Policy: Conflict of Interest
American Trakehner Foundation, Inc. Conflict of Interest Policy
The purpose of the Conflict of Interest Policy is to protect the interest of the American Trakehner Foundation, Inc. [“the ATF”] when it is contemplating entering into a transaction or arrangement that might benefit the private interest of a Trustee of the ATF or might result in a possible excess benefit transaction. 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.
§ 1. Interested Person
Any Trustee who has a direct or indirect financial interest, as defined below, is an interested person.
§ 2. Financial Interest
a. A 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 entity with which the ATF has a transaction or arrangement;
ii. A compensation arrangement with the ATF or with any entity or individual with which the ATF has a transaction or arrangement; or
iii. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the ATF is negotiating a transaction or arrangement.
b. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.
c. A financial interest is not necessarily a conflict of interest. Under, Section 3, a person who has a financial interest may have a conflict of interest only if the Board decides that a conflict of interest exists.
§ 3. Procedures
a. Duty to Disclose In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the Trustees
- b. Determining Whether a Conflict of Interest Exists After disclosure of the financial Interest and all material facts, and after any discussion between the Board and the interested person, he or she shall leave the Board meeting while the determination of whether a conflict of interest exists is discussed and voted upon. The remaining Board members shall decide if a conflict of interest exists.
c. Procedures for Addressing the Conflict of Interest
i. An interested person may make a presentation at the Board meeting, but after the presentation, he or she shall leave the meeting during the discussion of, and the vote on the transaction or arrangement involving the possible conflict of interest.
ii. The chairperson of the Board shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
iii. After exercising due diligence, the Board shall determine whether the ATF 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 circumstances not producing a conflict of interest, the Board shall determine by a majority vote of the disinterested Trustees whether the transaction or arrangement is in the ATF 's best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, the Board shall make its decision as to whether to enter into the transaction or arrangement.
§ 4. Violations of the Conflicts of Interest Policy
a. If the Board has reasonable cause to believe Trustee has failed to disclose actual or possible conflicts of interest, it shall inform the Trustee of the basis for such belief and afford the Member Trustee an opportunity to explain the alleged failure to disclose.
b. If, after hearing the Trustee's response and after making further investigation as warranted by the circumstances, the Board determines the Trustee has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
§ 5. Records of Proceedings
The minutes of the meetings of the Board shall contain:
a. The names of the persons who disclosed 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 was present, and the Board's decision as to whether a conflict of interest in fact existed.
b. 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 alternative to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.
§ 6. Compensation
- a. A Trustee who receives compensation, directly or indirectly, from the ATF for services is precluded from voting on matters
§ 7. Annual Statements
a. Has received a copy of the conflicts of interest policy,
b. Has read and understands the policy,
c. Has agreed to comply with the policy, and
d. Understands the ATF is charitable and that in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
§ 8. Periodic Reviews
To ensure the ATF operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
a. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and are the result of arm's length bargaining. ; and
b. Whether partnerships, joint ventures, and arrangements with management organizations conform to the ATF's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes, and do not result in impermissible private benefit or in an excess benefit transaction.
§ 9. Use of Outside Experts
When conducting the periodic reviews as provided for in Section 8, the ATF may, but need not, use outside advisors. If outside advisors are used, their use shall not relieve the Board of its responsibility for ensuring that periodic reviews are conducted.
