Conflicts of Interest Policy

Article I

Purpose

The purpose of the conflicts of interest policy is to protect the Foundation's interest when it is contemplating entering into a transaction or arrangement or making a grant that might benefit the private interest of an employee, officer or trustee of the Foundation. Recognizing that the Foundation encourages the active involvement of its employees and trustees in the larger community and in organizations addressing issues that are also within the Foundation's mission, charitable purpose and programmatic interests, a further purpose of this policy is to protect the Foundation's reputation and support its fundamental commitment to integrity by establishing processes to address actual and potential conflicts openly and fairly.

This policy is intended to supplement but not replace federal law prohibiting self dealing, private inurement or certain transactions benefiting disqualified persons or any applicable state laws governing conflicts of interest applicable to nonprofit and charitable foundations.

Article II

Definitions

1. Covered Person

This policy covers (a) each Board member, trustee, and officer of the Foundation, and (b) each employee, agent, temporary employee or consultant of the Foundation who has decision-making authority as an individual, as a member of a Foundation committee, or as a member of a grantmaking team.

2. Interested Person

Any covered person, who has a direct or indirect financial interest, as defined below, is an interested person. If a person is an interested person with respect to any entity that is a member of a group, he or she is an interested person with respect to all entities in that group.

3. Financial Interest

A person has financial interest if the person has, directly or indirectly, through business, investment or family -

1. an ownership or investment interest in any entity with which the Foundation has or proposes to have a transaction or arrangement, or to which it may make a grant, contribution or matching gift; or
2. a compensation arrangement or governing relationship (e.g., serving as a board member, even if uncompensated) with any entity or individual with which the Foundation has or proposes to have a transaction or arrangement, or to which it proposes to make a grant, contribution or matching gift; or
3. a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Foundation proposes to have a transaction or arrangement, or to which it proposes to make a grant, contribution or matching gift.

4. Other Definitions

1. Compensation includes direct and indirect remuneration as well as gifts or favors that are substantial in value or nature. Compensation also includes payments by an entity to a covered person who is serving as an officer or board member of the entity.

2. An ownership or investment interest includes any substantial ownership or investment, but excludes an interest in a publicly-owned entity that is only passive and insubstantial to both the person and the entity.

3. Family interests include interests of a spouse or equivalent, or a parent, sibling, child, grandchild or any other relative living in the same household. For the avoidance of doubt, an interest held by any member of the Moore family, to include Gordon and Betty Moore and each of their descendants and their respective spouses, shall be treated as an interest of each other member of the Moore family.

4. A group of entities is defined by common ownership or control of more than 50% of the voting power of each member of the group.

5. The term “grant” as used in this policy includes proposed and actual grants that are part of the Foundation’s standard grantmaking activities, contributions within the Strategic Contribution Process, contributions made through the Matching Gifts program, program-related investments, and other charitable giving mechanisms used by the Foundation.

6. The term “approval body” as used in this policy means any of the following: (i) Foundation's Board of Trustees, (ii) Executive Committee, or (iii) other committee, team or individual exercising decision-making authority to which an interested person reports or on which an interested person serves.

7. “Decision-making authority” means the ability of a covered person to (i) make hiring or firing decisions of vendors, contractors and service providers, (ii) advance a grant within the Foundation’s grantmaking process or Strategic Charitable Contribution process, (iii) make a matching gift to a qualifying charity, or (iv) enter into other contractual relationships on behalf of the Foundation.

5. Other Interests Subject to This Policy

1. Relationships with Grantees:
   
   With respect to entities that may be actual or potential recipients of grants, contributions or matching gifts made by the Foundation, an individual will be regarded as having a financial interest in the entity, if the person has, directly or indirectly through family, (i) an employment or governing relationship (such as serving as a board member ,even if uncompensated), or (ii) the potential to receive any substantial benefit from the grant not otherwise available to the public on substantially the same terms.
   
   The actual or potential receipt by a covered person of any substantial gift or favor from a grantee or from a third party in connection with an actual or potential grant, contribution or matching gift is subject to this policy, and constitutes a financial interest. However, reimbursement by the Foundation of out-of-pocket expenses incurred by Foundation staff for the purposes of investigating or monitoring grantees consistent with the Foundation's policies and procedures for reimbursement of ordinary and reasonable business expenses, would not, by itself, be considered a financial interest for these purposes. In addition, participating in dinners or social events that are purchased by the Foundation would not, by itself, violate this policy.
   
   
2. Other Potentially Conflicting Interests:
   
   There may exist other, less obvious or more remote actual or potential conflicts of interest that are sufficiently substantial and probable that their appearance calls into question the fairness or propriety of the Foundation's decision-making processes. Any person who is concerned about the appearance of such an interest or potential interest is encouraged to review the matter with his or her supervisor, the Legal Department, the President or the Chairperson of the Board, as appropriate. Any such interest may be disclosed by any person and may be addressed in the discretion of the Chairman of the Board or the President, pursuant to the procedures contained in this policy.
   

Article III

Certain Prohibited Conflicts

1. Acceptance of Business Gifts

The Foundation recognizes that it is traditional and acceptable in many cultures, including the United States business and philanthropic culture, to give and receive business gifts and courtesies having a nominal value.However, the offer or receipt of a gift having a substantial value can present a conflict of interest, particularly if the gift is offered or given in the context of an intention or expectation of influencing a business or grant decision.Furthermore, receipt of a substantial gift or benefit may present questions of receipt by a disqualified person of impermissible benefit or other prohibited self-dealing for a private charitable foundation. Therefore, no covered person may accept, from any entity with which the Foundation has or proposes to have a commercial arrangement or transaction, or to which it has or proposes to make a grant, any gift or benefit other than a customary business courtesy or present having only a nominal and insubstantial value.Offers of gifts or benefits having a greater than nominal or insubstantial value and offers exhibiting an expectation of influencing business decisions must be reported to the Foundation through the recipient's supervisor, the Legal Department, President or Chairperson of the Board as appropriate and may not be accepted.

2.Acceptance of Gift of Business Travel or Expenses from Grantees

It is the Foundation's policy that covered persons may not accept reimbursement for or a gift of business travel or expenses from grantees, potential grantees or third persons in connection with a grant or proposed grant. This policy is intended to assure that resources that are available to grantees are used for their own charitable purposes and not to benefit the Foundation or its employees or to reimburse the Foundation for expenses relating to our own grant investigation or monitoring activities. Accordingly, all out-of-pocket expenses of covered persons for travel, lodging, meals and the like associated with any grantee or grant shall be reimbursed to the covered person only by the Foundation directly and in accordance with the Foundation's policies and procedures for ordinary and reasonable business expenses.

3.Acceptance of Other Benefits from Grantees

The Foundation's policy on being the sole provider of direct reimbursement of ordinary and reasonable out of pocket expenses is also intended to protect against any violation, indirectly through or on behalf of a grantee, of the laws applicable to the Foundation prohibiting self-dealing, private inurement or impermissible benefit. Accordingly, covered persons may not accept any gift or other benefit, including travel, accommodations or entertainment, that is not both (i) reasonably in furtherance of his or her activities on behalf of the Foundation and (ii) reasonable in nature and insubstantial in value. The meaning of reasonable in nature and insubstantial in value should be evaluated in light of all relevant circumstances and with a sensitive appreciation of the adverse effects upon the reputation of the Foundation that could result from public disclosure of questionable gifts or benefits.

4. Acceptance of Honoraria

Acceptance of cash or any substantial in-kind honorarium will normally constitute compensation to the recipient and a financial interest under this policy. No covered person may accept honoraria from or on behalf of an actual or potential grantee without the approval of the President or the Chairperson of the Board of Trustees.

5. Investment/Other Business Transactions

No interested person may enter into a transaction that will give rise to the payment of fees, income or profits to that interested person or his/her family members, except as may be permitted following disclosure and determination in Article IV.

6. Grants, Contributions or Matching Gifts

No interested person may recommend a grant, contribution or matching gift if that person or his/her family members will receive a financial or other substantial benefit not otherwise available to the general public from the entity receiving the grant or contribution, except as may be permitted following disclosure and determination in Article IV.

Article IV

Procedures

1. Duty to Disclose

In connection with any actual or possible conflicts of interest, an interested person must disclose the existence and nature of his or her financial interest to the approval body that is considering the proposed transaction, arrangement, grant, contribution or matching gift.

 

Any person who has a concern regarding the actual or potential conflicts of interest or the appearance of such a conflict with respect to any covered person is encouraged to review the matter with his or her supervisor or other point of contact with the Foundation, the Legal Department, or the President, as appropriate.

2. Determining Whether a Conflict of Interest Exists

After disclosure of the financial interest, the interested person or persons may participate in discussion of the proposed arrangement, but shall leave any meeting where the financial interest of the person(s) is discussed and voted upon, or shall not otherwise participate in the decision of determining whether a conflict exists. The approval body shall then decide if a conflict of interest exists. The conflict shall be determined not to exist or shall be resolved pursuant to paragraph 3 or 4 below prior to the decision to enter or not enter the proposed arrangement.

 

Nothing in this policy shall authorize an approval body to approve, or the Foundation to engage in, an act of self dealing, private inurement or a transaction affording a prohibited benefit to a disqualified person or any other act prohibited by applicable law.

 

Nothing in this policy shall authorize any covered person to accept any gift, favor, prerequisite or benefit having a substantial value except pursuant to all applicable policies, procedures and practices of the Foundation.

3. Procedures for Addressing Conflicts of Interest in Commercial Matters

1. The approval body shall, if appropriate, appoint a disinterested person or other committee to investigate alternatives to the proposed transaction or arrangement.

2. After exercising reasonable due diligence, the approval body shall determine whether the Foundation can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that would not give rise to a conflict of interest.

3. If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the approval body shall determine. by a majority vote of the disinterested members if applicable, (i) whether the transaction or arrangement is in the Foundation's best interest and for its own benefit, and (ii) whether the transaction is fair and reasonable to the Foundation. The approval body shall then make its decision as to whether to enter into the transaction or arrangement in conformity with such determination.

4. Procedures for Addressing Conflicts of Interest in Grantmaking

The Foundation expects and encourages active involvement by Foundation members, trustees, officers, and employees in oversight of the management and operation of philanthropic and charitable organization, including grantees engaged in furthering the mission and programmatic objectives of the Foundation. However, this may result in situations where an interested person’s interests may overlap between the Foundation and a proposed or actual grantee. In such cases, the following procedures apply.

1. Each interested person shall disclose his or her conflicts to the chairperson of the approval body as early as possible but in all events prior to the first decision of the approval body with respect to the proposed grantee or grant affected by the conflict. For grantmaking teams this disclosure should occur prior to the grant being placed under review and the disclosed interest should be appropriately recorded in the Grant and Executive Summaries and other appropriate files relating to the proposed grant.

2. The approval body shall appoint a disinterested person or committee to investigate the nature of any benefits that the interested person(s) may receive, directly or indirectly, by reason of the proposed grant or grants.

3. After exercising reasonable diligence, the approval body shall determine whether the proposed grant is or can be structured so that no substantial benefit of or from the grant is received by the interested person(s) (i) that would not otherwise be available to a member of the public on substantially the same terms and (ii) that otherwise may influence inappropriately the decisions of the Foundation or of the interested person in relation to the proposed grant.

4. If the approval body has made the determination required by paragraph 4(c) above, then the person(s) who would otherwise be deemed to be interested person(s) shall not be so deemed and they may participate fully in the development, consideration, approval and administration of the proposed grant or grants.

5. If the approval body cannot make the determination provided in paragraph 4(c) with respect to any otherwise interested person, the approval body nevertheless may consider the merits of the proposed grant or grants under paragraph 4(f), provided that the interested person(s) is not a “disqualified person” and that person(s) shall be recused from consideration of the proposed grant or grants and shall not participate in their administration.

6. The approval body shall determine by a majority vote of its disinterested members (if applicable) whether the proposed grant or grants (i) is consistent with the Foundation's charitable purposes, (ii) is in the Foundation's best interest and for its benefit, and (iii) is fair and reasonable to the Foundation, notwithstanding the interest of the interested person(s). The Foundation shall implement that proposed grant or grants in conformity with such determination.

7. The approval body may act through a sole disinterested member. If a committee has no disinterested member, it shall refer the proposed grant or grants to a disinterested superior, superior committee or the board. If the board has no disinterested members, it nevertheless may act with respect to a proposed grant or grants through such of its members and or such procedures as it may deem appropriate.

5. Violations of the Conflicts of Interest Policy

1. If the approval body has reasonable cause to believe that a person has failed to disclose an actual or possible conflict 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.

2. If, after hearing the response of the person and making such further investigation as may be warranted in the circumstances, the approval body determines that the person has in fact failed to disclose an actual or possible conflict of interest, it shall take such disciplinary and corrective action as it deems appropriate.

Article V

Records of Actions Taken

The decisions of the approval body shall be documented and recorded as follows:

1. Documentation of the decision shall include (i) 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, (ii) the nature of the financial interest, (iii) any action taken to determine and/or resolve whether a conflict of interest was present, (iv) the content of the discussion, including any alternatives to the proposed transaction or arrangement, (v) the names of the persons who were present for discussions and voted relating to the transaction or arrangement, and (vi) the approval body’s decision as to whether a conflict of interest in fact existed.

2. Records of decisions shall be maintained as follows: For grants and strategic contributions, the records shall be maintained in the permanent grant files in GIFTS. For matching gifts, the records shall be maintained in the permanent records of Grants Administration. For decisions concerning commercial transactions, the records shall be maintained in the minutes or files of the approval body. A copy of the records of decisions should be sent to the Legal Department.

Article VI

Annual Statements

Each member, trustee, officer and employee of the Foundation shall annually sign a statement which affirms that such person

1. has received a copy of the conflicts of interest policy,
2. had read and understands the policy,
3. has agreed to comply with the policy, and
4. understands that the Foundation is a private foundation and that in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.

Article VII

Periodic Reviews

To ensure that the Foundation operates in a manner consistent with its charitable purposes and that it does not engage in activities that could jeopardize its status as an organization exempt from federal income tax, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:

1. Whether compensation arrangements and benefits are reasonable and are the result of arm's-length bargaining.

2. Whether commercial arrangements reflect reasonable payments for goods and services and do not result in inurement or impermissible private benefit.

3. Whether grant arrangements, including program related investments, conform to written policies, are properly recorded, further the Foundation's charitable purposes and do not result in inurement or impermissible private benefit.

Article VIII

Use of Counsel and Other Advisers

In exercising its authority and responsibilities hereunder, including in conducting the periodic reviews provided for in Article VII, the Foundation and its board and committees may, but need not, use internal or external counsel or other advisors. The approval body shall be entitled to rely in good faith upon the conclusions and recommendations of internal or external counsel or of other advisors to the maximum extent permitted by applicable law. If outside advisors are used for the periodic reviews provided in Article VII, their use shall not relieve the board of its responsibility for ensuring that periodic reviews are conducted.