Dzokden Conflict of Interest Policy

1. POLICY

• Dzokden is a California nonprofit public benefit corporation with Section 501(c)(3) tax-exempt public charity status (the “Corporation”).
• The Corporation is firmly committed to operating with the highest integrity and in compliance with both the letter and spirit of the law. The Corporation requires its directors, officers, spiritual leaders, employees, and volunteers to observe high standards of business and personal ethics in the conduct of their duties and responsibilities, and to make decisions objectively, honestly, and fairly.
• Conflicts of interest are generally relationships or activities that interfere, or could interfere, with such objectivity or cause personal interests to conflict with the Corporation’s interests or its charitable mission, as described in greater detail below. As a nonprofit and tax-exempt organization, the Corporation and its directors and officers are subject to various complex laws relating to conflicts of interest.
• The Board of Directors of the Corporation (the “Board”), recognizing that it is entrusted with resources dedicated to charitable purposes, has adopted this Conflict of Interest Policy (this “Policy”) to protect the Corporation’s interests and ensure compliance with applicable laws when the Corporation is contemplating entering into a transaction or arrangement involving a conflict of interest.

2. SCOPE

• This Policy applies to Directors, Officers, and other Interested Persons (defined below) of the Corporation.
• In addition to this Policy, the Corporation’s Bylaws and other policies and procedures may also apply to a conflict of interest situation.

3. DEFINITIONS AND PRINCIPLES

• Interested Persons. The Corporation’s Directors and Officers, and, if any, other members of its committees with governing board-delegated powers, are each an “Interested Person” for purposes of this Policy.
• Family Member. Family Members of an Interested Person include the Interested Person’s spouse, parents-in-law, ancestors, brothers, and sisters (whether whole or half-blood), children (whether natural or adopted), grandchildren, great-grandchildren, and spouses of brothers, sisters, children, grandchildren, and great-grandchildren.
• Conflicts of Interest.  Although there is no single universal definition, the term “Conflict of Interest” is generally a relationship or activity that actually or potentially – or that can be perceived or has the appearance to – impair or interfere with an Interested Person’s ability to act objectively or make decisions impartially in the best interests of the Corporation and its charitable mission. A Conflict of Interest may arise from an Interested Person’s personal interests, personal relationships, or financial interests. A Conflict of Interest can arise either directly or indirectly, such as through a Family Member of an Interested Person.
• Examples. Examples of a Conflict of Interest are set forth below but are not exhaustive of the circumstances in which a Conflict of Interest may arise.
• Conflicts with the Corporation: A Conflict of Interest between the Corporation and an Interested Person can include:
  • Compensation. A compensation arrangement with the Corporation or with any entity or individual with which the Corporation has a transaction or arrangement.
  • Financial Interests. An ownership or investment interest by an Interested Person in any entity with which the Corporation has a transaction or arrangement.
  • Use of Resources. Use of the Corporation’s resources for personal purposes of the Interested Person or his or her Family Member.
  • Competing Interests. Competition by an Interested Person, either directly or indirectly, with the Corporation in the purchase or sale of property or property rights, interests, or services, or, in some instances, competition directly for the same donor or external resources.
  • Corporate Opportunities. Interested Persons have a duty not to take advantage of corporate opportunities that reasonably belong to the Corporation. Generally speaking, a “corporate opportunity” is any business opportunity that is presented to an Interested Person in which the Corporation otherwise has an interest or expectancy or is an opportunity of which it would otherwise be unfair or inequitable for such individual to take advantage.
• Conflicts with Third Parties: A Conflict of Interest can arise with respect to arrangements between the Corporation and other third parties.
  • If the Corporation proposes to enroll a Family Member of an Interested Person in its educational programs.
  • If the Corporation proposes to hire a vendor in which an Interested Person has an ownership interest.

4. PROCEDURES TO DISCLOSE CONFLICTS

• Disclosure. The primary obligation of any Interested Person who may be involved in a Conflict of Interest situation is to bring it to the attention of those designated in this Policy so that the potential conflict can be evaluated and addressed. An Interested Person may not make the decision about whether a Conflict of Interest exists by himself or herself.
• Duty to Self-Disclose.
  • Disclosure Required. An Interested Person is required to make an appropriate disclosure of all material facts, including the existence of any financial interest, at any time that any actual or potential Conflict of Interest arises. This disclosure obligation applies even if an Interested Person does not plan to attend a meeting of the Board or a Board committee with governing board-delegated powers (a “Committee”) at which the Board or Committee will act regarding the conflicted matter.
  • Method of Disclosure. Depending on the circumstances, disclosure may be made to the Chairperson of the Corporation’s Board (or corresponding officer), or, if the potential Conflict of Interest first arises in the context of a Board or Committee meeting, the entire Board or the members of the Committee considering the proposed transaction or arrangement that relates to the actual or possible Conflict of Interest.
  • Annual Statements. Each Interested Person is required to sign the attached Conflict of Interest Disclosure Form annually; however, such annual statement does not relieve an Interested Person from ongoing disclosures of any additional actual or possible conflicts that may arise throughout the year.
• Disclosure of Conflicts of Others. If an Interested Person becomes aware of any potential self-dealing or common directorship transaction or other Conflict of Interest involving another Interested Person, he or she is required to promptly report it consistently with the foregoing procedures.

5. PROCEDURES TO RESOLVE CONFLICTS

• Evaluation of Potential Conflicts.
  • After disclosure of all material facts and any follow-up discussion with the Interested Person with a potential Conflict of Interest, a determination shall be by the Board or appropriate Committee made about whether a material financial interest, self-dealing transaction or other kind of actual conflict exists.
  • If the potential conflict is first disclosed during a Board or Committee meeting at which the Interested Person with the potential conflict is in attendance, the Interested Person shall leave the meeting while the determination of whether a Conflict of Interest exists is either discussed and voted upon or referred to Committee for further consideration. If the disclosure is made outside of the context of a meeting, then the determination of whether a conflict exists shall be referred to the Board of Directors or appropriate Committee thereof for decision and action.
  • In either event, the decision-making body shall evaluate the disclosures made by the Interested Person and determine on a case-by-case basis whether the disclosed activities constitute an actual Conflict of Interest.
  • Factors the decision-making body may consider when determining whether an actual conflict exists include: (i) the proximity of the Interested Person to the decision-making authority of the other entity involved in the transaction, (ii) whether the amount of the financial interest or investment is de minimis, and (iii) the degree to which the Interested Person might benefit personally if a particular transaction were approved.
  • If it is determined that an actual Conflict of Interest exists, the procedures set forth below must be followed. If the matter also involves a “self-dealing” transaction (as described below), then the transaction or matter may be approved only if the additional procedures required below have been followed.
  • The Board or Committee may recommend an appropriate course of action to protect the interests of the Corporation where it is determined that an actual Conflict of Interest exists.
• Addressing Conflicts of Interest. Prior to voting on a contract, transaction, or matter in which an actual Conflict of Interest is found to exist, the Board or Committee shall follow the following procedures:
  • The Interested Person may make a presentation at the Board or Committee meeting at which such transaction is being considered, but following the presentation, he or she must leave the meeting prior to the discussion of, and the vote on, the transaction or arrangement involving the Conflict of Interest.
  • The Chairperson of the Board or Committee shall, if deemed appropriate under the particular circumstances, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
  • After exercising due diligence appropriate under the particular circumstances, the Board or Committee shall determine whether the Corporation could 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 the Board or Committee determines that a more advantageous transaction or arrangement not producing a conflict of interest is not reasonably possible under circumstances, the Board or Committee shall determine whether the transaction or arrangement is in the Corporation’s best interests, for its own benefit, and whether it is fair and reasonable to the Corporation, and shall determine whether to enter into the transaction or arrangement based thereon.
• Approval Threshold for Non-Self-Dealing Transactions. A transaction involving an actual Conflict of Interest, but which is not a self-dealing transaction, must receive prior approval by at least a majority vote of the disinterested directors or Committee members present at a meeting at which a quorum is present.
• Addressing Self-Dealing Transactions. For a Conflict of Interest transaction that rises to the level of a self-dealing transaction, the following procedures apply in addition to the requirements for conflict of interest transactions above:
  • “Self-Dealing” Transactions. Section 5233 of the California Corporations Code requires that certain procedures be followed in order for the Board to approve any transaction involving “self-dealing.” Self-dealing is defined generally as a transaction in which a director has a material financial interest (an “Interested Director”).
  • Approval of Self-Dealing Transactions. A self-dealing transaction may be approved only (1) if it receives prior approval by a vote of at least a majority of the directors then in office, without counting the vote of any Interested Director, and with knowledge of the material facts of the transaction and the Interested Director’s interest; (2) if, prior to authorizing or approving the transaction, the Board considered and determined in good faith, after reasonable investigation under the circumstances, that the Corporation could not obtain a more advantageous arrangement with reasonable effort under the circumstances and that the transaction or arrangement is in the Corporation’s best interests, for its own benefit and is fair and reasonable to the Corporation; and (3) by the full Board, rather than by a committee of the Board, except to the limited extent permitted under Section 5233 of the California Corporations Code.
  • Exemptions. The following are exempt from the approval requirements of Section 5233 of the California Corporations Code: (i) approval of an action fixing the compensation of a director as a director or officer; (ii) good faith approval, without unjustified favoritism, of a charitable program of which a director or a director’s Family Member(s) are among the intended beneficiaries; and (iii) a transaction about which an Interested Director had no actual knowledge involving an amount that does not exceed the lesser of one percent of the gross receipts of the Corporation for the preceding fiscal year or $100,000.
• Interlocking Directorships. Transactions between the Corporation and another entity with overlapping directors may be permitted if all material facts regarding the transaction and the relevant directorships are known to the respective boards of directors, and the matters are approved in good faith by a vote sufficient without counting the vote of the common director(s). Care should be taken to ensure that the contract or transaction is just and reasonable as to the Corporation at the time it is approved. Such transactions are not self-dealing transactions.

6. RECORDS; VIOLATIONS

• Records. The minutes of the Board or Committee meeting convened to consider a transaction subject to this Policy must contain:
  • The names of the Interested Persons who disclosed or whom otherwise were found to have a financial or other interest in connection with an actual or possible Conflict of Interest,
  • the nature of the financial or other interest,
  • any action taken to determine whether a Conflict of Interest was present,
  • the names of the persons who were present for discussion and how each individual voted,
  • the Board’s or Committee’s decision as to whether a Conflict of Interest in fact existed, and
  • a summary of the material content of the discussion, including any alternatives to the proposed transaction or arrangement considered.
• Violations. Violation of this Policy can have severe adverse consequences under applicable law for the Corporation and for the individuals involved. Interested Persons violating this Policy may be subject to disciplinary action, up to and including termination of employment.