Conflict of Interest Policy

/Conflict of Interest Policy
Conflict of Interest Policy2012-09-24T00:27:26+01:00

1. GENERAL PRINCIPLES

The Foretia Foundation strives to maintain the highest ethical standards, and those who serve as Trustees, officers, non-trustee committee members, and staff (collectively, “Foundation Trustees and staff” and individually, “Trustee or staff member”) are expected to act in the best interests of the Foundation. Foundation Trustees and staff should act without favor or preference based on possible direct or indirect personal gain, whether financial or otherwise, and in a manner consistent with the mission and purposes of the Foundation, its economic and other best interests, and applicable federal and state law. Consequently, Foundation Trustees and staff have a duty under this Conflict of Interest Policy to avoid conflicts, both real and apparent, between the interests of the Foundation and their personal interests. Foundation Trustees and staff must remain conscious of the potential for such conflicts and act openly and with care in such situations.

2. DEFINITION OF A CONFLICT OF INTEREST

With respect to each transaction, investment, arrangement, grant, program, or other activity of the Foundation, a conflict of interest exists if the interest of any Trustee or staff member, any of their “family members” (defined as spouses, children, parents, and other household members), or any entity to which a Foundation Trustee or staff member owes fiduciary obligations or in which he or she has a “material economic interest” (defined as an interest of 10% or more) competes with the interest of the Foundation.

3. APPLICABLE LAW

State Law. State law imposes a duty of loyalty on all those who possess a fiduciary relationship with the Foundation. The duty of loyalty encompasses the idea that the fiduciary may not compete with the entity to which he or she owes the duty.

Federal Law. In addition to the state law duty, the federal Internal Revenue Code and Treasury

Regulations prohibit the Foundation from engaging in acts of “self-dealing” with “disqualified persons.” Self-dealing transactions include the sale, exchange, or leasing of property; the lending of money or other extension of credit; the furnishing of goods, services, or facilities; the payment of compensation or reimbursement of expenses; or transfer to a disqualified person, or use by or for the benefit of a disqualified person, of the income or assets of the Foundation. “Disqualified persons” with respect to the Foundation are defined by the Internal Revenue Code to include Trustees and officers, their “family members” (defined as spouses, lineal ancestors and descendants and spouses of lineal ancestors and descendants), and any corporation, partnership, trust or estate in which any of the above-mentioned disqualified persons has more than 35% of the voting power, profit interest, or beneficial interest. All

disqualified persons are required to disclose in advance any transaction that could potentially violate these rules.

Relationship of State and Federal Law to the Policy.

Foundation Trustees and staff must obey the applicable laws, rules, and regulations of the United States and of the states in which they conduct the business of the Foundation. Foundation Trustees and staff need to be aware that these laws impose penalties for violations that are separate from whatever disciplinary measures the Foundation imposes for violations of this policy. They should feel free to approach the Compliance Officer of the Foundation with any questions they may have concerning the requirements of federal and state law.

Foundation Trustees and staff should also understand that the policy is broader in scope than applicable state and federal mandates; thus the obligations it imposes include, but are not limited to, those of applicable state and federal law.

4. INTERPRETATION OF THE POLICY

This policy cannot anticipate all conflicts of interest or apparent conflicts of interest. In exercising their judgment, Foundation Trustees and staff should therefore interpret this policy broadly and err on the side of caution, mindful that even apparent conflicts of interest can be damaging to the Foundation.

Foundation Trustees and staff should feel free to ask the Foundation’s counsel for guidance as to whether the policy applies, and what it mandates, in a particular situation.

5. PROCEDURE

Disclosure of a Potential Conflict

Any Trustee or staff member who believes he or she may have an actual or potential conflict of interest shall include an appropriate disclosure on the annual disclosure statement identifying the conflict and any and all relevant information concerning the situation giving rise to the potential conflict. Any changes involving actual or potential conflicts of interest that occur between the completion of Annual Disclosure Statements should be reported to the Compliance Officer of the Foundation in a timely manner. Program directors shall also include such disclosures on grant proposals, and should request such disclosures from individuals providing proposal reviews.

Initiation of an Appropriate Course of Action

The Compliance Officer concerning a potential conflict shall have responsibility for initiating an appropriate course of action (a) for determining whether the potential conflict represents an actual conflict of interest within the meaning of this policy and, if so, (b) for presenting the conflict to the Board of Trustees or an appropriate committee.

Non-Participation

If it is determined that a Trustee or staff member has a potential or actual conflict, he or she, at a minimum, shall not participate in the discussion or final vote of the Board or any Board committee on any matter involving the potential or actual conflict. For purposes of Federal tax law, the definition of “family member” is both narrower and broader (because it does not include household members but does include all ancestors, grandchildren and great grandchildren, and their spouses and spouses of children) than the one used in this policy in connection with the Foundation’s day-to-day policies.

6. SPECIFIC RULES

The following rules relate to areas that have historically been of concern to private foundations. These rules are in addition to the disclosure requirements above.

Relationships with Vendors and Service Providers

Staff members with responsibility for issuing or approving orders for the purchase of supplies, equipment, or transportation, or for contracts for employment or services for the Foundation may not have a material economic interest (10% or more) in any supplier of goods or services to the Foundation.

Co-Investment

Foundation Trustees and staff must disclose to the Compliance Officer of the Foundation any arrangement in which they are co-investing with the Foundation. A co-investment arrangement is one in which the Trustee or staff member, their family members, or any entities in which they hold more than 35% of the voting power, profit interest, or beneficial interest are investing together with the foundation in the same investment partnership or fund or with the same investment manager. While these arrangements are not prohibited, the Foundation must ensure that Trustees and staff do not derive benefits from a co-investment arrangement (e.g., a reduced management fee or an opportunity to participate at a reduced minimum) that they would not receive but for having co-invested with the Foundation. The same considerations apply to investments that are made as a result of knowledge that the Foundation intends to make a certain investment.

Investment Activities of Investment Personnel

The Foundation’s investment and finance staff as well as Trustees and non-trustee committee members and others on the Investment Committee (collectively, “investment personnel”) have a special charge to be on their guard against conflicts of interest arising from the heightened sensitivity and vulnerability to misuse of their work. Investment personnel must abide by the following rules:

(a) Fees: No investment personnel may personally receive a placement fee or other personal benefit from a Foundation investment. Any fee received by investment personnel for service on the board of a company or partnership in which the Foundation has a direct investment or which has borrowed from the Foundation must be applied to the benefit of the Foundation.

(b) Prohibited Uses of Non-public Information: Investment personnel have a duty not to derive personal financial benefit through the use of special knowledge or privileged information acquired through their service as Investment Committee members or as participants in Investment Committee discussions. They may not directly or indirectly trade in, or advise a trade in, any financial instrument if such trade or advice would in any way conflict with, or be detrimental to, the interests of the Foundation, or if such trade or advice occurs while in possession of any material non-public information about a publicly traded company known to them by reason of their service to the Foundation.

(c) Confidentiality: Investment personnel may not communicate any non-public information known to them by reason of their position and may not at any time use such information to private advantage. This obligation remains in effect permanently, even after separation from the Foundation.

(d) Board Involvement: Investment personnel on the board of a publicly traded company must disclose this relationship and may not participate in any final Foundation decision regarding an investment related to such company.

(e) Management of Conflicts for Investment Staff: For staff involved in the Foundation’s investments, any conflict or appearance of conflict should be disclosed to Compliance Officer of the Foundation.

(f) Management of Conflicts for Investment Committee Members: If the Investment Committee takes up for consideration any matter in which a member of the committee, or that member’s family members, has a direct or indirect financial interest, then (i) the committee member must disclose to the committee any relevant facts which might give rise to a conflict of interest with respect to any matter to be considered by the committee; (ii) the member so affected must abstain from the committee’s discussion of any such matters, unless the committee specifically requests information from him or her, with such abstention recorded in the minutes of the meeting; and (iii) if requested to do so by another member of the committee, the member must withdraw from the meeting during the committee’s deliberations.

7. DISTRIBUTION OF THE POLICY AND DISCLOSURE STATEMENT

A copy of this policy shall be furnished to each Trustee and staff member, who shall complete and file with the Compliance Officer of the Foundation annually the disclosure statement. New Foundation Trustees and staff shall be advised of the policy and its terms upon undertaking office.