Conflict of Interest Policy
Free Arts NYC Conflict of Interest Policy
REASON FOR STATEMENT : Free Arts NYC is as a nonprofit, tax-exempt organization which depends on charitable contributions from the public. Maintenance of its tax-exempt status is important both for its continued financial stability and for the receipt of contributions and public support. Therefore, the IRS as well as state corporate and tax officials, view the operations of Free Arts NYC as a public trust which is subject to scrutiny by and accountability to such governmental authorities as well as to members of the public.
Consequently, there exists between Free Arts NYC and its board, officers, and management employees a fiduciary duty which carries with it a broad and unbending duty of loyalty and fidelity. The board, officers, and management employees have the responsibility of administering the affairs of Free Arts NYC honestly and prudently, and of exercising their best care, skill, and judgment for the sole benefit of Free Arts NYC. Those persons shall exercise the utmost good faith in all transactions involved in their duties, and they shall not use their positions with Free Arts NYC or knowledge gained therefrom for their personal benefit. The interests of the organization must have the first priority in all decisions and actions.
PERSONS CONCERNED: This statement is directed not only to directors and officers, but to all employees who can influence the actions of Free Arts NYC. For example, this would include all who make purchasing decisions, all other persons who might be described as "management personnel," and all who have proprietary information concerning Free Arts NYC.
AREAS IN WHICH CONFLICT MAY ARISE: Conflicts of interest may arise in the relations of directors, officers, and management employees with any of the following third parties:
- Persons and firms supplying goods and services to Free Arts NYC.
- Persons and firms from whom Free Arts NYC leases property and equipment.
- Persons and firms with whom Free Arts NYC is dealing or planning to deal in connection with the gift, purchase or sale of real estate, securities, or other property.
- Competing or affinity organizations.
- Donors and others supporting Free Arts NYC.
- Agencies, organizations, and associations which affect the operations of Free Arts NYC.
- Family members, friends, and other employees.
NATURE OF CONFLICTING INTEREST: A material conflicting interest may be defined as an interest, direct or indirect, with any persons and firms mentioned in Section 3. Such an interest might arise through:
- Owning stock or holding debt or other proprietary interests in any third party dealing with Free Arts NYC.
- Holding office, serving on the board, participating in management, or being otherwise employed (or formerly employed) in any third party dealing with Free Arts NYC.
- Receiving remuneration for services with respect to individual transactions involving Free Arts NYC.
- Using Free Arts NYCís time, personnel, equipment, supplies, or good will for other than Free Arts NYC approved activities, programs, and purposes.
- Receiving personal gifts or loans from third parties dealing with Free Arts NYC. Receipt of any gift is disapproved except gifts of nominal value which could not be refused without discourtesy. No personal gift of money should ever be accepted.
INTERPRETATION OF THIS STATEMENT OF POLICY: The areas of conflicting interest listed in Section 3, and the relations in those areas which may give rise to conflict, as listed in Section 4, are not exhaustive. Conceivably, conflicts might arise in other areas or through other relations. It is assumed that the trustees, officers, and management employees will recognize such areas and relation by analogy.
The fact that one of the interests described in Section 4 exists does not mean necessarily that a conflict exists, or that the conflict, if it exists, is material enough to be of practical importance, or if material that upon full disclosure of all relevant facts and circumstances that it is necessarily adverse to the interests of Free Arts NYC.
However, it is the policy of the board that the existence of any of the interests described in Section 4 shall be disclosed before any transaction is consummated. It shall be the continuing responsibility of board, officers, and management employees to scrutinize their transactions and outside business interests and relationships for potential conflicts and to immediately make such disclosures.
DISCLOSURE POLICY AND PROCEDURE: Disclosure should be made according to the Free Arts NYC standards. Transactions with related parties may be undertaken only if all of the following are observed:
- A material transaction is fully disclosed in the audited financial statements of the organization;
- The related party is excluded from the discussion and approval of such transaction;
- A competitive bid or comparable valuation exists; and
- The organization's board has acted upon and demonstrated that the transaction is in the best interest of the organization.
Disclosure in the organization should be made to the executive director (or if she or he is the one with the conflict, then to the board chair), who shall determine whether a conflict exists and is material, and if the matters are material, bring them to the attention of the board chair.
Disclosure involving directors should be made to the board chair, who shall bring these matters, if material to the board.
The board shall determine whether a conflict exists and is material, and in the presence of an existing material conflict, whether the contemplated transaction may be authorized as just, fair, and reasonable to Free Arts NYC. The decision of the board on these matters will rest in their sole discretion, and their concern must be the welfare of Free Arts NYC and the advancement of its purpose.