Conflict of Interest Policy
The purpose of the conflict of interest policy is to protect Warpstock
Corporation's (the Organization's) interest when it is contemplating
entering into a transaction or arrangement that might benefit the
private interest of an officer or director of the Organization 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
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 a financial interest if the person has, directly or
indirectly, through business, investment, or family:
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.
- 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
- 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
1. 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
directors and members of committees with governing board delegated
powers 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 interested person, he/she shall leave the
governing board or committee meeting while the determination of a
conflict of interest is discussed and voted upon. The remaining board
or committee members shall decide if a conflict of interest exists.
3. Procedures for Addressing the Conflict of Interest
- An interested person may make a presentation at the governing
board or 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 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.
- After exercising due diligence, the governing board or 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 governing board or committee shall determine by a
majority vote of the disinterested directors 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.
4. Violations of the Conflicts of Interest Policy
- If the governing board or 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
- If, after hearing the member's response and after making further
investigation as warranted by the circumstances, the governing board or
committee determines the member has failed to disclose an actual or
possible conflict of interest, it shall take appropriate disciplinary
and corrective action.
Records of Proceedings
The minutes of the governing board and all committees with board
delegated powers shall contain:
- 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
governing board's or 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
- A voting member of the governing 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 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 governing board or any 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.
Each director, principal officer and member of a committee with
governing board delegated powers shall annually sign a statement which
affirms 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 the Organization is charitable 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.
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 reviews shall, at a minimum, include the following
- Whether compensation arrangements and benefits are reasonable,
based on competent survey information, and the result of arm's length
- 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
Use of Outside Experts
When conducting the periodic reviews as provided for in Article VII,
the Organization 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 periodic reviews are conducted.