Conflict of Interest Policy
Adopted by the Board of Trustees May 20, 2016 in compliance with the New York State Revitalization Act of 2013
Purpose:
The purpose of this Conflict of Interest Policy (this “Policy”) is to (1) protect the interests of the University, a tax-exempt organization, when it is contemplating entering into a transaction or arrangement that might benefit the private interest of a trustee, officer or Key Employee or might result in a possible excess benefit transaction; and (2) provide a procedure for dealing with Conflict of Interest situations. This Policy is intended to supplement, but not replace, any applicable state and federal laws governing conflicts of interest applicable to not-for-profit, educational and charitable organizations in New York State. This Policy applies to all trustees, officers and Key Employees of the University.
Definitions:
“Affiliate” means an entity controlled by, or in control of, the University.
“Audit Committee” means the Audit Committee of the University’s Board of Trustees.
“Board” means the University’s Board of Trustees.
“Compensation” means direct or indirect remuneration, as well as gifts, favors or loans that are not insubstantial.
“Conflict of Interest” means any situation, circumstance or state of affairs in which an individual is in a position to approve or influence University policies or actions which: (1) involve personal interests or Financial Interests of the individual that may be inconsistent with, or divergent from, the interests of the University; or (2) could ultimately harm or benefit financially: (a) the individual; (b) any member of his or her Immediate Family; or (c) any entity in which any individual described in clause (a) or (b) of this definition has a five percent or greater ownership or beneficial interest, with respect to which any such individual serves as a director or officer, or over whose activities or decisions any such individual has the ability to exercise control. Without limiting the foregoing, any interest in a Related Party Transaction shall constitute a Conflict of Interest.
“Financial Interest” means any instance in which a person has, directly, or indirectly, through business, investment or Immediate Family: (1) an actual or potential ownership or investment interest in any entity with which the University has, or may reasonably be expected to have, a transaction or arrangement; or (2) an actual or potential Compensation arrangement with the University or with any entity or individual with which the University has, or may reasonably be expected to have, a transaction or arrangement.
“Immediate Family” Immediate Family includes an individual’s spouse or domestic partner, ancestors, brothers and sisters (whether whole or half-blood), children (whether natural or adopted), grandchildren, great grandchildren and spouses or domestic partners of brothers, sisters, children, grandchildren, and great-grandchildren.
“Key Employee” means any person who is in a position to exercise substantial influence over the affairs of the University, including, but not limited to: (1) any person who donated an aggregate amount that is more than two percent (2%) of the total donations received by the University in that taxable year of the University, provided that such donated amount exceeds Five Thousand Dollars ($5,000) (“Significant Donor(s)”); (2) any person whose compensation varies based upon the revenues derived from University activities; (3) any person that has or shares authority to control or determine a substantial portion of the University’s capital expenditures, operating budget or compensation for employees; and (4) any person that manages a discrete segment of the University that represents a substantial portion of the activities, assets, income or expenses of the University as compared to the University as a whole.
“Related Party” A Related Party includes: (1) any trustee, director, officer, or Key Employee of the University or any Affiliate or any other person who exercises the power of trustee, director, officer or Key Employee over the affairs of the University or any Affiliate; (2) Immediate Family of any individual described in clause (1) of this definition; or (3) any entity in which any individual described in clause (1) or (2) of this definition has a thirty-five percent or greater ownership or beneficial interest in or, in the case of a partnership or professional corporation, a direct or indirect ownership interest in excess of five percent.
“Related Party Transaction” A Related Party Transaction includes any transaction, agreement or any other arrangement in which a Related Party has a Financial Interest and in which the University or an Affiliate is a participant. A transaction, agreement or other arrangement otherwise meeting the requirements for Related Party Transaction is a Related Party Transaction even if the Board determines that a Conflict of Interest does not exist.
Disclosure of Conflicts of Interest:
Written disclosure of all potential Conflicts of Interest is required by all trustees, officers and Key Employees prior to election or appointment and annually thereafter. The “Annual Statements” procedure, below, governs the annual update of potential Conflicts of Interest. However, Conflicts of Interest may arise between annual updates and, accordingly, a trustee, officer or Key Employee shall disclose a potential Conflict of Interest: (a) prior to voting on or otherwise discharging his or her duties with respect to any matter involving the potential Conflict of Interest which comes before the Board or any committee; (b) prior to entering into any contract or transaction involving the University; (c) as soon as possible after the trustee, officer or Key Employee shall learn of a Conflict of Interest in any other context. Disclosure of the material facts surrounding the trustee, officer or Key Employee’s Conflict of Interest shall be made to the Vice President for Finance and Treasurer who shall report the conflict to the President and the chair of the Audit Committee. The trustee, officer or Key Employee shall thereafter refrain from participating in deliberations and decisions, relating to the matter though he may be asked for information about the Conflict of Interest. An interested officer or Key Employee shall follow the direction of the President as to how the University decisions that are the subject of the Conflict of Interest will be assessed and determined. An interested trustee shall follow the direction of the chair of the Board as to how the University decisions that are the subject of the Conflict of Interest will be assessed and determined; provided that if the interested trustee is the chair of the Board, then the chair of the Board shall follow the direction of the chair of the Audit Committee as to how the University decisions that are the subject of the Conflict of Interest will be assessed and determined.
Annual Statements:
Without limiting the general and continuing disclosure obligation set forth in the preceding section, the Associate Vice President of Finance shall distribute annually to all trustees, officers and Key Employees (not including Significant Donors), a form soliciting the disclosure of all potential Conflicts of Interest, including specific information concerning the terms of any contract or transaction with the University and whether the applicable processes set forth in this Policy were used. Each trustee, officer and Key Employee (not including Significant Donors) shall also annually sign a statement included with the form distributed by the Associate Vice President of Finance which affirms such person:
a. Has received a copy of this Policy,
b. Has read and understands this Policy,
c. Has agreed to comply with this Policy, and
d. Understands the University is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
Written disclosures shall be submitted to and reviewed by the Senior Controller. All potential Conflicts of Interest disclosed shall be forwarded to the Vice President of Finance and Administration, who shall report to the Audit Committee and the President. Additionally, copies of all annual written disclosure shall be provided to the chair of the Audit Committee.
Approval of Conflicts of Interest:
Following receipt of information concerning a contract, transaction or relationship involving a potential Conflict of Interest, the Audit Committee shall consider the material facts concerning the proposed contract or transaction including the process by which the decision was made to recommend entering into the contract or transaction on the terms proposed. The Audit Committee may issue a recommendation as to the approval and/or management of the proposed contract or transaction, and shall only recommend that the Board approve those contracts or transactions that are fair, reasonable and consistent with the best interests of the University; provided that if the potential Conflict of Interest is related to a Related Party Transaction, then the contract or transaction must be approved in accordance with the procedures set forth in the Section of this Policy entitled “Related Party Transactions.” For purposes of this Policy, fairness includes, but is not limited to, the concepts that the University should pay no more than fair market value for any goods or services which the University receives and that the University should receive fair market value consideration for any goods or services that it furnishes others. The Board shall set forth the basis for its decision with respect to approval and/or management of contracts or transactions involving Conflicts of Interest in the minutes of the meeting at which the decision is made, including the basis for determining that the consideration to be paid is fair to the University.
Under no circumstances may a trustee, officer or Key Employee with respect to whom a Conflict of Interest exists be present at or participate in deliberations and/or decisions relating to the matter, or attempt to improperly influence any deliberations or voting regarding the matter. The existence and resolution (as applicable) of any reported Conflict of Interest shall be documented in the appropriate University records, including in the minutes of any meeting at which the Conflict of Interest was discussed and voted upon.
Related Party Transactions:
Any trustee, officer or Key Employee with any interest in a Related Party Transaction shall make a good faith disclosure of all material facts related to such interest to the Audit Committee. The Audit Committee shall review all the material facts related to the proposed Related Party Transaction and request any additional information that it deems necessary to complete such review. Additionally, the Audit Committee shall consider alternative transactions to the proposed Related Party Transaction to the extent any alternative transactions are available. Following its review of the proposed Related Party Transaction and any available alternative transactions, if the a majority of disinterested members of the Audit Committee determines that the proposed Related Party Transaction is fair, reasonable and in the best interests of the University, then it may recommend to the Board that the University should enter into such Related Party Transaction. The Audit Committee shall document in the minutes of the meeting at which such determination is made, the basis for its determination that the proposed Related Party Transaction is fair, reasonable and in the best interests of the University and any alternative transactions that were considered when making this determination.
Upon receiving the recommendation of the Audit Committee, the Board may authorize the proposed Related Party Transaction if the Board determines that it is fair, reasonable and in the best interests of the University. The University shall not enter into a Related Party Transaction unless it is approved in accordance with this Policy.
At the time of any deliberation or decision by the Audit Committee or the Board concerning the authorization of a proposed Related Party Transaction, the interested trustee, officer or Key Employee shall not be present at the meeting, and such trustee, officer or Key Employee shall not attempt to improperly influence any deliberations or voting regarding the Related Party Transaction; provided that the Board, or Audit Committee, may request the interested trustee, officer or Key Employee to provide information regarding the Related Party Transaction prior to the commencement of deliberations or voting thereon. Any Related Party Transaction that is approved without complying with the procedure set forth in this section shall be void.