Policy Author: Board of Trustees
Responsible Office – Department: Board of Trustees, President’s Office
Effective Date of Policy: Revised September 16, 2014
Article I.
Purpose
The purpose of the conflicts of interest policy, as embodied in Article X of the Bylaws (Revised September 16, 2014) is to protect the University’s interest when it is considering transactions or arrangements that might benefit the private interests of an officer or Trustee of the University. The policy incorporated into Article X of the Bylaws is compliant with the latest State of New York requirements for enhanced conflict of interest policies within the non-profit corporation sector. However, the conflicts of interest policy is intended to supplement but not replace any applicable state laws governing conflicts of interest applicable to nonprofit corporations, including the Non-Profit Revitalization Act of 2013 that took effect on July 1, 2014.
Article II.
Definitions
A Board member shall be considered to have a conflict of interest if he or she, or the person or entities with which he or she is affiliated, has a direct or indirect interest that may impair or may reasonably appear to impair his or her independent, unbiased judgment in the discharge of his or her responsibilities to the University. The University will not enter into any transaction in which a Trustee, or persons or entities closely associated with that Trustee, have a material financial interest, direct or indirect, or with respect to which a Trustee’s independence of judgment might be impaired.
The following definitions shall apply to the interpretation of this Policy:
The term “closely associated” shall be defined as a spouse, parent, sibling, child, person living in the household or business associate of the Trustee.
The term “entity” shall be defined as follows:
- A spouse, parent, sibling, child, person living in the household or business associate of the Trustee;
- Any entity which is directly or indirectly owned or controlled individually or collectively by the Trustees and/or by one or more of the persons described in Definition (1) above. For this purpose, “owned” means holding more than 35 percent of voting membership rights or voting stock in the entity; and “controlled” means comprising over 35 percent of the directors, partners, trustees or other members of the governing body of the entity;
- A law firm, accounting firm or any other professional services organization of which the Trustee or any person described in Definition (1) above, is a partner, shareholder or holds any other ownership interest; and
- Other partnership of which the Trustee or any person described in Definition (1) above is a partner.
Exceptions to these restrictions are set forth in Section 3(a) and 3(b) of Article X of the Bylaws and are incorporated by reference herein.
Article III.
Procedures
(1) Disclosure of Conflicts. Trustees who believe a potential transaction with the University may involve a conflict under the terms of Article X of the Bylaws and/or this Policy document must report that transaction and all material facts in writing to the Board of Trustees, through the Audit Committee of the Board, in sufficient time for the Audit Committee to approve or disapprove such transaction.
All members of the Board of Trustees annually shall complete, sign and submit to the Secretary of the Board a written statement identifying any entity of which such Trustee is an officer, director, trustee, member, partner, owner, or employee, and with which the University has a relationship and any transaction which the corporation is a party to, and in which such Trustee may have a conflicting interest.
Such statements shall be made available by the Secretary of the Board to the Chair of the Audit Committee and to the Chair of the Board of Trustees.
(2) Procedure for Addressing the Conflict of Interest:
- The Audit Committee shall determine whether a conflict of interest exists and, if so, whether the transaction or arrangement is in the University’s best interest and for it own benefit and whether the transaction is fair and reasonable to the University;
- A positive disposition of the potential conflict of interest shall be predicated upon a finding that the transaction under review is (1) fair to the University; (2) should be approved following a finding that the University cannot obtain a more advantageous alternative to the proposed transaction with a reasonable effort; and (3) not constituting an excess benefit as defined under Section 4958 of the Internal Revenue Code;
- Pursuant to Article X of the Bylaws and this Policy document, when a potential conflict of interest is under review, the Trustee whose potential conflict is under consideration may not be present at nor participate in, a meeting of the Audit Committee addressing such potential conflict, nor at a meeting of the Board of Trustees, nor vote in either forum on the matter giving rise to such potential conflict. However, said Trustee may be requested by other Trustees to briefly attend such meetings to briefly state his or her position on such potential conflict of interest, or answer pertinent questions from other Trustees, if such participation or input is specifically requested in advance by members of the Audit Committee or from other Trustees at a meeting of the Board of Trustees;
- Such Trustee whose potential conflict is under consideration shall not make any attempt to improperly influence the deliberations or voting on the matter giving rise to such conflict.
- The Board Secretary shall record the existence and resolution of the potential conflict of interest, in the Minutes of any meeting of the Audit Committee where such potential conflict is considered and voted upon, or of any meeting of the Board of Trustees where such potential conflict is considered and is voted upon.
- A report of all conflicts voted on during the preceding year or reported by Trustees shall be forwarded to the Board of Trustees by the Audit Committee with statement of the resolutions reached on each conflict.
(3) Restrictions. The Corporation will not enter into any transaction in which a Trustee, or persons or entities closely associated (as hereinafter defined) to that Trustee, have a material financial interest, direct or indirect, or with respect to which a Trustee’s independence of judgment might be impaired. Exceptions to the restrictions under this Section are transactions:
- approved by a majority of the Audit Committee. If a majority of the Audit Committee is disqualified from acting or if a majority of the Audit Committee elects to refer the matter to the Executive Committee, then approval by a majority of the Executive Committee shall be required; or
- involving competitive bids or standard rates and terms offered to businesses generally.
(4) Board Procedures/Voting.
- When a potential conflict of interest is under review pursuant to this Article, the Trustee whose potential conflict is under consideration may not be present at nor participate in, a meeting of the Audit Committee addressing such potential conflict, nor at a meeting of the Board of Trustees, nor vote in either forum on the matter giving rise to such potential conflict. However, said Trustee may be requested by other Trustees to briefly attend such meetings to briefly state his or her position on such potential conflict of interest, or answer pertinent questions from other Trustees, if such participation or input is specifically requested in advance by members of the Committee or from other Trustees at a meeting of the Board of Trustees. Such Trustee whose potential conflict is under consideration shall not make any attempt to improperly influence the deliberations or voting on the matter giving rise to such conflict.
- A positive disposition of the potential conflict of interest shall be predicated upon a finding that the transaction under review is (1) fair to the University; (2) should be approved following a finding that the University cannot obtain a more advantageous alternative to the proposed transaction with a reasonable effort; and (3) not constituting an excess benefit as defined under Section 4958 of the Internal Revenue Code.
- The Board Secretary shall record the existence and resolution of the potential conflict of interest, in the Minutes of any meeting of the Audit Committee where such potential conflict is considered and voted upon or of any meeting of the Board of Trustees where such potential conflict is considered and is voted upon.
- A report of all conflicts voted on during the preceding year or reported by Trustees shall be forwarded to the Board of Trustees by the Audit Committee with a statement of the resolutions reached on each conflict considered.
Article IV.
Violations of the Conflicts of Interest Policy
- If the Audit Committee or the Board has reasonable cause to believe that 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; and
- If, after hearing the response of the member and making such further investigation as may be warranted in the circumstances, the Board determines that the member has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective actions.
Article V.
Annual Statements on Conflicts of Interest
Each Trustee, principal officer and member of a Standing Committee of the Board of Trustees with Board delegated powers, shall annually sign and date a statement which affirms that such person—
- has received a copy of the Bylaws as amended and approved by the Board of Trustees on September 16, 2014, and the Daemen University Board of Trustees Conflicts of Interest Policy document;
- has read and understands the provisions of Article X of the Bylaws and the Daemen University Board of Trustees Conflicts of Interest Policy document;
- has agreed to comply with the policies incorporated in both Article X of the Bylaws, and the Daemen University Board of Trustees Conflicts of Interest Policy document; and
- understands that the university is a charitable organization and that in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.
Such statements shall be made available by the Secretary of the Board to the Chair of the Audit Committee and to the Chair of the Board of Trustees.
Attachment: Annual Statement and Disclosure in Compliance with Article X of the Bylaws, and the Daemen University Board of Trustee’s Conflict of Interest Policy.