This Conflict of Interest Policy governs the activities of the board of directors, advisors, and staff of the Deep Creek Watershed Foundation, Inc., (hereinafter “Foundation”). The purpose of the policy is to assure that the Foundation, its directors, advisors, and staff act with integrity in carrying out the mission of the Foundation by avoiding even the appearance of a conflict of interest that could undermine public confidence in the activities of the Foundation. Questions about the policy should be directed to the President of the Board or other Designated Person. It is the duty of all directors, advisors, and staff to be aware of this policy, and to identify conflicts of interest and situations that may result in the appearance of a conflict and to disclose those situations/conflicts/or potential conflicts to the President of the Board or Other Designated Person, as appropriate. This policy provides guidelines for identifying conflicts, disclosing conflicts, and procedures to be followed to assist the Foundation in managing conflicts of interest and situations that may result in the appearance of a conflict.
What is a conflict of interest?
A conflict of interest arises when a director, advisor or staff member has a personal interest that conflicts with the interests of the Foundation or in situations where a director, advisor, or staff member has divided loyalties also known as “duality of interest.” The former is principally a financial conflict of interest and can result in situations that result in inappropriate financial gain to persons in authority with the Foundation and lead to financial penalties and violations of IRS regulations. Non-financial conflicts of interest or duality of interest conflicts, sometimes called “conflict of loyalties,” are more nuanced and arise frequently in nonprofit organizations when a director, advisor, or staff member is also a member of other boards, organizations, or governmental entities whose positions and/or interests may be different from those of the Foundation. A director, advisor, or staff member with a financial or non-financial conflict of interest is known as an “Interested Person” and is expected to recuse him/herself from (i.e., abstain from) participating in Foundation decisions where such a conflict exists.
Example 1
A director, advisor, or staff member of the Foundation Board may benefit financially from a transaction between the Foundation and the director/advisor/staff member, or others closely associated with the director/advisor/staff member may be affected financially. Family members, or their businesses, or other persons or the businesses of other persons with whom the director/advisor/staff member is closely
associated, could benefit from similar transactions.
Example 2
A conflict of interest could be a direct or indirect financial interest such as those described in Example #1, or a personal interest such as the situation where a director/advisor/staff member has a conflict of loyalties by virtue of membership on other boards, in other organizations, or on governmental bodies whose positions or interests may be different from the Foundation, or stand to gain by Foundation action.
Disclosure of conflicts
Foundation directors, advisors, and staff members have a duty to disclose annually and promptly update any disclosures previously made to the President on a Conflict of Interest Disclosure form provided by the Foundation that requests them to identify their interests that could give rise to conflicts of interest, such as a list of family members, substantial business or investment holdings, and other transactions or affiliations with businesses, other nonprofit boards, other organizations, and governmental entities or those of family members. Directors, advisors, and staff members are urged to disclose conflicts as they arise as well as to disclose those situations that are evolving that may result in a conflict of interest. Advance disclosure must occur so that a determination may be made as to the appropriate plan of action to manage the conflict. Directors, advisors, and staff members should disclose to the President or other designated person as soon as that person with a conflict is aware of the conflict/potential conflict or appearance of a conflict exists.
Procedures to manage conflicts
For each interest disclosed, the President of the Foundation, or other Designated Person, shall determine whether the organization should: (a) take no action or (b) disclose the situation more broadly and invite discussion/resolution by the full board of what action to take, or (c) refrain from taking action and otherwise avoid the conflict. In most cases the broadest disclosure possible is advisable so that decision-makers can make informed decisions that are in the best interests of the Foundation.
- When the conflict or potential conflict involves a decision-maker, i.e., director of the Foundation Board, the person with the conflict (“Interested Person”): (i) must fully disclose the conflict or potential conflict to all other decision-makers; (ii) may not be involved in the decision of what action to take (e.g., may not participate in a vote) but may serve as a resource to provide other decision-makers with needed information.
- In some cases the Interested Person may be asked to recuse him/herself from sensitive discussions so as not to unduly influence the discussion of the conflict.
- In all cases, decisions involving a conflict will be made only by disinterested persons.
- If the conflict was related to a director or advisor, the outcome will be documented in the minutes of the board meetings. If the conflict was related to a staff member the outcome will be reported to the President of the board or Other Designated Person.
- The President of the Board or Other Designated Person will monitor proposed or ongoing transactions of the organization (e.g., contracts with vendors and collaborations with third parties) for conflicts of interest and disclose them to the board as appropriate, whether discovered before or after the transaction has occurred.