NONPROFIT ORGANIZATION Policy on Conflicts of Interest and ...

<strong>NONPROFIT</strong> <strong>ORGANIZATION</strong><strong>Policy</strong> on Conflicts of Interest and Disclosure of Certain InterestsThis conflict of interest policy is designed to help Trustees, officers and employees of the<strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> identify situations that present potential conflicts of interest and toprovide <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> with a procedure which, if observed, will allow atransaction to be treated as valid and binding even though a director, officer or employee has or mayhave a conflict of interest with respect to the transaction. The policy is intended to comply with theprocedure prescribed in Texas Non-Profit Corporation Act, Art. 1396-2.30 , governing conflicts ofinterest for trustees of nonprofit corporations. In the event there is an inconsistency between therequirements and procedures prescribed herein and those in Art. 1396-2.30, the statute shall control.All capitalized terms are defined in Part 2 of this policy.1. Conflict of Interest Defined. For purposes of this policy, the following circumstances shall bedeemed to create Conflicts of Interest:A. Outside Interests.(i) A Contract or Transaction between <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> and a ResponsiblePerson or Family Member.(ii) A Contract or Transaction between <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> and an entity in whicha Responsible Person or Family Member has a Material Financial Interest or of which suchperson is a director, officer, agent, partner, associate, trustee, personal representative, receiver,guardian, custodian, conservator or other legal representative.B. Outside Activities.(i) A Responsible Person competing with <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> in the rendering ofservices or in any other Contract or Transaction with a third party.(ii) A Responsible Person’s having a Material Financial Interest in; or serving as a director,officer, employee, agent, partner, associate, trustee, personal representative, receiver, guardian,custodian, conservator or other legal representative of, or consultant to; an entity or individual thatcompetes with <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> in the provision of services or in any other Contractor Transaction with a third party.C. Gifts, Gratuities and Entertainment. A Responsible Person accepting gifts, entertainment orother favors from any individual or entity that:(i) does or is seeking to do business with, or is a competitor of<strong>ORGANIZATION</strong>; or<strong>NONPROFIT</strong>(ii) has received, is receiving or is seeking to receive a loan or grant, or to secure other financialcommitments from <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong>;

(iii) is a charitable organization operating in the United States of America;under circumstances where it might be inferred that such action was intended to influence or possiblywould influence the Responsible Person in the performance of his or her duties. This does notpreclude the acceptance of items of nominal or insignificant value or entertainment of nominal orinsignificant value which are not related to any particular transaction or activity of <strong>NONPROFIT</strong><strong>ORGANIZATION</strong>.2. Definitions.A. A "Conflict of Interest" is any circumstance described in Part 1 of this <strong>Policy</strong>.B. A "Responsible Person" is any person serving as an officer, employee or member of the Boardof Trustees of <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong>.C. A "Family Member" is a spouse, parent, child or spouse of a child, brother, sister, or spouse of abrother or sister, of a Responsible Person.D. A "Material Financial Interest" in an entity is a financial interest of any kind, which, in view ofall the circumstances, is substantial enough that it would, or reasonably could, affect a ResponsiblePerson’s or Family Member’s judgment with respect to transactions to which the entity is a party.E. A "Contract or Transaction" is any agreement or relationship involving the sale or purchase ofgoods, services, or rights of any kind, the providing or receipt of a loan or grant, the establishment ofany other type of pecuniary relationship, or review of a charitable organization by <strong>NONPROFIT</strong><strong>ORGANIZATION</strong>. The making of a gift to <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> is not a Contract orTransaction.3. Procedures.A. Prior to board or committee action on a Contract or Transaction involving a Conflict ofInterest, a director or committee member having a Conflict of Interest and who is in attendance at themeeting shall disclose all facts material to the Conflict of Interest. Such disclosure shall be reflected inthe minutes of the meeting.B. A director or committee member who plans not to attend a meeting at which he or she hasreason to believe that the board or committee will act on a matter in which the person has a Conflictof Interest shall disclose to the chair of the meeting all facts material to the Conflict of Interest. Thechair shall report the disclosure at the meeting and the disclosure shall be reflected in the minutes ofthe meeting.C. A person who has a Conflict of Interest shall not participate in or be permitted to hear theboard’s or committee’s discussion of the matter except to disclose material facts and to respond toquestions. Such person shall not attempt to exert his or her personal influence with respect to thematter, either at or outside the meeting.D. A person who has a Conflict of Interest with respect to a Contract or Transaction that will be

voted on at a meeting shall not be counted in determining the presence of a quorum for purposes ofthe vote. The person having a conflict of interest may not vote on the Contract or Transaction andshall not be present in the meeting room when the vote is taken, unless the vote is by secret ballot.Such person’s ineligibility to vote shall be reflected in the minutes of the meeting. For purposes ofthis paragraph, a member of the Board of Trustees of <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> has a Conflictof Interest when he or she stands for election as an officer or for re-election as a member of the Boardof Trustees.E. Responsible Persons who are not members of the Board of Trustees of <strong>NONPROFIT</strong><strong>ORGANIZATION</strong>, or who have a Conflict of Interest with respect to a Contract or Transaction thatis not the subject of Board or committee action, shall disclose to the Chair or the Chair’s designeeany Conflict of Interest that such Responsible Person has with respect to a Contract or Transaction.Such disclosure shall be made as soon as the Conflict of Interest is known to the Responsible Person.The Responsible Person shall refrain from any action that may affect <strong>NONPROFIT</strong><strong>ORGANIZATION</strong>’s participation in such Contract or Transaction.In the event it is not entirely clear that a Conflict of Interest exists, the individual with thepotential conflict shall disclose the circumstances to the Chair or the Chair’s designee, who shalldetermine whether there exists a Conflict of Interest that is subject to this policy.4. Confidentiality. Each Responsible Person shall exercise care not to disclose confidentialinformation acquired in connection with such status or information the disclosure of which mightbe adverse to the interests of <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong>. Furthermore, a Responsible Personshall not disclose or use information relating to the business of <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong> forthe personal profit or advantage of the Responsible Person or a Family Member.5. Review of policy.A. Each new Responsible Person shall be required to review a copy of this policy and toacknowledge in writing that he or she has done so.B. Each Responsible Person shall annually complete a disclosure form identifying any relationships,positions or circumstances in which the Responsible Person is involved that he or she believes couldcontribute to a Conflict of Interest arising. Such relationships, positions or circumstances mightinclude service as a Trustee of or consultant to a nonprofit organization, or ownership of a businessthat might provide goods or services to <strong>NONPROFIT</strong> <strong>ORGANIZATION</strong>.Any such information regarding business interests of a Responsible Person or a Family Member shallbe treated as confidential and shall generally be made available only to the Chair, the President, andany committee appointed to address Conflicts of Interest, except to the extent additional disclosure isnecessary in connection with the implementation of this <strong>Policy</strong>.C. This policy shall be reviewed annually by each member of the Board of Trustees. Any changesto the policy shall be communicated immediately to all Responsible Persons.

Name: ________________________Date: ___________________Conflict of Interest Information Form (2000)Please describe below any relationships, positions, or circumstances in which you are involvedthat you believe could contribute to a Conflict of Interest (as defined in <strong>NONPROFIT</strong><strong>ORGANIZATION</strong>'s <strong>Policy</strong> on Conflicts of Interest) arising.1. __________________________________________________________2. __________________________________________________________3. __________________________________________________________I hereby certify that the information set forth above is true and complete to the best of myknowledge. I have reviewed, and agree to abide by, the <strong>Policy</strong> of Conflict of Interest of <strong>NONPROFIT</strong><strong>ORGANIZATION</strong> that is currently in effect.Signature: _________________________Date: _____________________

ABC Community School PoliciesCONFLICT OF INTEREST POLICYBackground and ImplementationThis comprehensive conflict of interest policy replaces all previous ABC Conflict of InterestStatements and Policies. Upon adoption of this Conflict of Interest <strong>Policy</strong>, and before the nextBoard meeting, all Directors shall complete and sign the Conflict of Interest Disclosure Form.Newly elected Directors shall complete and sign a Conflict of Interest Disclosure form prior totheir first participation as decision-makers in the affairs of the School. [Note: Provisionsrequiring appropriate by-laws revisions in order to be fully implemented are italicized in thisdraft.]Statement of <strong>Policy</strong>ABC Community School Directors, officers, and employees have an obligation to exercise their authorityand to carry out the duties of their respective positions for the sole benefit of the School. They serve theschool’s trust and should avoid placing themselves in positions in which their personal interests are, ormay be, or may be perceived to be, in conflict with the interests of the School.Individuals serving or employed by the School shall at all times act in a manner consistent with theirfiduciary responsibilities.Every Board member understands that service as a Director entails the obligation to place the interests ofthe school foremost when dealing with or on behalf of the school, and that every Director has thecontinuing responsibility to comply with the requirements of this policy, regardless of the implicationsthat any action may have on the Board member’s personal affairs or business.DefinitionA person has a “financial interest” if the person has, directly or indirectly, through business, investment,or family:(a) an ownership or investment interest in any entity with which ABC engages in a financialtransaction; or(b) a potential ownership or investment interest in, or compensation arrangement with, any entityor individual with which ABC is negotiating a financial transaction.Note: Employment by the School does not in itself constitute a prohibited “financial interest.” Instead,according to the design and intent of this policy, every employee who participates in school decisionmakingis also covered by the policy and its underlying principles.Approved 9/26/02 1

ABC Community School PoliciesThree Underlying Principles1. A Director, officer, or employee shall not have or acquire any financial interest or association whichmight influence or interfere with the independent exercise of his or her judgment in the best interestof ABC.2. A Director, officer or employee should not personally profit from, or otherwise take advantage of,opportunities which are obtained by reason of such Director, officer or employee’s position with theSchool unless such Director, officer or employee’s involvement is disclosed and properly approved.3. Directors, officers and employees should refrain from those transactions or activities conducted intheir capacity as a Director, officer or employee of ABC which, while not involving personal profit orgain to the Director, officer or employee involved, are nonetheless detrimental to the best interests ofthe School.Disclosure – Procedures and GuidelinesNo person shall be disqualified from serving the school by reason of any pre-existing financial interest.However, all such interests must be disclosed to the Board of Directors upon nomination for Boardservice or employment at the School, or in the case of a sitting Director, when and if such an interestdevelops.Every ABC Board member shall be required annually to provide full written disclosure of any financialinterests or relationships that may in any way present a conflict between his/her business or professionalroles and his/her role as a Board member.Any Director, officer, employee who has an interest in or is directly or indirectly a party to, a contract ortransaction presented to the Board of Directors (or one of its committees) for authorization, approval orratification, shall make a prompt, full and frank disclosure of his or her interest to the Chair of the Boardof Directors, or in the Chair’s absence, to the Vice-Chairperson of the Board of Directors, prior to theBoard’s (or School’s) acting on such contract or transaction. Such disclosure shall include all relevantand material facts known to such person about the contract or transaction and the person’s interest orrelationship to the contract or transaction.Where a potential conflict of interest exists, it shall be the responsibility of the person involved or anyother person with knowledge to notify the Board of Directors of the potential conflict, so that the Board ofDirectors can provide such guidance and take such action as it shall deem appropriate. Any Director whohas a potential conflict of interest may, and at the request of the Chair, will excuse himself or herself fromany participation in the Board’s decision on that matter, other than to present factual information or torespond to the Board’s questions, before absenting him or herself from all discussion and voting. Anysuch excused Director temporarily reduces the number of total Board members for the purposes ofdetermining the existence of a quorum, or for calculating the margins of success required for variouskinds of votes, during that part of the meeting of the Board.The minutes of the meeting shall reflect the conflict of interest disclosure, the action(s) taken in its regard,and abstention(s) from participation in subsequent discussion and voting, where applicable.Approved 9/26/02 2

ABC Community School PoliciesEntering into transactions with “interested” partiesABC may enter into a contract or other transaction with an interested Director, officer, employee,etc. if it is determined by the appropriate decision-making body (absent any “conflicted” members) that:1. ABC is entering into the contract or other transaction for its own benefit;2. The contract or transaction is fair and reasonable to the School; and3. ABC cannot obtain a more advantageous arrangement with reasonable effort under the circumstances.Confidential InformationIt shall be the responsibility of all Directors, officers, employees and other persons having accessto confidential information or special knowledge acquired in the course of business of ABC, not todisclose such information to others or use such information for personal gain. No Director shallcommunicate to any non-Director any confidential or proprietary information or information which couldbe harmful to ABC if disclosed. Further, all current information about the Board’s activities shall betreated as confidential unless there has been general disclosure or the information is a matter of publicrecord or common knowledge.Disclosure FormDisclosure forms shall be updated annually, or sooner if changed circumstances require disclosure. Allpersons subject to this policy are expected to update their Disclosure Form at any time during the yearthat the information requested on the form changes. The administration and maintenance of theDisclosure Forms shall be the responsibility of the Chair of the Board of Directors, or his/her designee.Approved 9/26/02 3

ABC Community School PoliciesABC COMMUNITY SCHOOLCONFLICT OF INTEREST POLICYDISCLOSURE STATEMENTI HAVE REVIEWED, UNDERSTOOD, AND HAVE AGREED TO BE BOUND BY THEFOREGOING POLICY.__________________________________Signature___________________Date_____________________________Please print nameDisclosure of Conflict or Potential Conflict(s) of Interest:______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Signature___________________Date_____________________________Please print nameApproved 9/26/02 4

Board of Trustees – Conflict of Interest<strong>Policy</strong> StatementIndividuals serving the School shall at all times act in a manner consistent with their fiduciaryresponsibilities. If an individual believes that he or she may have a conflict of interest, theindividual shall promptly and fully disclose the conflict to the Finance Committee of the Board ofTrustees and shall refrain from participating in any way in the matter to which the conflict relatesuntil the conflict question has been resolved.It is the School’s policy not to enter into any business transactions with related parties.“Related parties” refers to School trustees, employees and significant donors who have a direct orindirect interest or influence in an outside commercial entity, whether an individual, firm, orcorporation.“Business transactions” includes purchases of goods or services, loans, deposits, leases, rentals,transfers of assets, the use of privileged School information, or any other business dealings,whether or not money payment is involved.The purposes of this policy are threefold: (1) to assure that all business transactions with theSchool are conducted at “arm’s length”; (2) to eliminate the potential for conflict of interest,and/or the appearance of conflict of interest that may arise should the School and a related partypropose to enter a business transaction together; (3) to secure the best combination of pricing andquality available to the School.In the event that the administration believes a transaction with a related party may be in the bestinterest of the School, the administration may submit a recommendation to the FinanceCommittee of the Board of Trustees for review, evaluation, recommendation, and submission tothe Board of Trustees for decision. An interested Trustee should not participate in this decision.SignatureDate

COLLEGE PREPARATORY SCHOOLCONFLICT OF INTEREST POLICY(Adopted by the Board of Directors on March 19, 1997)A director or employee of COLLEGE PREPARATORY SCHOOL may not participate in themaking of any decision when it is reasonably possible that the individual or a member of theirimmediate family may benefit financially from the decision.I have read and understand the Conflict of Interest <strong>Policy</strong> of COLLEGE PREPARATORYSCHOOL. If I should become aware of any situation in which I or a related party (spouse,brother/sister, in-laws, children, parents and 35% controlled businesses) might benefit financiallyfrom a decision of COLLEGE PREPARATORY SCHOOL, I will notify the Chairman of theBoard and not participate in the making of the decision. During the four years following myfinal year on the Board of Directors, I will immediately notify the President of the School shouldI, or a related party, become involved in a transaction with COLLEGE PREPARATORYSCHOOL.Name:(please print)Signature:Date: