Ethics, Managing Conflicts of Interest

300 Governance

Policy Reference:
Policy Name:
Original Effective Date:
Revised Effective Date:

 

GV-303
Ethics, Managing Conflicts of Interest
10/13/2017
01/01/2021

303.1         Policy Statement

Alfalit operates with integrity and transparency and ensures all conflicts of interest are mitigated.

303.2         Policy Detail

          1. The board of directors is committed to its fiduciary responsibility of mitigating conflicts of interest.
          2. The board of directors enforces the duty to disclose for those who enter into a transaction or arrangement that might benefit the private interest of an officer, honorary board member, or key employee of Alfalit or might result in a possible excess benefit transaction or might appear to do so.
          3. This Policy supplements but does not replace any applicable state and federal laws governing conflicts of interest applicable to nonprofit and charitable organizations.

303.3         Procedures

          1. Board members sign an annual conflict of interest statement in addition to their annual contract.
            1. This statement is a disclosure of any actual, potential, or possible perceived conflicts of interest when their personal, professional, or business interests are or may be construed to be incompatible with the best interests of Alfalit or Alfalit Realty Holdings.
            2. This requirement extends to disclosing the same information concerning their family members, friends, or colleagues.
          2. The external auditor issues related party questionnaires or similar surveys to board members to obtain appropriate audit evidence to determine whether related parties and relationships and transactions with related parties are properly identified, accounted for, and disclosed in the financial statements.
          3. Honorary directors must disclose any actual, potential, or possible perceived conflicts of interest to the board when their personal, professional, or business interests are or may be construed to be incompatible with the best interests of Alfalit or Alfalit Realty Holdings. This requirement extends to disclosing the same information concerning their family members, friends, or colleagues.
          4. Other volunteers, interns, staff, and consultants must disclose any actual, potential, or possible perceived conflicts of interest to the executive director when their personal, professional, or business interests are or may be construed to be incompatible in the best interest of Alfalit or Alfalit Realty Holdings. This requirement extends to disclosing the same information concerning their family members, friends, or colleagues.

303.4         When conflicts exit:

          1. Governance policies and procedures are followed for board members, honorary board members, other volunteers, and the executive director.
          2. Human Resources policies and procedures are followed for staff, excluding the executive director, volunteers, interns, and consultants. The executive director is responsible for managing and resolving such conflicts and informing the board of the conflict and outcome. See the Human Resources Module for more detail.

303.5         Duty to Disclose

          1. In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial or other interest and be allowed to disclose all material facts to board members without interest.
          2. The disclosure of a financial interest is not necessarily a conflict of interest.
          3. No interested person will be disqualified from holding any office in Alfalit because of any interest in any concern so long as the interest is disclosed, and the board agrees that a conflict does not exist.
          4. An interested person will not be disqualified from dealing, either as a vendor, purchaser, or otherwise, or contracting or agreeing to any other transaction with Alfalit or with any entity of which Alfalit is an affiliate so long as the interest is disclosed, and the board agrees that a conflict does not exist.
          5. No transaction of Alfalit will be voided because any interested person of Alfalit has an interest in the concern with which such transaction is entered so long as the interest is disclosed, and the board agrees that a conflict does not exist.

303.6         Determining Whether a Conflict of Interest Exists

After disclosing the financial interest and all material facts, and after any discussion with the interested person, they shall leave the board meeting while the determination of a conflict of interest is discussed, and the decision is put to a vote. The remaining board members shall decide if a conflict of interest exists.

303.7         Procedures for Addressing the Conflict of Interest

          1. An interested person may make a presentation a board meeting, but after the presentation, they shall leave the meeting during the discussion of, and the vote, the transaction or arrangement involving the possible conflict of interest.
          2. The chairperson of the board or their designee 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 shall determine whether Alfalit can obtain a more advantageous transaction or arrangement from a person or entity with reasonable efforts that would not give rise to a conflict of interest.
          4. If a more advantageous transaction or arrangement is not reasonably possible under the circumstances, the board shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in Alfalit’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, it shall decide whether to enter the transaction or arrangement or not.

303.8         Violations of the Conflict of Interest Policy

          1. If 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 allow the member to explain the alleged failure to disclose.
          2. If, after hearing the member’s response and making further investigation as warranted by the circumstances, the board determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

303.9        Records of Proceedings

          1. The minutes of the governing board and all committees with board-delegated powers shall contain:
            1. The names of the person who disclosed or otherwise were found to have a financial interest in connection with any actual or possible conflict of interest, the nature of the financial interest, any action is taken to determine whether a conflict of interest was present, and the governing board ‘s or committee’s decision as to whether a conflict of interest existed.
            2. The names of the persons 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.
          2. The summary of the proceeding should include the following:
            1. Name of the conflicted person
            2. Description of the conflict
            3. Members present during the discussion
            4. Whether the conflicted person was present during the discussion
            5. The content of the discussion
            6. The members who voted
            7. The result of the vote
            8. Any action taken because of the vote

303.10       Compensation

          1. A voting member of the governing board who receives compensation, directly or indirectly, from Alfalit for services is precluded from voting on matters about that member’s compensation.
          2. A voting member of any committee whose jurisdiction included compensation matters and who receives compensation, directly or indirectly, from Alfalit for services is precluded from voting on matters about that member’s compensation.
          3. No voting member of the governing board or any committee whose jurisdiction included compensation matters and who receives compensation, directly or indirectly, from Alfalit, either individually or collectively, is prohibited from providing information to any committee regarding compensation.

303.11       Annual Statements

Each director, principal officer, top management official, top financial officer, each key employee, and member of a committee with governing board-delegated powers shall annually sign a statement that affirms such person:

          1. Has received a copy of the conflicts of interest policy,
          2. Has read and understands the policy,
          3. Has agreed to comply with the policy, and
          4. Understands Alfalit is charitable, and to maintain its federal tax exemption, it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.

303.12       Periodic Reviews

To ensure Alfalit operates in a manner consistent with charitable purposes, as reflected in its IRS Form 990, and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews of the administration of this conflict of interest policy are conducted. The review considers the level of compliance with the policy, the continuing suitability, and whether the policy should be modified and improved. The reviews shall, at a minimum, include the following subjects:

          1. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s length bargaining.
          2. Whether partnerships, joint ventures, and arrangements with management organizations conform to Alfalit’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.
          3. When conducting the periodic reviews, Alfalit may, but is not required, to use outside advisors. If outside advisors are used, their use shall not relieve the governing body of its responsibility for ensuring periodic reviews are conducted.

303.13       Definitions

          1. External Audit: An examination of financial records, accounts, business transactions, accounting practices, and internal controls of a charitable nonprofit by an “independent” auditor, usually a certified public accountant. While the IRS does not require an external audit, most federal and state governments and grant funders do.
          2. IRS Form 990: An informational tax form that most tax-exempt organizations must file annually. The form provides a summary of the organization’s activities, governance, and detailed financial information. This information is used to determine if the organization continues to qualify for currently held tax-exempt status
          3. Fiduciary: Nonprofit board members make many important decisions, such as recruiting and appointing new board of directors, hiring and firing the executive director, monitoring financial reports, and conducting an annual audit. These duties fall under the responsibility of care, loyalty, or obedience. These duties are mandated by the state of Florida and common law.
          4. Conflict of Interest: When any officer, board member, honorary board member, staff, volunteer, intern, or consultant has a barrier, real or perceived, that prevents or seems to prevent them from being impartial and loyal to the nonprofit organization.
          5. Interested Person: Any officer board member, honorary board member, staff, volunteer, intern, or consultant, or member of a committee with board-delegated powers who has a direct or indirect financial interest.
          6. Officer: Alfalit’s chairperson, vice-chairperson, secretary, treasurer, executive committee member, emeritus members, executive director, or any other person with the responsibilities of any of these positions (regardless if the person is an officer of Alfalit under Alfalit’s Bylaws.)
          7. Honorary Board member: a special category of board membership reserved for those with an affinity for Alfalit and who support the organization but cannot serve as an elected board member for whatever reason. Only the board of directors can award this designation.
          8. Key Employee: An employee whose total annual compensation (including benefits) from Alfalit and or its affiliates is more than $150,000 and who has responsibilities or influence over Alfalit like that of officers, directors, or trustees
          9. Transaction: Any matter, agreement, or arrangement between an interested person and Alfalit, or between Alfalit and any third party where an interested person has an interest in the transaction or any party to it. Such transactions do not include compensation arrangements between Alfalit and staff but do include those with consultants.
          10. 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 Alfalit has a transaction or arrangement, or
            2. A compensation arrangement with Alfalit or with any entity or individual with which Alfalit has a transaction or arrangement, or
            3. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which Alfalit is negotiating a transaction or arrangement.
          11. Compensation: Direct and indirect remuneration as well as gifts or favors that are not insubstantial.

303.14       Exhibits / Appendices / Forms /Supporting Information

None

Alfalit International – Policies & Procedures.GV-303