Board Conflict of Interest Policy

The Board of Knox Makers is required to sign a paper yearly stating that they have read and understand this policy.

It’s not always possible to avoid conflicts of interest in organizations like ours, but we must consistently acknowledge them and act appropriately and with transparency.

What constitutes a conflict of interest?

Related parties on the board, board members related to those in other official positions within the organization, and certain transactions all present potential conflicts of interest.

How are conflicts of interest identified?

Board members must always report a conflict of interest to the rest of the board as soon as it is recognized. Should a non-board member believe an unacknowledged conflict of interest exists, they should alert the board.

How are conflicts of interest documented?

When a member joins the board of directors, part of the onboarding process is completion of a form documenting any current or anticipated conflicts and relationships. Should a board member’s situation change, a new form should be executed.

What constitutes a relationship between parties?

People who are closely related either through blood or marriage are considered related parties. Parents, grandparents, spouses, or siblings are examples of such relationships. More distant relationships, such as a cousin or aunt, are not considered a relationship.

Individuals within a chain of command in a business or organization are considered related. Examples of such relationships are employer/employee and supervisor/supervised employee. Business partners are also considered related parties.

What constitutes a quorum when some board members are related?

A quorum is the minimum number of unrelated board members needed to count as an official meeting.

For example, if a board of directors is comprised of five individuals, in most cases three of these board members can meet and satisfy quorum. However, if a board is comprised of five individuals, of whom two are related, both of whom are at a meeting during a voting situation, all five board members must be present to satisfy quorum because the majority of board members present must be unrelated.

How does a relationship between board members affect board eligibility?

The majority of the board of directors must be unrelated to all other board members (as defined above). Any potential board constituency that meets this requirement is valid and all members therefore eligible.

What kinds of financial transactions or relationships create a conflict of interest?

A conflict of interest is created if the organization utilizes services provided by a board member’s for-profit entity or one with which they have close association (eg, owned by a friend). In such situations, the conflicted board member must recuse themselves from voting on the matter. Should the board decide to proceed, they must document why this the best option for the organization, and services must be provided at a fair value (if not below market value).

What about other kinds of conflict of interest?

A common sense application of the concept of conflict of interest should always be applied. For example, if a party related to a board member is being considered for a czar/ina position, that board member should recuse themselves from the vote.