Conflict of Interest
Section I Purpose
The purpose of the conflict of interest policy is to protect this tax-exempt organization’s (The Knox Historical Society) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or trustee of the Society 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 conflict of interest applicable to nonprofit and charitable organizations.
Section II Definitions
A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.
Section III Procedures
The minutes of the governing board shall contain:
Each member of the governing board shall, upon change of office, sign a statement that affirms he/she:
To ensure the Society operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
When conducting the periodic reviews as provided for in Article VII, the Society may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.
Section I Purpose
The purpose of the conflict of interest policy is to protect this tax-exempt organization’s (The Knox Historical Society) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or trustee of the Society 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 conflict of interest applicable to nonprofit and charitable organizations.
Section II Definitions
- Interested Person – Any trustee, principal officer, or member of a committee with governing board delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.
- Financial Interest – A person has a financial interest if the person has, directly or indirectly, through business, investment or family:
- An ownership or investment interest in any entity with which the Society has a transaction or arrangement,
- A compensation arrangement with the Society or with any entity or individual with which the Society has a transaction or arrangement, or
- A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Society is negotiating a transaction arrangement.
A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.
Section III Procedures
- 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 officers and trustees (governing board) who are considering the proposed transaction or arrangement.
- Determining Whether a Conflict of Interest Exists – After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing meeting while the determination of a conflict of interest is discussed and voted upon. The remaining members of the governing board shall decide if a conflict of interest exists.
- Procedures for Addressing the Conflict of Interest –
- An interested person may make a presentation at the meeting with the governing board, but after the presentation he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
- The KHS president shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
- After exercising due diligence, the governing board shall determine whether the Society can obtain with reasonable efforts a more advantageous transaction or arrangement from a person of entity that would not give rise to a conflict of interest.
- If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board shall determine by a majority vote of the disinterested governing board whether the transaction or arrangement is in the Society’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.
- Violations of the Conflicts of Interest Policy
- If the governing board has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
- If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
The minutes of the governing board shall contain:
- 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 governing board’s decision as to whether a conflict of interest in fact existed.
- The names of the person who were present for discussions and votes 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 votes taken in connection with the proceedings.
- A voting member of the governing board who receives compensation, directly or indirectly, from the Society for services is precluded from voting on matters pertaining to that member’s compensation.
- A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Society for services is precluded from voting on matters pertaining to that member’s compensation.
Each member of the governing board shall, upon change of office, sign a statement that affirms he/she:
- Has received a copy of the Conflicts of Interest Policy.
- Has read and understands the policy.
- Has agreed to comply with the policy.
- Understands the Society is charitable and in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.
To ensure the Society operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
- Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s length bargaining.
- Whether partnerships, joint ventures, and arrangements with management organizations conform to the Society’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurement, impermissible private benefit or in an excess benefit transaction.
When conducting the periodic reviews as provided for in Article VII, the Society may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.