Article X is not written for crooks. It is written for the rest of us. It is for the ordinary moment when what is good for you and what is good for the Nonprofit stop pointing the same way. The first duty is simply to say so: out loud, in writing, early, and even when the conflict merely looks like one. From there, people with nothing at stake decide, and anyone conflicted leaves the room and stays out of it entirely. Everything goes into a register the Secretary keeps, and a summary reaches the public each year. Lending money to insiders is refused outright. Trust takes years to build and an afternoon to lose.
Section 10.1 Duty to Disclose
Every Official Representative shall disclose any actual, potential, or reasonably apparent conflict of interest. A conflict is any interest that could impair, or reasonably appear to impair, the individual’s ability to serve the Nonprofit’s best interests.
Conflicts may arise from financial, professional, business, fiduciary, familial, contractual, or other personal relationships or interests. These examples are illustrative and do not limit what may constitute a conflict. A family or business relationship among Directors, Corporate Officers, or highly compensated individuals is permitted unless these Bylaws prohibit it. A relationship arising only from service to the Nonprofit is not a business relationship. Each such relationship shall be disclosed in writing when it arises and in each annual affirmation. Such a relationship is a material conflict for a Director in any matter concerning the other person.
Disclosure shall occur promptly after the individual becomes aware of the conflict. Whenever practicable, disclosure shall precede related discussion, consideration, or voting by the Board of Directors or an authorized committee.
Section 10.2 Conflict Determination
After a disclosure, the Board of Directors shall determine in good faith whether an actual conflict exists based on the presented facts and circumstances. An authorized committee may make the determination instead.
Before deciding, the Board of Directors or committee may request relevant information from the disclosing individual or another informed person. The interested individual may answer questions and provide facts but shall not participate in deliberations or voting.
A Board determination requires three-fourths of all eligible Disinterested Directors. An assigned committee requires at least two affirmative votes. The minutes shall record the disclosure, determination, and reasons.
Conflicts arising from membership, Acting Member service, or a succession designation are disclosed only to the Independent Review Panel, which determines them and certifies any required recusal without stating reasons. The Conflict of Interest Register records only that the Panel certified a recusal. A sealed disclosure lodged with the Panel satisfies the related portion of the annual affirmation. Each Director’s annual affirmation also includes a confidential disclosure of family, financial, business, and close personal relationships, lodged only with the Independent Review Panel, which the Panel uses to determine conflicts with the Member without revealing the Member’s identity.
Before approving a conflicted transaction, contract, or arrangement, the authorized decision-makers shall investigate its terms. They shall determine that it is fair, reasonable, and in the Nonprofit’s best interests when approved. They shall consider reasonably available comparable terms and document the evidence and reasons in the official minutes.
Conflict exclusions or reciprocal-approval rules may prevent the Board of Directors or assigned committee from acting. The matter then follows the Chain of Authority. Advisory review does not constitute approval, and interested or recused persons remain excluded.
An express Independent Review Panel fallback requires at least four eligible participants and three affirmative votes. Nonwaivable law and available court procedures remain controlling.
Section 10.3 Recusal and Records
After an actual conflict is determined, the interested individual shall recuse from all related deliberations, recommendations, negotiations, decisions, and voting. The recusal applies to every decision concerning the matter, except action the Founder or the Member takes under the Formation authority and legally permissible mandatory ministerial Member execution under the Member conflict procedure. When a conflicted Member’s action is required, the Member conflict procedure governs. Other matters follow the Chain of Authority when a conflicted individual’s action is required or the assigned decision-maker has not been established or cannot act.
The individual shall leave the physical or virtual meeting during deliberations and voting. The Board of Directors or committee may request their presence solely to provide factual information. The individual may return after the vote unless the Chair directs otherwise.
A recused individual shall not directly or indirectly influence the matter. The minutes shall record the disclosure, conflict determination, recusal, absence, factual participation, final action, and other information required for the official record.
Section 10.4 Conflict-of-Interest Transparency
The Secretary shall maintain an internal Conflict of Interest Register as an official corporate record. It shall document each disclosure, determination, recusal, and final disposition under the organization’s Technology and Records Standards.
The Annual Governance Report shall summarize conflict disclosures and responsive actions while protecting legitimate confidentiality. It shall not reveal protected financial, personal, privileged, or legally confidential information. These safeguards do not limit disclosures required by law or additional disclosures authorized by the Board of Directors to advance transparency and ethical governance.
Section 10.5 Annual Affirmation
Each Director, any Interim President, and every other highly compensated individual shall annually sign a written affirmation confirming compliance with this Conflict-of-Interest Policy. The Secretary shall administer a standalone annual compliance cycle for everyone this Section covers. A Pillar Director’s completion may also be documented through the Pillar Director renewal rules. An Independent Director’s affirmation remains separate from that Pillar-only process.
The affirmation shall confirm the signer’s understanding, compliance, disclosures, and continuing duties. It shall certify that the signer:
- (a)has received, read, and understands this Conflict-of-Interest Policy
- (b)agrees to comply with its requirements
- (c)has disclosed all actual, potential, or reasonably apparent conflicts, and every family or business relationship the Duty to Disclose covers, known when signing
- (d)understands the continuing Duty to Disclose conflicts arising thereafter
The Secretary shall maintain all affirmations as official corporate records. Retention shall follow the organization’s Technology and Records Standards.
Section 10.6 Policy Review
At least every two years, the Board of Directors or its designated committee shall review the administration and effectiveness of this Conflict-of-Interest Policy. The review shall examine consistent disclosure, determination, and recusal practices throughout the Nonprofit.
The review shall assess compliance with applicable law and current governance best practices. It shall produce a written report recommending any appropriate revisions. Recommended revisions require adoption through the Bylaw amendment procedures.
Section 10.7 Prohibited Insider Loans
The Nonprofit shall not lend money or extend credit to any Director, Corporate Officer, Official Representative, employee, or their Immediate Family Member. It shall not guarantee, secure, or forgive such a person’s obligation.
This prohibition is absolute and cannot be authorized, ratified, or waived by any committee, Board Resolution, policy, or delegation. No organizational authority may approve an exception.
The prohibition does not restrict authorized expense reimbursement, expense advancement, lawful compensation, or routine advances of travel or business funds. Any advance must be accounted for within a reasonable period and must not function as a loan. Benefits generally available to employees on the same terms also remain permitted.
End of Article X. Return to the TOC