Conflict of Interest

I. Purpose and Scope:
A Conflict of Interest is a set of circumstances that create a risk that professional judgement or actions regarding any Primary Interest of the Arthritis Foundation will be unduly influenced by any Secondary Interest.  Simply put, Secondary Interests cannot be at risk for becoming more heavily weighted than Primary Interests in the Foundation’s decision making.  Avoiding Conflicts of Interest are an important part of the Foundation’s adherence to legal and ethical practices. Conflicts of Interest can seriously damage the Foundation’s reputation and create unnecessary cost.  Limiting adverse effects of Conflicts is the intended result of this policy. It is the Foundation’s goal to avoid or address all Conflicts of Interest.  Any person in position to represent the Foundation in the ongoing execution of its mission, with the aims of the mission defining all Primary Interests, is subject to this policy.  This policy requires all individuals subject to the policy to prevent, report and manage Conflicts of Interest in accordance with this policy.  The construct and execution of this Conflicts of Interest policy recognize the important benefit the Foundation receives from the diverse interests and expertise volunteers and staff have but must balance those benefits with the potential Conflicts that can arise.

Note that the Conflicts of Interest policy of the Foundation is one of a series of important policies that relate to legal or ethical issues that may arise in the ordinary course of executing our mission.  The other supporting policies include the Foundation’s Code of Ethics, Gift Acceptance Policy, and Whistleblower Policy.

Nothing herein shall be deemed to supersede or preempt applicable state or federal laws concerning the governance and operations of nonprofit organizations and organizations exempt from federal income tax and qualified to receive tax-deductible contributions under I.R.C. Section 501(c)(3). 

II. Definitions:
"Associate": (1) a member of a Representative's immediate or close family; (2) a close personal friend of a Representative; (3) any organization that employs a Representative or a member of his or her immediate family or a close personal friend; (4) any organization in which a Representative (or a member of his/her immediate family or a close personal friend) is a partner or has an ownership interest in more than 10% of any class of securities; or (5) a trust for which a Representative is a trustee, or in which a Representative or a member of his/her family or a close personal friend has a beneficial interest.  This definition is intended to be as expansive as possible regarding what “immediate or close family” or a “close personal friend” means, so any individual who could reasonably be described as such should be considered an Associate.

"Board": the National Board of Directors of the Foundation.

“Chair”: when used without qualification, the Chair of the Board or the chair of any committee, council, leadership board or other volunteer group.

“Conflict of Interest”: a set of circumstances or relationships that creates or increases the risk that the Primary Interests will be neglected as a result of advancing Secondary Interests. In such situations the circumstances, relationships and Secondary Interests could create the conditions such that the Secondary Interests outweigh the Primary Interests.

“Contract”: the formal legal agreement that defines the business relationship between or among the Foundation and Third Parties. 

"Foundation": the entire Arthritis Foundation, including the Home Office and all market offices, volunteer groups, local leadership boards, councils, committees or other constituent groups, individually and collectively.

“Home Office”: the headquarters of the Foundation, currently located in Atlanta, Georgia.

“National CEO”: the president and chief executive officer of the Foundation.

“Primary Interests”: the collective set of considerations, strategies, business plans and business operations when executed drive the goals and outcomes that are the Foundation’s mission.

"Representative": anyone participating in judgement or action involved in executing the Foundation’s Primary Interests.  This includes every employee of the Foundation, all officers and members of the Board, and members of all committees, task teams created by the Board.  Other individuals relating to the execution of the Foundation’s Primary Interests may be considered Representatives and shall be determined on a case by case basis.   The National CEO’s designee shall be responsible for maintaining an updated list of all Representatives for the Foundation.

“Secondary Interests”: situations in which risk arises that Representatives or their Associates can exert undue influence such that they may benefit from a decision, an action taken or a failure to act by the Foundation.  The benefit received by Representatives or Associates as a result of situations involving a Secondary Interest does not need to be financial.  Some specific situations that give rise to Secondary Interest include (but are not limited to):  

• a Representative or Associate is employed by or has a significant ownership in an entity with which the Foundation does business; 
• a Representative or Associate receives any special consideration as a result of any business dealings involving the Foundation; 
• a Representative or Associate benefits from action of the Foundation or by receiving information through his or her engagement with the Foundation;
• a Representative uses his or her role in the Foundation to advance his or her own or an Associate’s business or personal interests.

“Third Parties”: Individuals or companies who enter into a Contract with the Foundation to provide goods or perform services, whether compensated or not, but who are not employees of the Foundation.

III. Guidelines:
I. Conflicts of Interest may be real or perceived.  As used herein, the phrase “Conflicts of Interest” refers to both real and perceived Conflicts of Interest without distinction, unless expressly noted.  Further, this policy also covers situations where a real or perceived Conflict of Interest is merely possible and has not already occurred or arisen.

a. Real Conflicts of Interest exist whenever a Representative acts on behalf of the Foundation, participates in a decision under consideration, or has the ability to influence a decision in which the Representative or any Associate receives a Personal Gain or has an immediate financial or personal interest that would be affected by the act or decision in any material way.  

b. Perceived Conflicts of Interest exist whenever it may appear to a reasonable observer that the action taken by a Representative or the participation in or influence by a Representative on a decision would constitute a real Conflict of Interest.

II. Financial transactions (i.e., dealing with outside vendors) must avoid Conflicts of Interest and are subject to review by senior management and the Board as part of ongoing management compliance programs and board governance obligations as appropriate.  Business dealings with outside firms should not result in unusual gains for those firms.

III.  Additional specific examples of Conflicts of Interest, and examples of the proper methods of managing such, are listed in Appendix A attached. 

IV.   Managing Conflicts of Interest:
I.  Preventative Measures.  The Foundation shall implement the following procedures to discover any Conflicts of Interest:
a. Disclosure.  Annually prior to January 31, management shall execute a Conflict of Interest process to query and assess all of the Foundation’s Representatives for existence of Conflicts of Interest.  Upon commencement as a Foundation Representative, and then each year thereafter prior to January 31, Representatives shall complete a Conflict of Interest Disclosure Form, a copy of which is attached as Appendix B.  Completed Disclosure Forms shall be reviewed as part of the process with all noted Conflicts being reviewed by designated senior management with results reported to the National CEO and the Board’s Audit Committee. The Audit Committee shall report to the Board on the results and compliance with this policy.  Conflicts of Interest that are disclosed at any time or in any manner outside of the annual cycle of completing Disclosure Forms must be immediately escalated to senior management and reported to the National CEO.  It shall be the Foundation’s practice to consider all known and query for unknown Conflicts of Interest prior to the commencement of discussions in meetings involving judgement or actions concerning the Foundations Primary Interests.

b. Third Parties.  Staff shall evaluate any Third Parties prior to engagement for the purpose of identifying any Conflicts of Interest.  Third Parties shall be provided with a copy of this policy upon engagement.  Third Parties shall be asked to document the nature of any Conflicts of Interest or shall attest to their absence. Third Parties with disclosed Conflicts of Interest may not contract with Foundation without the approval of the National CEO.  In no event shall a Foundation Representative with a known Secondary Interest that raises the risk of undue influence be authorized to approve payment involving that Third Party.  

c. Disclosure.  A copy of this policy shall be provided to any new employee of the Foundation upon hiring.  All disclosure forms shall be maintained on file with Human Resources.

II.  Irreconcilable Conflicts.  Certain Conflicts of Interest cannot be managed or reconciled (by disclosure, recusal, or other methods).  The actions or involvement of a Representative which lead to an irreconcilable Conflict are always prohibited.  Examples of actions or relationships that would be prohibited are listed in Appendix A.  

III.  Manageable Conflicts.  Other Conflicts of Interest may be managed through disclosure, recusal or other actions that limit the possible risks associated with the Conflict.  Examples of manageable Conflicts are listed in Appendix A.  The following are examples, but not an exclusive list, of ways to manage Conflicts of Interest:

a.    Disclosure.  When a Conflict of Interest disclosure arises, the affected Representative shall immediately call such Conflict to the attention of his or her supervisor, who must in turn report the disclosure to senior management.  This disclosure is required regardless of whether a Conflict has previously been disclosed (such as in an annual Disclosure Form) and if there is uncertainty about the situation.  If another volunteer or employee is aware of a Conflict of Interest not disclosed by the affected Representative, such other person shall call attention to the Conflict.  The disclosure must describe the Conflict in detail sufficient to determine whether a Conflict exists and the necessary response.  Disclosure of Conflicts shall be made in writing or noted in the minutes or record of the applicable meeting.  

b.    Recusal.  If a Conflict of Interest does exist, the affected Representative shall voluntarily recuse himself or herself from participating in any decision concerning the matter related to the Conflict.  The Representative, if appropriate, may request an opportunity to provide factual information and to comment upon the related issue prior to a vote on the matter, but may not cast a vote.  The applicable Chair, in his/her discretion, may require the Representative to leave the room prior to a final discussion and during the vote, or even during the entire discussion and vote. If the Chair of the Board is the Representative at issue, the Vice Chair of the Board shall assume the Chair’s responsibilities.

c.    Refusal by the Representative to Recuse.  If a Conflict of Interest has been disclosed but the Representative declines to voluntarily recuse himself or herself, or in situations where the Representative does not believe the situation presents a Conflict of Interest, the applicable Chair, (i) may make a determination of whether a Conflict exists which would require recusal, subject to overrule by the full board or committee upon motion by any member thereof; or (ii) may refer the decision to the full board or committee directly.  In either instance, the board or committee shall consider and vote on whether there is a Conflict requiring recusal.  The Representative shall recuse himself or herself from this deliberation and vote after providing relevant information.  If the Chair of the Board is the Representative at issue, he or she may not make or take part in the determination of whether a Conflict exists which would require recusal and the Vice Chair of the Board shall assume the Chair’s responsibilities.

d.    Restricted Acts by Staff.  Upon disclosure of an employee’s Conflict, his/her supervisor may require that the employee no longer take part in the Foundation action related to the Conflict or may request that the employee no longer take part in the relationship or activity giving rise to the Conflict.  For examples, refer to Appendix A.  The affected employee may request that appropriate management staff and/or the Human Resources department review and address the employee’s Conflict.

IV.    Consequences of Noncompliance:
In any instance in which the procedures for identifying and managing Conflicts of Interest set forth in this policy are not followed, the Chair of the Board, the National CEO, or either’s designee shall review the facts and may take any appropriate remedial action, including but not limited to revocation, rescission or termination of a contract, return of monies, reconsideration of decision, and censure or removal of the Representative involved for cause, in accordance with the Foundation’s Bylaws, Code of Ethics, and other applicable policies.