Conflict of Interest Policy
Strong Futures
Purpose
This Conflict of Interest Policy is adopted in accordance with the Texas Business Organizations Code (“TBOC”) and applicable federal law governing tax-exempt organizations, including Section 501(c)(3) of the Internal Revenue Code. The purpose of this Conflict of Interest Policy is to protect the interests of Strong Futures (the “Organization”) when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer, director, committee member, key employee, or any individual with significant decision-making authority (collectively, “Covered Persons”). This policy is intended to supplement, not replace, any applicable state and federal laws governing conflicts of interest applicable to nonprofit organizations.
Definition of Conflict of Interest
A conflict of interest exists when a Covered Person has a direct or indirect financial or personal interest that could compromise, or appear to compromise, their ability to act in the best interests of Strong Futures.
A person has a financial interest if the person has, directly or indirectly, through business, investment, or family: – An ownership or investment interest in any entity with which Strong Futures has a transaction or arrangement; – A compensation arrangement with Strong Futures or with any entity or individual with which Strong Futures has a transaction or arrangement; or – A potential ownership, investment interest, or compensation arrangement with any entity or individual with which Strong Futures is negotiating a transaction or arrangement.
A personal interest includes any relationship, loyalty, or obligation that could impair objectivity or independent judgment.
Persons Covered
This policy applies to all members of the Board of Directors, officers, committee members with board-delegated powers, and key employees of Strong Futures, consistent with the Organization’s Bylaws and the Texas Business Organizations Code. This policy applies to all members of the Board of Directors, officers, committee members with board-delegated powers, and key employees of Strong Futures.
Duty to Disclose
Each Covered Person has a duty to disclose any actual, potential, or perceived conflict of interest. Disclosure must occur: – Prior to initial appointment or election; – Annually, via a written disclosure statement; and – Whenever a new conflict arises.
Procedures for Addressing a Conflict of Interest
The following procedures are intended to align with the fiduciary duties of care, loyalty, and obedience required of directors and officers under Texas law (TBOC §§ 22.221–22.230): 1. Disclosure: The Covered Person shall disclose all material facts regarding the conflict to the Board of Directors or appropriate committee. 2. Recusal: The Covered Person shall leave the meeting during the discussion of, and vote on, the transaction or arrangement involving the conflict. 3. Independent Review: The remaining disinterested directors shall determine whether a conflict of interest exists. 4. Alternatives: The Board or committee shall consider alternative transactions or arrangements that would not give rise to a conflict of interest. 5. Decision: If no reasonable alternative exists, the Board or committee may approve the transaction or arrangement if it determines, by majority vote of the disinterested directors, that the transaction is fair, reasonable, and in the best interests of Strong Futures.
Violations of the Policy
If the Board or committee has reasonable cause to believe a Covered Person has failed to disclose an actual or potential conflict of interest, it shall inform the person and allow them an opportunity to explain the alleged failure to disclose. If, after hearing the response and making further investigation as warranted, the Board or committee determines the failure to disclose was intentional or material, it may take appropriate corrective or disciplinary action.
Records of Proceedings
In accordance with the Organization’s Bylaws and Texas recordkeeping requirements, the minutes of the Board of Directors and all committees shall contain: The minutes of the Board of Directors and all committees shall contain: – The names of persons who disclosed or were found to have a conflict of interest; – The nature of the conflict; – Any action taken to determine whether a conflict existed; – The Board’s or committee’s decision regarding the transaction or arrangement; and – A record of any votes taken, noting recusals.
Compensation Matters
Consistent with the Organization’s Bylaws, IRS intermediate sanctions rules, and Texas nonprofit law, no Covered Person shall participate in or vote on matters involving their own compensation or the compensation of an immediate family member. Compensation decisions shall be made using appropriate comparability data and independent review. No Covered Person shall participate in or vote on matters involving their own compensation or the compensation of an immediate family member. Compensation decisions shall be made using comparability data and independent review, in compliance with IRS regulations.
Annual Statements
Each Covered Person shall annually sign a statement affirming that they: – Have received a copy of this Conflict of Interest Policy; – Have read and understand the policy; – Agree to comply with the policy; and – Understand that Strong Futures is a nonprofit organization and must engage primarily in activities that accomplish its tax-exempt purposes.
Periodic Review
The Board of Directors shall periodically review this policy to ensure it complies with current federal requirements and the Texas Business Organizations Code, and that it remains consistent with the Organization’s Bylaws and governance practices. The Board of Directors shall periodically review this policy to ensure it complies with current legal requirements and reflects best practices for nonprofit governance.