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Conflict of Interest

Article I: Purpose 
The purpose of this conflict of interest policy is to protect the interests of Cause when it is contemplating entering into a transaction or an arrangement that might benefit the private interest of an officer or director of Cause, or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations. It complements the Cause Code of Ethics and the Cause Whistle Blower Protection Policy.

Article II: Definitions

  • Interested Person. Any member of the board of directors, an officer, or an employee who has a direct or indirect financial interest, as defined below, is an interested person.
  • Financial Interest. A person has a financial interest if that person has, directly or indirectly, through business, investment, or family:
  • An ownership or investment interest in any entity with which Cause has a transaction or arrangement;
  • A compensation arrangement with Cause or with any entity or individual with which Cause has a transaction or arrangement; or
  • A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which Cause is negotiating a transaction or arrangement. 
  • Compensation. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.
  • Financial Interest distinguished from a conflict of interest. A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a financial interest may constitute a conflict of interest only if the board of directors (or disinterested members thereof) decides that a particular financial interest is of sufficient magnitude to call into question whether the interested person can act objectively while fulfilling any fiduciary duty owed to Cause.

Article III: Procedures

Duty to Disclose. In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the board of directors (or disinterested members thereof) when the proposed transaction or arrangement is being reviewed.

Determining Whether a Conflict of Interest Exists. After disclosure of the financial interest and all material facts, and after discussion, if any, with the interested person, he/she shall leave the board meeting while the determination of a conflict of interest is discussed and voted upon. The board (or remaining disinterested members) shall decide if a conflict of interest exists.

Procedures for Addressing the Conflict of Interest. An interested person may make a presentation at the board meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.

The chairperson of the governing board shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.

After exercising due diligence and considering any information collected under paragraph 3b, the governing board shall determine whether Cause can obtain with reasonable effort a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.

If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the best interest of Cause and whether it is fair and reasonable. In conformity with the above determination it shall then make a decision whether to enter into the transaction or arrangement. 

Violations of the Conflicts of Interest Policy

If the governing board has reasonable cause to believe an interested person has failed to disclose actual or possible conflicts of interest, it shall inform the person of the basis for such belief and afford the person an opportunity to explain the alleged failure to disclose.

If, after hearing the person's response and after pursuing further investigation as warranted by the circumstances, the governing board determines the person has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action. 

Article IV: Records of Proceedings
The minutes of the governing board shall contain:

  • The names of persons who disclosed or were otherwise found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the decision of the governing board or committee as to whether a conflict of interest in fact existed.
  • The names of persons present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.

Article V: Compensation

A voting member of the governing board who receives compensation, directly or indirectly, from Cause for services is precluded from voting on matters pertaining to that member's compensation.

A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from Cause for services is precluded from voting on matters pertaining to that member's compensation.

A voting member of the governing board or of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from Cause, either individually or collectively, is not prohibited from providing information regarding compensation; however, the compensated member shall affirmatively disclose any apparent financial interest that the member may have under a compensation plan, and shall abstain from any vote on specific compensation for the member. The member does not have to abstain from voting on compensation plans of general, objective applicability unless a majority of the uninterested members vote otherwise.

Article VI: Annual Statements 
Annually, each director, officer, and employee shall sign a statement that affirms that such person:

  • Has received a copy of the conflicts of interest policy;
  • Has read and understands the policy;
  • Has agreed to comply with the policy; and
  • Understands Cause is a charitable organization and in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.

Article VII: Periodic Reviews 
To ensure that Cause operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall include, at a minimum, the following subjects:

  • Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm's length bargaining.
  • Whether partnerships, joint ventures, and arrangements with management organizations conform to Cause's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurement, impermissible private benefit or in an excess benefit transaction.

Article VIII: Use of Outside Experts 
When conducting the periodic reviews as provided for in Article VII, Cause may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring that periodic reviews are conducted.