Conflict of Interest Policy for ARC38

ARC-38 CONFLICT OF INTEREST POLICY

 

Section 1. Purpose:

ARC-38 is a nonprofit, tax-exempt organization.  Maintenance of its tax-exempt status is important both for its continued financial stability and for public support.  Therefore, the IRS as well as state regulatory and tax officials view the operations of ARC-38 as a public trust, which is subject to scrutiny by and accountable to such governmental authorities as well as to members of the public.  The purpose of this conflict of interest policy is to protect the community’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interests of any of its members, or that might otherwise result in a possible excess benefit transaction.  This policy is intended to supplement but not replace any applicable New York and federal laws applicable to nonprofit charitable corporations and is not intended as an exclusive statement of responsibilities.

Consequently, there exists between ARC-38 and its board, officers, members, visitors, and the public a fiduciary duty, which carries with it a broad and unwavering duty of loyalty and fidelity.  The board, officers, and members have the responsibility of administering the affairs of ARC-38 honestly and prudently, and of exercising their best care, skill, and judgment for the sole benefit of ARC-38.  Those persons shall exercise the utmost good faith in all transactions involved in their ARC-38 duties, and they shall not use their positions with ARC-38 or knowledge gained therefrom for their personal benefit.  The interests of the organization must be the first priority in all decisions and actions.

 

Section 2.  Definitions

Unless otherwise defined, the terms used in this document have the following meanings:

  1. “Interested Persons” – This statement is directed not only to directors and officers, but to all employees who can influence the actions of ARC-38.  For example, this would include all who make purchasing decisions, all persons who might be described as “management personnel,” and anyone who has proprietary information concerning ARC-38.
  2. “Financial Interest” – A person has a Financial Interest if the person has, directly or indirectly, through business, investment, or family:

B-i) An ownership or investment interest in any entity with which the Cooperative has a transaction or arrangement;

B-ii) A compensation arrangement with the Community or with any entity or individual with which the Community has a transaction or arrangement; or

B-iii) A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Community is negotiating a transaction or arrangement.

Compensation includes direct and indirect payment for goods or services as well as gifts or favors that are not insubstantial. Remuneration for expenses incurred, with invoices approved does not constitute a conflict of interest compensation. A Financial Interest is not necessarily a conflict of interest. A person who has a Financial Interest may have a conflict of interest only if the Board of Directors, or a committee thereof, decides that a conflict exists pursuant to the procedures set forth below.

 

Section 3.  AREAS IN WHICH CONFLICT MAY ARISE:

Conflicts of interest may arise in the relations of directors, officers, and members with any of the following third parties:

  1. Persons and firms supplying goods and services to ARC-38.
  2. Persons and firms from whom Arc-38 leases property and equipment.
  3. Persons and firms with whom Arc-38 is dealing or planning to deal in connection with the gift, purchase or sale of real estate or other property.
  4. Competing or affinity organizations.
  5. Donors and others supporting ARC-38.
  6. Agencies, organizations. and associations which affect the operations of ARC-38.
  7. Family members and friends.

 

Section 4.  NATURE OF CONFLICTING INTEREST

A conflicting interest may be defined as an interest, direct or indirect, with any persons or firms mentioned in Section 3.  Such an interest might arise through:

  1. Owning stock or holding debt or other proprietary interests in any third party dealing with ARC-38.
  2. Holding office, serving on the board, participating in management, or being otherwise employed (or formerly employed) with any third party dealing with ARC-38.
  3. Receiving remuneration for services with respect to individual transactions involving ARC-38.
  4. Using ARC-38’s time, personnel, equipment, supplies, or good will for other than ARC-38 approved activities, programs, and purposes.
  5. Receiving personal gifts or loans from third parties dealing or competing with ARC-38.

 

Section 5.  INTERPRETATIONS OF THIS STATEMENT OF POLICY:

The areas of conflicting interest listed in Section 3, and the relations in those areas which may give rise to conflict, as listed in Section 4, are not exhaustive.  Conflicts might arise in other areas or through other relations. It is assumed that the directors, officers, and members will recognize such areas and relation by analogy.

The fact that one of the interests described in Section 4 exists does not necessarily mean that a conflict exists, or that the conflict, if it exists, is material enough to be of practical importance, or if material, that upon full disclosure of all relevant facts and circumstances it is necessarily adverse to the interests of ARC-38.

However, it is the policy of the board that the existence of any of the interests described in Section 4 shall be disclosed before any transaction is consummated.  It shall be the continuing responsibility of the board, officers, and management employees to scrutinize their transactions and outside business interests and relationships for potential conflicts and to immediately make such disclosures.

Receipt of any gift is disapproved except gifts of a value less than $50, which could not be refused without discourtesy.  No personal gift of money should ever be accepted from community funds and any loans or disbursements not approved repaid in a reasonable period of time, according to agreements.

Section 6.  DISCLOSURE POLICY AND PROCEDURE  

(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, who are 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 discussions with the Interested Person, the Interested Person shall remain silent and may be asked to leave the Board Meeting while the determination of a conflict of interest is discussed and considered. The remaining members of the Board of Directors shall decide if a conflict of interest exists using the Consensus Decision­Making Process.

(C)  Procedure for Addressing the Conflict of Interest  ­ In the event that the Board of Directors determines that a proposed transaction or arrangement presents a conflict of interest, the Board of Directors shall take the following actions:

  1. i) An Interested Person may make a presentation at the Board Meeting, but after the presentation, he/she shall remain silent or may be asked to leave the meeting during the discussion of, and the Consensus Decision­Making Process regarding, the transaction or arrangement involving the possible conflict of interest.
  2. ii) The Board shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.

iii) After exercising due diligence, the Board shall determine whether the Community 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.

  1. iv) If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Directors (excluding the Interested Person(s)), using the Consensus Decision­Making Process, shall determine whether the transaction or arrangement is in the Community’s best interest, for its own benefit, and whether it is fair and reasonable.  It shall make its decision as to whether to enter into the transaction or arrangement in conformity with this determination.

 

Section 7.  Violations of the Conflict of Interest Policy:

(A) If the Board of Directors has reasonable cause to believe an Interested Person has failed to disclose actual or possible conflicts of interest, it shall inform the Interested Person of the basis for such belief and afford the Interested Person an opportunity to explain the alleged failure to disclose.

(B) If, after hearing the Interested Person’s response and after making further investigation as warranted by the circumstances, the Board of Directors determines the Interested Person has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

 

Section 8.  Records and Procedures.  

The minutes of the Board of Directors shall contain:

(a) The names of the persons who disclosed or otherwise 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 determine whether a conflict of interest was present, and the Board of Director’s decision as to whether a conflict of interest in fact existed.

(b)  The names of the persons who were present for discussions and the Consensus Decision­ Making Process 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 Consensus Decision­Making Process in connection with the proceedings.

(c)  Annual Statements ­ Each Director, principal officer and member of a committee with Board­ delegated powers shall annually sign a statement which affirms such person:

  1. Has received a copy of this conflict of interest policy; ii. Has read and understands the policy; iii. Has agreed to comply with the policy; and iv. Understands that the Cooperative is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax ­exempt purposes.