Except in certain circumstances, a Board member must avoid transactions of the board in which the Board member has a financial interest.
The following transactions are specifically deemed impermissible:
- Any transaction, other than an employment contract, directly between the organization and a Board member.
- Any transactions between the organization and a partnership or unincorporated association in which a Board member is a partner, or owner, or holder, directly or indirectly, of a proprietorship interest.
- Any transaction between the organization and a for-profit corporation in which the organization’s Board member is the owner or holder, directly or indirectly, of 5 percent or more of the outstanding common stock.
The following transactions are deemed permissible:
- Transactions between the organization and a for-profit corporation in which a Board member is the owner or holder, directly or indirectly, of less than 5 percent of the outstanding common stock.
- Transactions between the organization and a for-profit corporation on whose governing body a Board member serves as a director and owner or holder, directly or indirectly, of less than 5 percent of the outstanding common stock.
- Transactions between the organization and a nonprofit corporation on whose governing body a Board member serves as a director.
Organization directors, officers, employees, volunteers or designated agents or other representatives shall not engage in self-dealing actions or transactions in which they have a personal pecuniary interest. Examples include acceptance of compensation, advances, discounts, loans, gifts, entertainment, or other favors in actual or perceived exchange for or to influence organization actions, judgments, or transactions.
The organization encourages the prompt disclosure of any such conflict, real or perceived, to the chief operating officer for review and determination. All disclosures shall be made to the Board Chair for review and determination consistent with this policy statement.
It is unlawful and against organization policy for any person, including Board members, employees, volunteers, or organization agents or other representatives to utilize any information that is not a matter of public record and is received by the person by reason of his or her membership on the Board of Directors, organization employment, or relationship with the organization for personal pecuniary gain, regardless of whether he or she is or is not a Board member, employee, or otherwise engaged with the organization at the time such gain is realized.
Education Code Sections 89906-09; and Corporations Code Sections 5233.
Every Board member has an affirmative duty to know and understand the conflict of interest standards, to disclose to the Board any real or perceived transaction conflict, and to step aside from Board deliberations and actions on such matters.