CONFLICT OF INTEREST POLICY

Article 1 – Purpose

The purpose of this conflict of interest policy is to protect the interest of First United Methodist Foundation of Phoenix (the “Foundation”) when it is contemplating entering into a transaction that might benefit the private interest of a director of the Foundation or might result in a possible excess benefit transaction.  The policy is intended to supplement but not replace any applicable state and federal laws governing conflicts of interest applicable to nonprofit and charitable organizations.

Article 2 – Definitions

Section 2.01.  Board. The board means the board of directors of the Foundation.

Section 2.02   Church. The Church means the First United Methodist Church of Phoenix, Arizona.

Section 2.03.  Committee. A committee as used in this policy shall mean a committee to which the board has delegated decision making authority.

Section 2.04.  CompensationCompensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.  No conflict of interest exists with respect to authorized compensation, if any, received from the Foundation for performance of the duties of a director.  To the extent a director is also a pastor or employee of the Church, remuneration received from the Church as a pastor or employee is not compensation for these purposes even if directly or indirectly funded by payments from the Foundation.

Section 2.05.  Interested Person.  An interested person is any director who has a direct or indirect financial interest, as defined below.

Section 2.06.  Financial Interest.  A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:

  1. An ownership or investment interest in any entity with which the Foundation has a transaction or arrangement;
  2. A compensation arrangement with the Foundation or with any entity or individual with which the Foundation has a transaction or arrangement; or
  3. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Foundation is negotiating a transaction or arrangement.

A financial interest is not necessarily a conflict of interest.  Under Article 3, a person who has a financial interest may have a conflict of interest only if the board or the appropriate committee determines that a conflict of interest exists.

Article 3 – Procedures

Section 3.01.  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 board or the members of the committee considering the proposed transaction or arrangement.

Section 3.02.  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 or she shall leave the board or committee meeting while the determination of a conflict of interest is discussed and voted upon.  The remaining board or committee members shall decide if a conflict of interest exists.

Section 3.03.  Procedures for Addressing the Conflict of Interest.

  1. An interested person may make a presentation at the meeting of the board or the committee, but after the presentation, he or she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
  2. The chairperson of the board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
  3. After exercising due diligence, the board or committee shall determine whether the Foundation 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.
  4. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the board or committee shall determine by a majority vote of the disinterested board or committee members whether the transaction or arrangement is in the best interests of the Foundation 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.

Section 3.04  Violations of the Conflict of Interest Policy.

  1. If the board or a committee has reasonable cause to believe a person to whom this policy is applicable has failed to disclose an actual or possible conflict of interest, it shall inform the person of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
  2. If, after hearing the person’s response and after making further investigation as warranted by the circumstances, the board or committee determines the person has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

Article 4 – Records of Proceedings

The minutes of the board and all committees shall contain:

  1. 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 or committee’s decision as to whether a conflict of interest in fact existed.
  2. The names of the persons who were present for discussions and the 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.

Article 5 – Compensation

  1. A voting member of the board who receives compensation from the Foundation for services is precluded from voting on matters pertaining to that person’s compensation.
  2. A voting member of any committee, whose delegated authority includes compensation matters, and who receives compensation from the Foundation for services is precluded from voting on matters pertaining to that person’s compensation.
  3. No voting member of the board or any committee, whose jurisdiction includes compensation matters, and who receives compensation from the Foundation is prohibited from providing information to the board or any committee considering compensation.

Article 6 – Director Affirmations

Following the adoption of this policy, as amended in 2014, (i) each director then serving and (ii) each new director upon taking office, shall sign a statement which affirms such director:

  1. Has received a copy of this Conflict of Interest Policy;
  2. Has read and understands the Conflict of Interest Policy;
  3. Agrees to comply with the Conflict of Interest Policy; and
  4. Understands that the Foundation is a tax-exempt charitable organization 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.

Article 7 – Periodic Reviews

To ensure that the Foundation is operated in a manner consistent with its tax-exempt 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:

  1. Whether compensation arrangements and benefits are reasonable, based on competent comparative information, and the result of arms-length bargaining.
  2. Whether partnerships, joint ventures, and arrangements with other entities and organizations conform to the Foundation’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, the Foundation may, but need not, use outside advisors.  If outside experts are used, their use does not relieve the board of its responsibility for ensuring that periodic reviews are conducted.

 

REVIEW

These GUIDELINES shall be reviewed, and revised if appropriate, bi-annually by the Foundation Board Governance Committee and again be approved by the Foundation Board.

APPROVAL

These GUIDELINES were most recently adopted by the Foundation Board at their regular meeting on May 6, 2014.

Click here to download a copy of the Conflict of Interest Policy.

 

Foundation Board Conflict of Interest Policy