A conflict of interest exists only when the board decides that a person with a financial interest has a conflict of interest.

Other Interests – A conflict also may exist where an interested party obtains a non-financial benefit or advantage that he/she would not have obtained absent his/her relationship with Peninsula Rotary Foundation. Examples include where:

An interested party seeks to make use of confidential information obtained from a Peninsula Rotary Foundation member for his/her own benefit (not necessarily financial).
Peninsula Rotary Foundation adopts a policy that provides a significant nonfinancial benefit to an interested party.
A conflict of interest exists only when the Board of Directors decides there is a conflict.

III. Disclosure of Potential Conflicts of Interest

An interested party is under a continuing obligation to disclose any potential conflict of interest as soon as it is known or reasonably should be known.
Board trustees complete an Affirmation of Compliance form (Appendix B) when they join the board and annually thereafter.
Any interested party completes the Disclosure of Potential Conflict of Interest Statement (Appendix A) to disclose any potential conflicts of interest.

Disclosure Statements and Affirmations of Compliance will be submitted as follows:

For board members, the disclosure statements will be provided to the board chair.
The chair’s disclosure statement shall be provided to the secretary of the board.
In the case of consultants/volunteers, the disclosure statements shall be provided to the secretary of the board.

The secretary of the board, or the person designated by the board as the reviewing official, is responsible for bringing potential conflicts to the attention of the board. The secretary of the board shall file copies of all disclosure statements with the official corporate records of Peninsula Rotary Foundation.

IV. Procedures for Review of Potential Conflicts

Whenever there is reason to believe that a potential conflict of interest exists between Peninsula Rotary Foundation and a board trustee, the board shall determine the appropriate response.

The designated reviewing official has a responsibility to bring a potential conflict of interest to the attention of the board for action at the next regular meeting of the board or during a special meeting called specifically to review the potential conflict of interest.

Peninsula Rotary Foundation shall refrain from acting until such time as the proposed action, policy or transaction has been approved by the disinterested members of the board.

Whenever there is reason to believe that a potential conflict of interest exists between Peninsula Rotary Foundation and a consultant/volunteer, board president, or their designee, shall determine the appropriate response. The board president shall determine whether any further board review or action is required.

V. Procedures for Addressing Conflicts of Interest

The following procedures shall apply:

An interested party who has a potential conflict of interest with respect to a proposed action, policy, or transaction of the corporation shall not participate in any way in, or be present during, the deliberations and decision-making vote of Peninsula Rotary Foundation. However, the interested party shall have an opportunity to provide factual information about the proposed conflict and/or action, policy, or transaction. Also, the board may request that the interested party be available to answer questions.
The disinterested members of the board may approve the proposed action, policy, or transaction upon finding that it is in the best interests of the Peninsula Rotary Foundation. The board shall consider whether the terms of the proposed action, transaction, or policy are fair and reasonable to Peninsula Rotary Foundation and whether it would be possible, with reasonable effort, to find a more advantageous arrangement with a disinterested party.
Approval by the disinterested members of the board shall be by vote of a majority of directors in attendance at a meeting at which a quorum is present. An interested party shall not be counted for purposes of determining whether a quorum is present, or for purposes of determining what constitutes a majority vote of directors in attendance.
The minutes of the meeting shall reflect that the conflict disclosure was made to the board, the vote was taken, and, where applicable, the abstention from voting and participation by the interested party. Whenever possible, the minutes should frame the decision of the board in such a way as to provide guidance for consideration of future conflict of interest situations.

VI. Violations of Conflict of Interest Policy

If the board has reason to believe that an interested party has failed to disclose a potential conflict of interest, it shall inform the person of the basis for such belief and allow the person an opportunity to explain the alleged failure to disclose. If the board decides that the interested party has in fact failed to disclose a possible conflict of interest, the board shall take such disciplinary and corrective action as the board shall determine.

Appendix A

Peninsula Rotary Foundation

Potential Conflict of Interest Disclosure Statement

Please complete the questionnaire below, indicating any potential conflicts of interest. If you answer “yes” to any of the questions, please provide a written description of the details of the specific action, policy, or transaction in the space allowed. Attach additional sheets as needed.

A conflict may exist where an interested party directly or indirectly benefits or profits as a result of a decision, policy, or transaction made by Peninsula Rotary Foundation. The interested party would not have obtained this benefit were it not for his/her relationship with Peninsula Rotary Foundation.

Has Peninsula Rotary Foundation proposed to contract or contracted to purchase or lease goods, services, or property from you or from any of your relatives or associates?
Board trustees only: Has Peninsula Rotary Foundation offered employment to you or to any of your relatives or associates?
Have you used your relationship with Peninsula Rotary Foundation to obtain a contract, employment for yourself or any of your relatives or associates, from a person or entity that does business with Peninsula Rotary Foundation?
Have you or any of your relatives been provided use of the facilities, property, or services of Peninsula Rotary Foundation in a way that is not available to others who benefit from the organization’s services?
Have you, a relative, or an associate been in a position to benefit financially from an action, policy, or transaction made by Peninsula Rotary Foundation?

Other issues or situations not addressed above

Name (Please print) Signature Date

Appendix B

Conflict of Interest

Affirmation of Compliance

I have received and carefully read the Conflict of Interest Policy for board trustees. I have considered not only the literal expression of the policy but also its intent.

By signing this affirmation of compliance, I hereby affirm that I understand and agree to comply with the Conflict of Interest Policy.

I further understand that Peninsula Rotary Foundation is a nonprofit organization and that in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes without personal inurement or benefit by board trustees or consultants/volunteers.

I hereby state that I do not have any conflict of interest, financial or otherwise that may be seen as competing with the interests of Peninsula Rotary Foundation, nor does any relative or associate have such a potential conflict of interest. If any situation should arise in the future that I think may involve me in a conflict of interest, I will promptly and fully disclose in writing the circumstances to the President of the Board.

I further certify that the information set forth in the Disclosure Statement and attachments, if any, is true and correct to the best of my knowledge, information, and belief.

Name (Please print) ______________________________________________

Signature ________________________________ Date _________________

Annual Review and Reaffirmation

Signature ________________________________ Date _________________

Signature ________________________________Date _________________