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Policy update

During its April meeting, the Kiwanis International Board approved the following addition to International Policy:

B. International Administration

13. Conflict of Interest

Purpose

In order to protect its interests as a tax-exempt organization, Kiwanis International, when contemplating a transaction or arrangement that might benefit the private interest of an Officer or Trustee of the organization or that might result in a possible excess benefit transaction, shall exercise due diligence to assure no conflict of interest exists and/or it shall take appropriate disciplinary and corrective action if, upon investigation, a conflict of interest is determined to exist. This policy is intended to supplement, but not replace, any state and federal laws applicable to nonprofit and charitable organizations.

International Procedures

196.1 - Definitions

• Organization: “Organization” in this procedure means “Kiwanis International.”
• Interested Person: Any trustee, principal officer, or member of an International Board committee with International Board-delegated powers, which has a direct or indirect financial interest, as defined below, is an interested person.
• Financial Interest: A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:
  • An ownership or investment interest in any entity with which the Organization has a transaction or arrangement;
  • A compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement; or
  • A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement.

Compensation includes direct and indirect remuneration, as well as gifts or favors that are not insubstantial.

A financial interest is not necessarily a conflict of interest. A person who has a financial interest may have a conflict of interest only if the International Board or Board committee decides that a conflict of interest exists.

196.2 - 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 Trustees and members of committees with International Board-delegated powers considering the proposed transaction or arrangement.

196.3 - Determining Whether a Conflict of Interest Exists

After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the International Board or Board committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining International Board or Board committee members shall decide if a conflict of interest exists.

196.4 - Addressing a Conflict of Interest

• An interested person may make a presentation at the International Board or Board committee 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 President of the International Board or chairperson of the Board committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
• After exercising due diligence, the International Board or Board committee shall determine whether the Organization can obtain with reasonable efforts 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 International Board or Board committee shall determine by a majority vote of the disinterested Trustees whether the transaction or arrangement is in the Organization’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, it shall make its decision as to whether to enter into the transaction or arrangement.

196.5 - Violations

• If the International Board or Board committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
• If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the International Board or Board committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

196.6 - Records of Proceedings

The minutes of the International Board and all Board committees with board-delegated powers shall contain:

• The names of the person who disclosed or otherwise were 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 International Board’s or Board committee’s decision as to whether a conflict of interest in fact existed.
• The names of the persons who were 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.

196.7 - Compensation

• A voting member of the International Board who receives compensation, directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member’s compensation.
• A voting member of any Board committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member’s compensation.
• No voting member of the International Board or any Board committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Organization, either individually or collectively, is prohibited from providing information to any committee regarding compensation.

196.8 - Annual Statements

Each trustee, principal officer and member of a Board committee with International Board-delegated powers shall annually sign a statement, which affirms such person:

• Has received a copy of Kiwanis’ conflict of interest policy;
• Has read and understands the policy;
• Has agreed to comply with the policy;
• Has identified in writing any potential conflict of interest; and
• Understands the Organization is charitable 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.

196.9 - Periodic Review

To ensure the Organization 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 review shall, at a minimum, include 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 the Organization’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.

196.10 - Use of Outside Experts

When conducting the periodic reviews as provided in subsection g, the Organization may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the International Board of its responsibility for ensuring periodic reviews are conducted.