New Berlin Library Association

1. What are some examples of potential conflicts of interest?

It is impossible to list all the possible circumstances that could present conflicts of interest. Potential conflicts of interest include situations in which a director, officer or key person or that person’s relative or business: 

• has an ownership or investment interest in any third party that the Library deals with or is considering dealing with;
• serves on the board of, participates in the management of, or is otherwise employed by or volunteers with any third party that the Library deals with or is considering dealing with;
• receives or may receive compensation or other benefits in connection with a transaction into which the Library enters;
• receives or may receive personal gifts or loans from third parties dealing with the Library;
• serves on the board of directors of another nonprofit organization that is competing with the Library for a grant or contract;
• has a close personal or business relationship with a participant in a transaction being considered by the Library;
• would like to pursue a transaction being considered by the Library for  their personal benefit.

• In situations where you are uncertain, err on the side of caution and disclose the potential conflict as set forth in Section III of this policy.

• A potential conflict is not necessarily a conflict of interest. A person has a conflict of interest only if the audit committee decides, pursuant to Section IV of this policy, that a conflict of interest exists.[1]

1. Disclosing Potential Conflicts of Interest

1. You must disclose to the best of your knowledge all potential conflicts of interest as soon as you become aware of them and always before any actions involving the potential conflict are taken.

• You must file an annual disclosure statement in the form attached to this policy. If you are a Trustee, you must also file this statement prior to your initial election. 

1. Determining Whether a Conflict of Interest Exists[2]

After there has been disclosure of a potential conflict and after gathering any relevant information from the concerned trustee, officer or key person, the audit committee shall

---

[1] Alternatively, the policy could provide for disclosure (1) to the board of directors, in which case, the board would decide both whether there is a conflict and how to handle the conflict; or (2) to a different board committee.

[2] Alternatively, the policy could provide for disclosure (1) to the board of directors, in which case, the board would decide both whether there is a conflict and how to handle the conflict; or (2) to a different board committee.

1. determine whether there is a conflict of interest. The trustee, officer or key person shall not be present for deliberation or vote on the matter and must not attempt to influence improperly the determination of whether a conflict of interest exists.

• In determining whether a conflict of interest exists, the audit committe shall consider whether the potential conflict of interest would cause a transaction entered into by the Library to raise questions of bias, inappropriate use of the Library’s assets, or any other impropriety. 

• A conflict always exists in the case of a related party transaction – a transaction, agreement or other arrangement in which a related party[1] has a financial interest and in which the Library or any affiliate of the Library is a participant.[2]

• If the audit committee determines that there is a conflict of interest, it shall refer the matter to the board of directors (“board”).

1. Procedures for Addressing a Conflict of Interest

1. When a matter involving a conflict of interest comes before the board, the board may seek information from the director, officer or key person with the conflict prior to beginning deliberation and reaching a decision on the matter.  However, a conflicted person shall not be present during the discussion or vote on the matter and must not attempt to influence improperly the deliberation or vote.

• Additional Procedures for Addressing Related Party Transactions

a.  The Library may not enter into a related party transaction unless, after good faith disclosure of the material facts by the director, officer or key person, the board or a committee authorized by the board determines that the transaction is fair, reasonable and in the Library’s best interest at the time of such determination.

b.  If the related party has a substantial financial interest, the board or authorized committee shall:

---

[1] A related party is:

1. a director, officer or key person of the Corporation or any affiliate of the Corporation, or
2. a relative of any individual described in (1), or
3. an entity in which any individual described in (1) or (2) has an ownership or beneficial interest of 35% or more, or in the case of a partnership or professional Corporation, a direct or indirect ownership interest in excess of 5%.

[2] A transaction is not a related party transaction if:

1. the transaction, or the related party’s financial interest in the transaction, is de minimis;
2. the transaction would not customarily be reviewed by the board or the boards of similar organizations in the ordinary course of business and is available to others on the same or similar terms;
3. the transaction constitutes a benefit provided to a related party solely as a member of a class of the beneficiaries that the Corporation intends to benefit as part of the accomplishment of its mission (and that benefit is available to all similarly situated members of the same class on the same terms).

i. prior to entering into the transaction, consider alternative transactions to the extent available;

ii. approve the transaction by a vote of not less than a majority of the trustees present at the meeting; and

iii. contemporaneously document in writing the basis for its approval, including its consideration of any alternative transactions.

1. Minutes and Documentation

The minutes of any board meeting at which a matter involving a conflict of interest or potential conflict of interest was discussed or voted upon shall include:

1. the name of the interested party and the nature of the interest;

• the decision as to whether the interest presented a conflict of interest;

• any alternatives to a proposed contract or transaction considered by the board; and

• if the transaction was approved, the basis for the approval.

1. Prohibited Acts

The Library shall not make a loan to any director or officer.

1. Procedures for Determining Compensation

1. No person shall be present for or participate in board or committee discussion or vote pertaining to:

a.   their own compensation;

b.   the compensation of their relative;

c.   the compensation of any person who is in a position to direct or control them in an employment relationship;

d.   the compensation of any person who is in a position to directly affect their financial interests; or

e.   any other compensation decision from which the person stands to benefit.

2.  In the case of compensation of Key Persons, the following additional procedures apply:

      a.  The board or a committee authorized by the board shall approve compensation before it is paid. 

b.  The board or authorized committee shall base approval of compensation on appropriate data, including compensation paid by comparable organizations (three are sufficient if the Library’s income is less than $1,000,000) for functionally similar positions, availability of similar services in the geographic area of the Library, and compensation surveys compiled by independent firms.

c. The board or authorized committee shall contemporaneously document:

i.    the terms of compensation and date of determination;

ii.  the members of the board or committee who were present and those who voted for it;

iii.  the comparability data relied on and how it was obtained;

iv   if the compensation is higher or lower than the range of comparable data, the basis for the determination, and;

v.  any actions with respect to consideration of the compensation by anyone on the board or committee who had a conflict of interest with respect to the matter.

New Berlin Library

Conflict of Interest Disclosure Statement

By signing below, I affirm that:

1. I have received and read a copy of the Conflict of Interest and Compensation Policy;
2. I agree to comply with the policy;
3. I have no actual or potential conflicts as defined by the policy or if I have, I have previously disclosed them as required by the policy or am disclosing them below.

Disclose here, to the best of your knowledge:

1. any entity in which you participate (as a trustee, officer, employee, owner, or member) with which the Corporation has a relationship;
2. any transaction in which the Library is a participant as to which you might have a conflicting interest; and

any other situation which may pose a conflict of interest.