Conflict of Interest Policy

COMMUNITY NETWORK FOR ORPHANS UGANDA, INC. (CNFOU)
Policy for Conflict of Interest

Article I
Purpose

The purpose of this policy for conflict of interest is to protect CNFOU’s interest when it is contemplating entering into a transaction arrangement that might benefit the private interest of an office of director for CNFOU or might results in a possible excess benefit transaction. This policy is intended to supplement but not replace any state and federal laws governing conflict of interest that are applicable to not-for-profit and charitable organizations.

Article II
Definitions

1. Interested Person – Any director, principal officer or member of a committee with governing board delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.
2. Financial Interest – A person has financial interest in the person has, directly or indirectly, through business, investment, or family:
   1. An ownership or investment interest with any entity with which CNFOU has a transaction or arrangement.
   2. A compensation arrangement with CNFOU or with any entity or individual with which CNFOU has a transaction or arrangement, or
   3. A potential ownership or investment interested in, or compensation arrangement with, any entity or individual with which CNFOU 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. Under Article III, Section 2, a person who has a Financial Interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.

Article III
Procedures

1. Duty to Disclose – In connection with any actual or possible conflict of interest, an Interested Person must disclose the existence of any Financial Interest and be given the opportunity to disclose all material facts to the directors and members of committees with powers delegated by the governing board who are considering the proposed transaction or arrangement.
2. Determining Whether a Conflict of Interest Exists – After disclosure of the Financial Interest and all material facts, and after any discussion with the governing board or committee, the Interested Person shall leave the meeting while the question of a conflict of interest is discussed and voted on. The remaining members of the governing board or committee shall decide whether a conflict of interest exists.
3. Addressing a Conflict of Interest
   1. The Interested Person with a conflict of interest may make a presentation at the meeting of the governing board or committee, but, after the presentation, the Interested Person shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the conflict of interest.
   2. The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
   3. After exercising due diligence, the governing board or committee shall determine whether CNFOU 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.
   4. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested members whether the transaction or arrangement is in CNFOU’s best interest, for its own benefit, and whether it is fair and reasonable. In accordance with the above determination the governing board or committee shall make its decision whether to enter into the transaction or arrangement.
4. Violation of the Policy for Conflict of Interest
   1. If the governing board or committee has reasonable cause to believe a member has failed to disclose an actual or possible conflict 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.
   2. If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines that the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

Article IV
Recordings of Proceedings

The minutes of the governing board and any committee with powers delegated by the governing board shall contain:

1. The names of the persons 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 existed, and the governing board’s or committee’s decision whether a conflict of interest existed.
2. 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 notes taken in connection with the proceedings.

Article V
Compensation

1. A voting member of the governing board who receives compensation, directly or indirectly, from CNFOU for services is precluded from voting on matters pertaining to that member’s compensation.
2. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from CNFOU for services is precluded from voting on matters pertaining to that member’s compensation.
3. No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from CNFOU, either individually or collectively, is prohibited from providing information to any committee regarding compensation.

Article VI
Annual Statements

Each director, principal officer, and member of a committee with powers delegated by the governing board shall annually sign a statement which affirms such person:

1. Has received a copy of the policy for conflicts of interest,
2. Has read and understands the policy,
3. Has agreed to comply with the policy, and
4. Understands that CNFOU is charitable and that, in order to maintain its federal tax exception, it must engage primarily in activities to accomplish one or more of its tax-exempt purposes.

Articles VII
Periodic Reviews

To ensure CNFOU operates in a matter 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 subject:

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

Article VIII
Use of Outside Experts

When conducting the periodic reviews provided for in Article VII, CNFOU may, but need not, use outside advisers. If outside experts are used, their use shall not relive the governing board of its responsibility for ensuring periodic reviews are conducted.