Abstention from Decisions
No board member or employee with an actual, potential or perceived conflict of interest shall vote on or otherwise take part in any decision of the Foundation that directly or indirectly benefits such person or a member of such person’s family. In all situations calling for disclosure of affiliations, the board member or employee should abstain from voting or otherwise participating in the decision other than providing information requested by the disinterested decision makers. Abstentions should be formally noted in the board meeting minutes or, in the case of employees, other appropriate written records.
At times, there may be cases where further deliberation on the merits of a grant or transaction is necessary. In such cases, the board member or employee with the affiliation should leave the room and not participate in the deliberation on the merits or the vote. Board members who leave the room under these circumstances are still counted as present for purposes of a quorum.
Employees: The Executive Director ( or Chair of the Board if the Executive Director is involved) shall note for the Foundation’s records the name of each employee who disclosed or was otherwise determined to have an interest in a transaction or grant; the nature of the interest and whether it was determined to constitute a conflict of interest; and, if applicable, the terms of the transaction or grant that was approved and the date approved.
Board decisions: The minutes of the board meeting at which any discussion, decision or action takes place involving matters covered by this policy shall reflect the board member or employee, as applicable, whose situation was considered by the board, the nature of the interest; if a board member was at issue, his or her abstention; whether the grant or transaction was approved or disapproved; and if approved, its terms.
Any disclosed conflict of interest, whether actual or potential, relating to grants will be noted in the grants docket as well as the notations mentioned above.
Because of its classification as a “private foundation,” The Podiatry Foundation is subject to specific self-dealing rules established by section 4941 of the Internal Revenue Code. These rules prohibit certain kinds of transactions, directly or indirectly, between The Podiatry Foundation and disqualified persons.
The following specific transactions may potentially create a self-dealing transaction; therefore, unless an exception applies, these transactions shall be prohibited:
- Selling, exchanging or leasing of property between a private foundation and a disqualified person is an act of self-dealing, even if the foundation pays demonstrably less than the fair market value of the property it receives. A contribution of property subject to a mortgage is treated as a sale or exchange, and hence, constitutes self-dealing.
- Lending of money or other extension of credit by a foundation to a disqualified person is an act of self-dealing. In addition, a disqualified person may not lend to a foundation unless the loan is interest free and the proceeds are used exclusively for charitable purposes. Where a disqualified person has made an interest-free loan to a foundation, the foundation may not repay the loan with property other than cash.
- Furnishing of goods, services or facilities by a disqualified person to a private foundation is an act of self-dealing unless these items are offered free of charge. Conversely, a foundation may provide goods, services or facilities to a disqualified person only if the disqualified person is treated no differently from other members of the public to whom the foundation also makes these items available, or if such furnishing is reasonable and necessary to the performance of the disqualified person’s tasks for the foundation, and taken together with other payment of compensation, as described below, is not excessive.
- Payment of compensation to a disqualified person and reimbursement of related expenses are acts of self-dealing unless the services are personal services that are reasonable and necessary to carrying out the purposes of the foundation and the compensation and reimbursements are reasonable in amount.
If there arises an instance where an exception should be considered, it may be done in consultation with the Foundation’s legal counsel.
Board members, employees and members of their families may not knowingly receive or accept any item of value (including gifts, honoraria, loans and entertainment) from recent, current, or potential grantees, vendors, suppliers, consultants, or others who have existing or proposed business or granter-grantee relationships with the Foundation if such item is intended to influence the outcome of a Foundation decision.
It is permissible to accept gifts of nominal value, meals, and social invitations that are in keeping with good business ethics and do not obligate the recipient to take or refrain from taking any action or decision on behalf of the Foundation. Where it would be awkward to decline a gift, it should be accepted on behalf of the Foundation, and the Executive Director should be consulted as to its disposition.