Layer 1 — At a glance

DRAFT

Ensures that decisions made by Board members, officers, and key employees are made in the best interest of CivicOS Institute — not personal or financial interests. IRS-required for 501(c)(3) organizations. All covered persons sign an annual disclosure statement.

Covers: Directors, officers, key employeesAnnual disclosure: Required within 30 days of fiscal year startGift limit: $75 per occurrence; $25 reporting thresholdEnforcement: Up to and including removal from service

Last reviewed: Not yet reviewed

Layer 2 — Full text

CIVICOS INSTITUTE

CONFLICT OF INTEREST POLICY

PURPOSE

This Conflict of Interest Policy ("Policy") is designed to ensure that the interests of CivicOS Institute (the "Organization") are protected and advanced at all times, and that decisions made by Directors, officers, and key employees are made in the best interest of the Organization, free from any personal, financial, or other conflicting interests.

This Policy is adopted in compliance with the requirements of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. Compliance with this Policy is a condition of service as a Director, officer, or key employee of the Organization.

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SECTION 1: DEFINITIONS

1.1 Conflict of Interest

A "Conflict of Interest" exists when a person's personal, financial, professional, or other interests conflict—or appear to conflict—with the interests of the Organization. Conflicts may be:

(a) **Actual**: A direct conflict between personal interests and organizational interests;

(b) **Potential**: A situation that could develop into an actual conflict;

(c) **Apparent**: A situation that would appear to a reasonable observer to create a conflict, whether or not an actual conflict exists.

1.2 Interested Person

An "Interested Person" is any Director, officer, or key employee of the Organization who has a direct or indirect financial interest, as defined below, or any other interest that could conflict with the interests of the Organization.

1.3 Financial Interest

A person has a "Financial Interest" if they have, directly or indirectly, through business, investment, or family:

(a) An ownership or investment interest in any entity with which the Organization has a transaction or arrangement;

(b) A compensation arrangement with the Organization or with any entity with which the Organization has a transaction or arrangement;

(c) A potential ownership or investment interest in, or compensation arrangement with, any entity with which the Organization is negotiating a transaction or arrangement;

(d) A family member who has any of the interests described above. "Family member" includes a spouse, domestic partner, parent, child, sibling, or any relative sharing the same household.

1.4 Key Employee

"Key Employee" means any employee or contractor who:

(a) Has responsibilities that allow them to exercise substantial influence over the Organization's affairs;

(b) Receives total compensation exceeding [ONE HUNDRED THOUSAND DOLLARS ($100,000)] annually;

(c) Is designated as a key employee by the Board of Directors.

1.5 Non-Financial Interest

A "Non-Financial Interest" includes personal relationships, organizational affiliations, or other interests that could influence or appear to influence a person's objectivity, even if no money is involved.

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SECTION 2: DUTY OF LOYALTY

2.1 Fiduciary Duty

Directors, officers, and key employees owe a fiduciary duty of loyalty to the Organization. This duty requires that they:

(a) Act in good faith and in the best interests of the Organization;

(b) Place the interests of the Organization above personal interests;

(c) Exercise independent judgment free from outside influence;

(d) Avoid situations that create actual, potential, or apparent conflicts of interest.

2.2 Duty of Care

Directors, officers, and key employees shall exercise the care an ordinarily prudent person would exercise in similar circumstances, including:

(a) Being informed about matters before the Board or relevant to their responsibilities;

(b) Participating actively in deliberations;

(c) Seeking independent advice when appropriate;

(d) Making decisions based on all relevant information reasonably available.

2.3 Duty of Obedience

Directors, officers, and key employees shall ensure the Organization operates within its mission and in compliance with all applicable laws and regulations.

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SECTION 3: DISCLOSURE REQUIREMENTS

3.1 Annual Disclosure

Each Director, officer, and key employee shall complete and sign the Organization's Annual Conflict of Interest Disclosure Statement within thirty (30) days of:

(a) Beginning service with the Organization;

(b) The start of each fiscal year thereafter;

(c) Whenever their circumstances change materially.

3.2 Contents of Annual Statement

The Annual Disclosure Statement shall require disclosure of:

(a) All entities in which the person has an ownership or investment interest of more than [FIVE PERCENT (5%)];

(b) All compensation arrangements with the Organization;

(c) All business relationships with entities that do business with or compete with the Organization;

(d) All family members' interests as defined in Section 1.3(d);

(e) Any other facts or circumstances that could create a conflict of interest;

(f) Any positions held with other organizations that might create conflicts.

3.3 Transactional Disclosure

In addition to annual disclosure, each Director, officer, and key employee must disclose any actual or potential conflict of interest:

(a) Immediately upon becoming aware of the conflict;

(b) Before participating in any discussion or vote related to the matter;

(c) In writing or verbally at the beginning of the relevant meeting, to be recorded in the minutes.

3.4 Gifts and Gratuities

Directors, officers, and key employees must disclose:

(a) Any gifts or gratuities received from vendors, contractors, donors, or others doing business with the Organization valued at more than [SEVENTY-FIVE DOLLARS ($75)];

(b) Any entertainment or hospitality that is excessive or could reasonably be perceived as intended to influence official action;

(c) Gifts or benefits provided to family members as described above.

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SECTION 4: PROCEDURES FOR ADDRESSING CONFLICTS

4.1 Identification of Conflict

When a potential conflict is disclosed or identified:

(a) The Interested Person shall disclose all material facts;

(b) The Board or relevant committee shall determine whether a conflict exists;

(c) The determination shall be documented in the meeting minutes.

4.2 Recusal Requirements

When a Director, officer, or key employee has a conflict of interest with respect to a matter:

(a) They shall leave the meeting during discussion of the matter, unless specifically requested to provide information;

(b) They shall not vote on the matter;

(c) They shall not attempt to influence the vote outside the meeting;

(d) They shall not be counted for quorum purposes for that matter;

(e) Their absence and recusal shall be recorded in the minutes.

4.3 Independent Review

Before approving any transaction involving a conflict of interest:

(a) The disinterested Directors shall review the material facts;

(b) Appropriate due diligence shall be conducted;

(c) Comparable market data shall be obtained when relevant;

(d) The transaction shall be determined to be fair and reasonable to the Organization;

(e) The transaction shall be determined to be in the best interests of the Organization.

4.4 Documentation

All proceedings related to conflicts of interest shall be documented in the minutes, including:

(a) The nature of the disclosed conflict;

(b) The name of the Interested Person;

(c) The determination that a conflict exists;

(d) The individuals present during discussion;

(e) The content of the discussion;

(f) Any comparisons to market rates or other due diligence;

(g) The vote taken and the result;

(h) The determination that the transaction is fair and reasonable.

4.5 Arm's Length Terms

Any transaction with an Interested Person shall be conducted on arm's length terms no less favorable to the Organization than would be available from an unrelated party. The Board must specifically approve any compensation or contractual terms.

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SECTION 5: PROHIBITED TRANSACTIONS

5.1 Prohibited Arrangements

The following are prohibited without prior approval by the Board after full disclosure:

(a) Loans to Directors, officers, or key employees;

(b) Guarantees of personal obligations of Directors, officers, or key employees;

(c) Sale, lease, or exchange of Organization property to an Interested Person;

(d) Purchase of property from an Interested Person;

(e) Compensation arrangements with family members of Directors or officers, unless following an open competitive process;

(f) Any other transaction that would result in private inurement or excess benefit.

5.2 Excess Benefit Transactions

No Director, officer, or key employee shall receive any benefit from the Organization that is excessive or unreasonable compared to benefits provided by similar organizations for similar services or property.

5.3 Political Activities

No Organization resources shall be used to support or oppose any candidate for public office or any political party, and no Director, officer, or key employee shall use their position to engage in partisan political activities.

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SECTION 6: COMMON CONFLICT SCENARIOS

6.1 Compensation Decisions

When determining compensation for an Interested Person:

(a) The person shall recuse themselves from discussion and voting;

(b) The Board shall use appropriate comparability data;

(c) The decision shall be documented;

(d) Independent Directors shall approve the compensation.

6.2 Business Relationships

If an Interested Person or their business has a relationship with a vendor, grantee, or contractor:

(a) Full disclosure is required;

(b) Competitive bidding should be used when practicable;

(c) The relationship must be demonstrably fair to the Organization;

(d) The Board must approve the relationship after recusal.

6.3 Board Service on Other Organizations

Service on multiple boards can create conflicts:

(a) Directors shall disclose board memberships;

(b) Potential conflicts arising from dual service must be disclosed;

(c) Directors shall not share confidential information between organizations;

(d) Directors shall recuse themselves when organizations have competing interests.

6.4 Employment of Family Members

Employment or contracting with family members requires:

(a) Prior Board approval;

(b) Disclosure of the relationship;

(c) Compliance with all Organization employment policies;

(d) Documentation that the arrangement is in the best interest of the Organization;

(e) No reporting relationship between family members.

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SECTION 7: INVESTIGATION AND ENFORCEMENT

7.1 Duty to Report

All Directors, officers, and key employees have a duty to report suspected violations of this Policy to the Chair of the Board or, if the Chair is involved, to another Director.

7.2 Investigation

Upon receipt of a report of a potential violation:

(a) The Chair (or designated Director) shall review the allegation;

(b) If warranted, an investigation shall be conducted;

(c) The investigation shall be documented;

(d) The results shall be reported to the Board or Executive Committee;

(e) The Interested Person shall have an opportunity to respond.

7.3 Corrective Actions

If a violation of this Policy is confirmed, the Board may take appropriate corrective action, including:

(a) Requiring additional disclosure;

(b) Requiring recusal from specific matters;

(c) Requiring divestment of conflicting interests;

(d) Suspension of the person from their position;

(e) Removal from the Board or termination of employment;

(f) Legal action to recover damages;

(g) Reporting to appropriate authorities if laws were violated.

7.4 No Retaliation

The Organization prohibits retaliation against any person who reports a potential conflict in good faith, even if the report is later determined to be unsubstantiated.

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SECTION 8: EDUCATION AND TRAINING

8.1 Orientation

All new Directors, officers, and key employees shall receive a copy of this Policy and complete an orientation on their duties and responsibilities within thirty (30) days of assuming their position.

8.2 Annual Review

All Directors, officers, and key employees shall review this Policy annually and acknowledge in writing their understanding and agreement to comply.

8.3 Ongoing Education

The Organization shall provide periodic training on conflict of interest issues, including:

(a) Recognition of potential conflicts;

(b) Proper disclosure procedures;

(c) Recusal requirements;

(d) Documentation requirements.

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SECTION 9: RECORD KEEPING

9.1 Confidentiality

Disclosure statements and related documents shall be treated as confidential and shall be:

(a) Maintained by the Secretary or designee;

(b) Accessible only to the Board, auditors, and legal counsel;

(c) Stored securely with appropriate access controls;

(d) Retained for [SEVEN (7)] years after the person's service ends.

9.2 Access

Directors may review their own disclosure statements upon request. Access to others' statements requires a majority vote of the Board with a legitimate need to know.

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SECTION 10: ANNUAL CERTIFICATION

Each Director, officer, and key employee shall annually sign and return the following certification:

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**ANNUAL CONFLICT OF INTEREST CERTIFICATION**

I, _________________________________, certify that:

1. I have received and read the Conflict of Interest Policy of CivicOS Institute;

2. I understand my obligations under this Policy;

3. I have disclosed all actual and potential conflicts of interest as required;

4. I agree to comply with this Policy and promptly disclose any future conflicts;

5. I understand that failure to comply may result in removal from my position.

I have the following interests to disclose (attach additional sheets if necessary):

_____________________________________________________________________________

Signature: ___________________________ Date: _________________

Print Name: __________________________

Position: ____________________________

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SECTION 11: REVIEW AND AMENDMENT

This Policy shall be reviewed annually by the Board and amended as necessary to ensure compliance with applicable law and best practices. Any amendments must be approved by the Board of Directors.

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SECTION 12: EFFECTIVE DATE

This Conflict of Interest Policy is effective as of [DATE] and supersedes all prior policies on this subject.

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**ADOPTED BY THE BOARD OF DIRECTORS:**

Date: ___________________

_________________________________

[NAME], Secretary

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APPENDIX A: COMMON EXAMPLES OF CONFLICTS OF INTEREST

The following are examples of situations that may create conflicts of interest. This list is illustrative, not exhaustive:

1. **Compensation Arrangements**

- Voting on one's own salary or benefits

- Influencing the compensation of a family member

- Receiving payments from Organization vendors

2. **Business Relationships**

- Selling goods or services to the Organization

- Purchasing goods or services from the Organization below market rates

- Having an ownership interest in an Organization vendor or competitor

3. **Governance Conflicts**

- Serving on the board of a competing organization

- Using Organization resources for personal benefit

- Disclosing confidential information for personal advantage

4. **Gift Relationships**

- Accepting substantial gifts from vendors or grantees

- Receiving entertainment that could influence decision-making

- Offering preferential treatment to gift-givers

5. **Employment Conflicts**

- Hiring or supervising family members

- Influencing the hiring of friends or associates

- Making personnel decisions affecting someone with whom one has a personal relationship

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APPENDIX B: DISCLOSURE STATEMENT TEMPLATE

**CONFLICT OF INTEREST DISCLOSURE STATEMENT**

**Personal Information**

Name: ________________________________

Position: ____________________________

Date: ________________________________

Fiscal Year: _________________________

**Employment and Compensation**

1. Do you receive compensation from the Organization? ☐ Yes ☐ No