Disclose
A director, officer, key employee, or other covered person should promptly disclose an actual or potential financial conflict and the relevant facts to the appropriate decision-makers.
Governance policy framework
Conflicts should be disclosed and managed in the open
This page is a draft public framework for how Heart and Hands Relief Foundation intends to identify and manage conflicts of interest. It is not represented as a formally adopted board policy until the board reviews, approves, and records that adoption.
Policy status
Draft framework — board adoption required
The board should review this framework against the foundation's governing documents, applicable state law, IRS guidance, and legal advice as appropriate before adopting a final internal policy.
Purpose
Protect charitable decisions from improper private influence.
A conflict does not automatically mean someone has done something wrong. The important thing is to identify situations where personal financial interests could affect organizational judgment, disclose them early, and use a process that protects the foundation's charitable purpose.
Process
A simple four-step handling process
Determine
Disinterested members of the governing body should determine whether a conflict exists and what safeguards are appropriate before the organization acts.
Recuse
A person with a conflict should not vote on the affected matter and should step out of deliberation when needed so the remaining decision-makers can evaluate the issue independently.
Document
Meeting minutes or other appropriate records should identify the disclosed conflict, the people involved, how the conflict was handled, and the decision reached by disinterested members.
Examples
Situations that should trigger disclosure and review
A board member has a financial interest in a vendor the foundation is considering hiring.
An officer or family member could benefit financially from a contract, grant, lease, purchase, or other organizational decision.
Compensation or benefits are being considered for a director, officer, founder, key employee, or another person with substantial influence over the organization.
A person involved in a decision has another material financial relationship that could reasonably affect, or appear to affect, independent judgment.
Annual disclosure
Conflicts should be reviewed before a problem appears.
A final policy should require covered people to review the policy regularly, disclose known financial interests and relationships that could create conflicts, and update those disclosures when circumstances change.
Compensation decisions
Pay decisions need independent review too.
When compensation is considered for an insider or key employee, conflicted people should not control the approval process. The board should use appropriate comparable information, independent review, and contemporaneous documentation to support reasonable compensation decisions.
Final adoption checklist
Before this becomes an official policy
- Confirm the people and relationships covered by the policy.
- Confirm disclosure and recusal procedures against applicable law and bylaws.
- Create an annual conflict disclosure statement or questionnaire.
- Define who receives disclosures and determines whether a conflict exists.
- Define how violations or failures to disclose are addressed.
- Have the board approve the final text and record adoption in the minutes.