The purpose of this policy for dealing with actual, potential, or perceived conflicts of interest is to avoid the situation, or the perception, that individuals working with or on behalf of The Kavli Foundation (the “Foundation”) have used their position to engage in any transaction or arrangement that might inappropriately benefit their private interests. It is intended to provide guidance on how to deal with situations that involve, or may appear to involve, conflicts of interest, and to comply with applicable federal and state laws concerning conflicts of interest.
Conflict of Interest. For purposes of this policy, a conflict of interest exists whenever the interests or concerns of any Interested Person may be seen as competing with the best interests of the organization. Conflicts tend to occur:
A. where an Interested Person has a financial interest, either directly or through a business or family relationship, in a decision of the Foundation or any action by the Foundation; and
B. where an Interested Person has a conflict of loyalties even if he or she has no personal financial interest in the decision or action to be taken.
Interested Person. For the purposes of this policy, an Interested Person is any trustee, director, officer, employee or vendor.
Family Relationship. Includes his or her spouse, domestic partner, parents, siblings, children, and any other relative who resides in the same household.
1. Duty to disclose all conflicts, potential or perceived conflicts. All material facts concerning any situation that might be viewed as a conflict should be disclosed to the appropriate decision maker by the Interested Person. Where doubt exists regarding whether a conflict exists or appears to exist, the matter must be resolved by the president of The Kavli Foundation.
2. Procedures necessary to approve any conflict. In order to assure that persons who have a conflict of interest will not have influence over the Foundation regarding business transactions involving themselves, no Interested Person may be present for a vote on any decision or action by the Foundation which would directly or indirectly benefit such Interested Person. Such Interested Person may, however, answer questions or respond to requests, at a meeting or otherwise, for factual information needed to make an informed decision.
3. Additional procedures necessary to approve a conflict involving a material financial interest. The appropriate decision maker shall not approve any transaction to which the Foundation would be a party and in which an Interested Person of the Foundation has a material financial interest unless and until the appropriate decision maker has specifically and in good faith determined after reasonable investigation (including a review of the terms upon which other comparable organizations enter transactions or arrangements similar to the one under consideration) that:
a. the appropriate decision maker is aware of all material facts concerning the transaction and the Interested Person’s interest in the transaction;
b. the Foundation is entering into the transaction for its own benefit;
c. the transaction is fair and reasonable as to the Foundation; and
d. the Foundation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances.
4. Self-Dealing. Notwithstanding the other provisions of this Policy, in determining whether to approve a conflict, the appropriate decision maker shall take into account the rules applicable to private foundations regarding self-dealing under Section 4941 of the Code. These rules prohibit certain transactions directly or indirectly between a foundation and its directors, officers, key employees, and substantial contributors, or members of their families, and also prohibit transactions that may result in an economic benefit to these people because of their ownership or beneficial interest in a business entity. If a prohibited self-dealing transaction occurs, excise taxes may be imposed. All directors, officers and key employees are required to disclose to the Foundation in advance any transaction that could potentially violate these rules. If a determination is made that a transaction would be a self-dealing transaction, it will be prohibited.
5. Recordkeeping. The appropriate decision maker shall document each decision. With respect to any Board discussion or decision involving matters covered by this policy, the minutes of the Board meeting at which such discussion or decision take place must reflect in detail the Board deliberations and the voting process, specifically indicating the director or officer whose situation was considered; the nature of the potential conflict of interest; any potential alternative arrangements; and that the affected director or officer was not present in the room, either during the discussion or for the vote. In addition, any market data or information considered by the Board in approving or disapproving a proposed transaction covered by this policy must be attached to the minutes of the Board meeting at which such consideration took place.
6. Annual Distribution of this Policy. A copy of this policy must be furnished annually to all incumbent and incoming Interested Persons of the Foundation. Each Interested Person shall annually sign a statement that affirms that he or she has received a copy of this Policy; has read and understands the Policy; and has agreed to comply with this Policy.
7. Periodic Reviews. The Foundation must conduct periodic reviews to ensure that all compensation arrangements, partnerships, joint ventures, and other transactions involving directors and officers are reasonable, reflect arm’s length bargaining, and further charitable purposes, and do not result in unreasonable benefit to the Interested Persons or any other private shareholder or individual. When conducting these reviews, the Foundation may, but need not, use outside advisors. Any use of outside advisors, however, shall not relieve the Foundation of its responsibility for conducting the periodic reviews.
Gifts, Conflicts of Interest and Employees
It is important that none of the Foundation employees have a feeling of indebtedness or obligation to our vendors, independent contractors or outside service personnel caused by receiving gratuities or favors.
Foundation employees may not accept gifts, loans, entertainment, or anything else that involves personal gain that comes to a value of over $100.00 from any business associate, customer, vendor, other persons or entity providing goods and services to the Foundation. Furthermore, employees should not let any type of gift influence their conduct toward any person or entity transacting, or desirous of transacting, business with the Foundation.
This policy cannot describe all situations where conflicts of interest may arise involving the Foundation. Therefore, each Interested Person must use good judgment to avoid any appearance of impropriety. Questions about this policy or its application should be directed to the Human Resources Director.