Board of Directors Conflict of Interest Policy and Disclosure Form
The purpose of this policy is to help inform the Board about what constitutes a conflict of interest and assist the Board in identifying and disclosing actual and potential conflicts.
CONFLICT OF INTEREST POLICY – ARTICLE X OF BY-LAWS
1. Purpose. The purpose of the conflict of interest policy is to protect the Association’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an “Interested Person” (as defined in section 2 “Definitions” of this Article. This policy is intended to supplement (but not replace) any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations.
a. Interested Person. Any director, officer, employee, agent, independent contractor or member of a committee with powers delegated by the Library Board, who has a direct or indirect “financial interest”, as defined in subsection b. below is an interested person.
b. Financial Interest. An interested person has a financial interest if the person has, directly or indirectly, through business, investment or family: (i) an ownership or investment interest in any type of property of entity with which the Association has or is contemplating, a transaction or arrangement; (ii) a compensation agreement with the Association or with any entity or individual with which the Association has a transaction or arrangement; or (iii) a potential ownership or investment interest in, or compensation arrangement with, any type of property, entity or individual with which the Association is negotiating a transaction or arrangement. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial. A financial interest is not necessarily a conflict of interest. Under section 3 of this Article, an Interested Person who has a financial interest has a conflict of interest only if the Library Board or appropriate committee determines that a conflict of interest exists or may exist.
a. Duty to Disclose. In connection with any actual or possible conflict of interest, the Board shall require that an Interested Person disclose the existence of the financial interest and give such Interested Person the opportunity to disclose all material facts to the Library Board and members of committees with powers and authority delegated by the Library Board considering the proposed transaction or arrangement.
b. 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, the Library Board or committee shall require the Interested Person to leave the meeting while the determination of a conflict of interest is discussed and voted upon. The directors or committee members thereupon shall determine if a conflict of interest exists.
c. Procedures for Addressing the Conflict of Interest
i. The Board may permit an Interested Person to make a presentation at the Library Board or committee meeting.
ii. The President or committee shall, if appropriate, appoint a disinterested person or committee to consider and recommend alternatives to the proposed transaction or arrangement.
iii. After exercising due diligence, the Library Board or committee shall determine whether the Association 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.
iv. If a more advantageous transaction or arrangement is not reasonably possible under the circumstances that would avoid producing a conflict of interest, the Library Board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Association’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, the Library Board shall make its decision as to whether to enter into the transaction or arrangement.
d. Violation of the Conflicts of Interest Policy
i. If the Library Board or committee has reasonable cause to believe that an Interested Person has failed to disclose actual or possible conflicts of interest, it shall inform the Interested Person of the basis for such belief and afford the Interested Person an opportunity to explain the alleged failure to disclose.
ii. If, after hearing the Interested Person’s response, and after make further investigation as warranted by the circumstances, the Library Board or committee determines that the Interested Person has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
4. Records of Proceedings. The minutes of the Library Board and all committees with powers delegated to it by the Library Board shall contain:
a. The names of Interested Persons who disclose 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 exists, and the Board of Director’s or committee’s decision as to whether a conflict of interest in fact existed.
b. The names of the persons who were present for discussion and votes relating to the transaction or arrangement, and a record of any votes taken in connection with the proceeding.
5. Interested Person Transaction. An Interested Person may be interested in a contract or transaction to which the Association is a party to the extent permitted by applicable law and these By-laws.
6. Annual Affirmations. The Board shall require each board member to make an annual affirmation that they have received a copy of the conflict of interest policy; has read and understands the policy; has agreed to comply, has complied and is in compliance with the policy; shall disclose to the Library Board the existence of a financial interest in connection with any actual or possible conflict of interest; and understands that the Association is a charitable organization and, in order to maintain its federal tax exemption, it must engage solely in activities which accomplish one or more of its tax-exempted purposes.
ACKNOWLEDGEMENT AND DISCLOSURE FORM
I have read the Kent Library Association (KLA) Conflict of Interest Policy set forth above and agree to comply fully with its terms and conditions at all times during my service as a KLA Board member. If at any time following the submission of this form I become aware of any actual or potential conflicts of interest, or if the information provided below becomes inaccurate or incomplete, I will promptly notify the KLA President in writing.
Disclosure of Actual or Potential Conflicts of Interest:
No Conflicts of Interest to Disclose:____
Board Member Signature: ____________________________________________________
Board Member Printed Name:_________________________________________________