ARTICLE VIII - Conflict of Interest
Section 1. Definitions
a. Interested Person - Any Member of the Board who has a direct or indirect financial interest, as defined below, is an interested person.
b. Financial Interest - A person has a financial interest if the person has, directly or indirectly, through business, investment, or family
i. An ownership or investment interest in any entity with which the Club has a transaction or arrangement,
ii. A compensation arrangement with the Club or with any entity or individual with which the Club has a transaction or arrangement, or
iii. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Club is negotiating a transaction or arrangement.
Section 2. Procedures
a. 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 Members of the Board considering the proposed transaction or arrangement.
b. 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 meeting of the Board while the determination of a conflict of interest is discussed and voted upon. The remaining Members of the Board shall decide if a conflict of interest exists.
c. Procedures for Addressing the Conflict of Interest
i. 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.
ii. An Officer of the Board, as defined in Article V, Section 1 hereof, shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
iii. After exercising due diligence, the Board shall determine whether the Club 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.
iv. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Board shall determine by a majority vote of the disinterested Members of the Board whether the transaction or arrangement is in the Club'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.
d. Violations of the Conflict of Interest Policy
i. If the Board 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 Board of the basis for such belief and afford the Member of the Board an opportunity to explain the alleged failure to disclose.
ii. If, after hearing the Member of the Board's response and after making further investigation as warranted by the circumstances, the Board determines the Member of the Board has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
Section 3. Records of Proceedings
The minutes of the Meeting of the Board shall contain
a. 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 was present, and the Board’s decision as to whether a conflict of interest in fact existed.
b. 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.
Section 4. Compensation
a. A voting member of the Board who receives compensation, directly or indirectly, from the Club for services is precluded from voting on matters pertaining to that Member of the Board’s compensation.
b. No voting member of the Board whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Club, either individually or collectively, is prohibited from providing information to any committee regarding compensation.
Section 5. Annual Statements
Each Member of the Board shall annually sign a statement which affirms such person
a. Has received a copy of the conflicts of interest policy,
b. Has read and understands the policy,
c. Has agreed to comply with the policy, and
d. Understands the Club is charitable and educational and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
Section 6. Periodic Reviews
To ensure the Club 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, at a minimum, include the following subjects:
a. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm's length bargaining, and
b. Whether partnerships, joint ventures, and arrangements with management organizations conform to the Club'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.
Section 7. Use of Outside Experts
When conducting the periodic reviews as provided for in Article XIII, Section 6, the Club may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the Board of its responsibility for ensuring periodic reviews are conducted.