What is the purpose of this? This policy is designed to ensure that key people involved in the decision making of the Foundation are not influenced by financial or other personal considerations that may affect, or have the appearance of affecting, their professional judgment in exercising any duty or responsibility
Who does the policy cover? The policy applies to covered individuals: Board members, officers, the Executive Director, the Financial Director (if any) and key staff. A covered individual may have a conflict of interest due to some interest of their own, or that of a family member.
What is a "conflict of interest"? There is a conflict of interest whenever the foundation enters - or considers entering - into a transaction or business relationship directly with a covered individual or the family member of a covered individual. For example, a conflict exists if:
- The Foundation purchases products manufactured by the spouse of the Executive Director.
- The Foundation engages a firm for financial advice and the Financial Director serves as a director of that firm.
- The Foundation purchases services from a company owned by a director's sibling
It is important to note that the existence of a conflict does not necessarily mean the transaction cannot occur, just that the Foundation has to act to address the conflict in order to ensure that the transaction is in the best interests of the Foundation.
Conflict of Interest Policy
Article I: Purpose
This conflict of interest policy is designed to foster public confidence in the integrity of the GNOME Foundation (the “Organization”) and to protect the Organization’s interest when it is contemplating entering a transaction (defined below) that might benefit the private interest of a director, a corporate officer, the top management or top financial official, or a key employee (defined below).
Article II: Definitions
The following are considered covered individuals for the purposes of this policy:
- Each member of the Board of Directors or other governing body.
- The president, chief executive officer, chief operating officer, treasurer and chief financial officer, executive director, or any person with the responsibilities of any of these positions (whether or not the person is an officer of the Organization under the Organization’s Bylaws and the California Corporations Code).
Any key employee, meaning an employee whose total annual compensation (including benefits) from the organization and its affiliates is more than $150,000 and who (a) has responsibilities or influence over the organization similar to that of officers, directors, or trustees; or (b) manages a program that represents 10% or more of the activities, assets, income, or expenses of the organization; or (c) has or shares authority to control 10% or more of the organization’s capital expenditures, operating budget, or compensation for employees.
Interest means any commitment, investment, relationship, obligation, or involvement, financial or otherwise, direct or indirect, that may influence a person’s judgment, including receipt of compensation from the Organization, a sale, loan, or exchange transaction with the Organization.
A conflict of interest is present when, in the judgment of the Board of Directors, a covered individual’s stake in the transaction is such that it reduces the likelihood that a covered individual’s influence can be exercised impartially in the best interests of the Organization.
Transaction means any transaction, agreement, or arrangement between a covered individual and the Organization, or between the Organization and any third party where a covered individual has an interest in the transaction or any party to it. Transaction does not include compensation arrangements between the Organization and a director, officer, or other covered individual that are wholly addressed under the Organization’s Compensation Policy.
Article III: Procedures
Duty to Disclose
Each covered individual shall disclose to the Board all material facts regarding his or her interest in the transaction, promptly upon learning of the proposed transaction.
Determining Whether a Conflict of Interest Exists
With regard to a covered individual, the Board shall determine if a conflict of interest exists. The covered individual(s) and any other interested person(s) involved with the transaction shall not be present during the Board’s discussion or determination of whether a conflict of interest exists, except as provided in Article IV below.
Procedures for Addressing a Conflict of Interest
The Board shall follow the procedures set forth in Article IV in order to decide what measures are needed to protect the Organization’s interests in light of the nature and seriousness of the conflict, to decide whether to enter into the transaction and, if so, to ensure that the terms of the transaction are appropriate.
Article IV: Review by the Board
The Board may ask questions of and receive presentation(s) from the covered individual(s) and any other interested person(s), but shall deliberate and vote on the transaction in their absence. The Board shall ascertain that all material facts regarding the transaction and the covered individual’s conflict of interest have been disclosed to the Board and shall compile appropriate data, such as comparability studies, to determine fair market value for the transaction.
After exercising due diligence, which may include investigating alternatives that present no conflict, the Board shall determine whether the transaction is in the Organization’s best interest, for its own benefit, and whether it is fair and reasonable to the Organization; the majority of disinterested members of the Board then in office may approve the transaction.
Article V: Records of Proceedings
The minutes of any meeting of the Board pursuant to this policy shall contain the name of each covered individual who disclosed or was otherwise determined to have an interest in a transaction; the nature of the interest and whether it was determined to constitute a conflict of interest; any alternative transactions considered; the members of the Board who were present during the deliberations on the transaction, those who voted on it, and to what extent interested persons were excluded from the deliberations; any comparability data or other information obtained and relied upon by the Board and how the information was obtained; and the result of the vote, including, if applicable, the terms of the transaction that was approved and the date it was approved.
Article VI: Annual Disclosure and Compliance Statements
Each director, each corporate officer, the top management official, the top financial official, and each key employee of the Organization, shall annually sign a statement on the form attached, that:
- affirms that the person has received a copy of this conflict of interest policy, has read and understood the policy, and has agreed to comply with the policy; and
- discloses the person’s financial interests and family relationships that could give rise to conflicts of interest.
Article VII: Violations
If the Board has reasonable cause to believe that a covered individual of the Organization has failed to disclose actual or possible conflicts of interest, including those arising from a transaction with a related interested person, it shall inform such covered individual of the basis for this belief and afford the covered individual an opportunity to explain the alleged failure to disclose. If, after hearing the covered individual’s response and making further investigation as warranted by the circumstances, the Board determines that the covered individual has failed to disclose an actual or possible conflict of interest, the Board shall take appropriate disciplinary and corrective action.
Article VIII: Annual Reviews
To ensure that the Organization operates in a manner consistent with its status as an organization exempt from federal income tax, the Board shall authorize and oversee an annual review of the administration of this conflict of interest policy. The review may be written or oral. The review shall consider the level of compliance with the policy, the continuing suitability of the policy, and whether the policy should be modified and improved.
This policy was approved on November 27, 2018, by the Foundation board.