|Approved by:||Board of Trustees|
|History:||Issued -- December 16, 2008|
|Revised -- June 4, 2019|
|Last Reviewed -- June 4, 2019|
|Related Policies:||Conflict of Interest Policy for Staff and Faculty|
|Additional References:||Trustee Conflict of Interest Disclosure Statement and Questionnaire|
|Responsible Official:||Secretary of the Board tel. (202) 319-5100|
I. Policy Statement
The University's trustees commonly have a range of professional and personal associations and interests in both for-profit and nonprofit organizations. The University welcomes the energy and expertise trustees bring to the University from those associations and interests. At the same time, trustees have a fiduciary duty to make decisions and to contribute to discussions based on the best interests of the University, and not on any personal interest or any other relationship or official duties, regardless of whether they involve financial matters. This policy provides guidance to assist trustees in avoiding actual or potential conflicts of interest, and describes the University’s mandatory initial, annual, and ad hoc conflict of interest disclosure processes for trustees.
It is important to note that disclosing non-University associations and interests does not mean that a conflict of interest exists. Nor do such disclosures in any way suggest inappropriate activity by the individual making the disclosure. Rather, the purpose of this policy and the disclosure process is to allow the University to evaluate objectively all trustee associations and interests, and to provide guidance and management where necessary so that even the potential for the appearance of a conflict can be avoided.
II. Disclosures by Episcopal Members
The University is unique among all the Catholic universities in the United States in that it was founded by the American bishops and chartered by the Holy See. Because of its ecclesial nature the University, by statute, requires seven bishops to participate in its governance, and it invites all of the American cardinal archbishops to serve as Board members and Fellows. The bishops who serve as trustees have a particular responsibility to maintain the University’s communion with the universal Church and the Holy See. A conflict of interest policy that disabled episcopal members from fulfilling that responsibility would be inconsistent with the University’s own constitutional design. For that reason the Board of Trustees, its committees, and agents, in interpreting this policy, should assume that actions pursuant to the responsibilities entrusted to bishops by the Code of Canon Law cannot, without more, create a material conflict of interest. When an apparent conflict concerning an episcopal member of the board arises, it shall be addressed pursuant to the procedures in sections VI and VII of this policy in consultation with a qualified canon lawyer.
A. Conflict of Interest means a situation in which the interests of a trustee and the interests of the University diverge, or appear to diverge. Conflicts often arise when there is the potential for a trustee, a trustee’s family members, or a trustee’s friends to benefit personally as a result of the trustee’s involvement in a University activity or decision. Conflicts may also arise when a trustee has non-University interests or duties that could influence the trustee’s actions on behalf of the University. Accordingly, conflicts are not necessarily financial in nature. Actual impropriety is not necessary for a conflict of interest to arise. The appearance or potential for a conflict can be just as damaging as actual self-dealing.
B. Episcopal Member refers to a member of the board of trustees who is a bishop, archbishop, or cardinal of the United States.
C. Family Member means a trustee’s spouse, child (including an adopted or step-child), parent, parent-in-law, sibling, niece or nephew, legal guardian, or household member.
D. Position of Authority includes service as a director, officer, trustee, or partner in a non-University for-profit or nonprofit entity, whether or not one is compensated.
IV. Avoidance of Conflicts
To assure the University's constituents of the integrity of its endeavors, trustees must avoid situations in which their financial or other ties to outside entities could, or do, present an actual, potential or apparent conflict of interest.
Trustees also must avoid actions or situations that might, or do, result in or create the appearance of using their association with the University for private gain, according unwarranted preferential treatment to any outside individual or organization, losing independence or impartiality, or adversely affecting the University's reputation or public confidence in its integrity. Below are areas where conflicts of interest may arise.
A. Business Relationships
A conflict of interest is presumed to arise when the University has a business relationship or is considering a transaction with a trustee or a trustee's family member or an outside entity (including a religious, educational, or non-profit entity) in which the trustee or family member has a financial interest or a position of authority.
A conflict of interest becomes material, and thus requires greater care and management, when it is sufficiently serious that it might require a trustee to refrain from voting on, and at times from discussion of, the matter under consideration. Material conflicts are presumed to exist if they entail:
1. An ownership or investment interest (including stock, options, a partnership interest, or any other ownership or investment interest) valued at more than $10,000, except:
- Equity in a publicly traded company amounting to less than a 5% ownership interest, and
- Investment in a publicly-traded company by another publicly-traded entity (such as a mutual fund) whose investment decisions the trustee does not control.
2. Receipt of non-dividend compensation (including salary, consulting fees, royalty payments, or other remuneration) of more than $10,000 in any 12-month period in the past 3 years, or the expectation of such compensation in the future;
3. An ownership interest in real property, personal property, intellectual property, or any other interest valued at $10,000 or more.
B. Appropriation of University Opportunities
If a trustee becomes aware of a business, investment, or other potentially valuable opportunity that rightfully belongs to the University and not to the trustee individually or another entity with which the trustee is affiliated, the trustee shall bring the opportunity to the attention of the Board.
C. Use or Disclosure of Confidential Information
Trustees may not use confidential information acquired as a result of service to the University for any purpose unrelated to University business, or provide such information to any third party, without the consent of the Board. Wrongful use of University information includes, but is not limited to, use or disclosure of information to engage, invest, or otherwise participate in any business, project, venture, or transaction other than through the University.
D. Acceptance of Gifts
Trustees shall not accept or encourage gifts, meals, favors, or gratuities, other than of nominal or de minimis value, for themselves or family members, from any individual or entity that to the trustee's knowledge has, or seeks to have, a business relationship with the University.
V. Initial, Annual, and Ad Hoc Disclosures
Upon joining the Board, and annually thereafter, all trustees shall submit to the Secretary of the Board an initial conflict of interest disclosure statement and questionnaire setting forth their associations and interests in other entities, as well as any known actual or potential conflicts of interest. On an ad hoc basis, trustees shall disclose to the Secretary of the Board any actual or potential conflicts of interest as soon as they arise.
Initial and annual disclosures are made using the online Trustee Conflict of Interest Disclosure Statement and Questionnaire. Ad hoc disclosures are made in writing to the Secretary of the Board of Trustees.
A trustee’s knowing failure to disclose a conflict of interest, or knowing refusal to submit the completed initial or annual disclosure statement and questionnaire, may be grounds for removal from the Board, subject to the Bylaws of the Trustees. Such trustee also may be required to return to the University any personal gain by the trustee or trustee's Family Member that is deemed by the Board to be improper gain under this policy.
VI. Review of Disclosures
A. Initial Review
The University’s Chief Ethics and Compliance Officer administers the conflict of interest process on behalf of the Secretary of the Board. The Secretary, in consultation with the Chief Ethics and Compliance Officer and the University General Counsel, shall review all disclosures as they are submitted. In cases of Episcopal Members, a qualified canon lawyer also may be participate in such discussions.
B. Review by the Trusteeship Committee
If after review the Secretary has reason to believe that a current or proposed activity, transaction, or business relationship may present a conflict that may be material, the Secretary promptly shall submit to the chair of the Trusteeship Committee (or, if the matter involves the chair, another member of the Trusteeship Committee) any information about the current or proposed activity, transaction or business relationship.
The Trusteeship Committee shall review the information and determine whether the activity, transaction, or business relationship poses a conflict that is material. If the matter being reviewed involves a member of the Trusteeship Committee, the member shall not participate in or be present during the Committee's consideration of the matter, except as requested by the Committee to answer questions or provide information. The Trusteeship Committee may review any information it deems pertinent, and may pose questions to the trustee involved.
If the Committee determines that a material conflict of interest exists, it shall so advise the trustee, who shall have an opportunity to address the matter with the Committee. The Committee thereafter shall implement steps to eliminate or mitigate the conflict per section VI below or, if the Trusteeship Committee believes it is appropriate, refer the matter to the Board for review and further action.
C. Review by the Board
If a matter is referred to the Board for review or further action, the Board may question the interested trustee, and the trustee shall have an opportunity to address the Board. The interested trustee shall leave the Board meeting while the disinterested members of the Board determine, by majority vote, whether the conflict of interest is material. If it is determined that a material conflict of interest exists, the Board shall implement steps to eliminate or mitigate the conflict per section VI below. If it is determined that no material conflict exists, the interested trustee may rejoin the meeting and participate fully in the discussion of and vote on the proposed transaction or arrangement.
Disclosure of a conflict of interest may sometimes be made in the first instance to the Board. This could happen if, for example, a trustee became aware of a possible conflict during or just before a meeting of the Board. In such a case the Board may decide on its own whether the conflict is material, or may refer the matter to the Trusteeship Committee for a recommendation. The Board and/or the Trusteeship Committee may, as part their consideration, consult with the Chief Ethics and Compliance Officer, the General Counsel, and/or a qualified Canon lawyer.
VII. Disposition and Management of Material Conflicts
If the Trusteeship Committee (or where further review is appropriate, the Board) determines that a trustee has a material conflict of interest in a matter before the Board or one of the Board’s committees, the Trusteeship Committee (or the Board) may decide to:
- Exclude the trustee from participation in the discussion and the vote.
- Permit the trustee to participate in the discussion but not the vote.
- Permit the trustee to participate in the discussion and the vote.
In making this decision the Trusteeship Committee (and the Board) shall give special recognition to the structural composition of the Board, including the constitutional necessity of having participation by the Episcopal Members.
When the Board finds that a material conflict of interest exists, it shall approve the transaction or arrangement only upon a finding, by a majority vote of the disinterested trustees, that the transaction or arrangement is in the University's best interests. The Board may engage such consultants as it deems necessary or useful to assist in its determination. Consistent with the Bylaws of the Board of Trustees, if the number of disinterested trustees present does not constitute a quorum, the Board shall postpone consideration of the matter involving a material conflict of interest until a quorum of disinterested trustees is available.
VIII. Record of Proceedings
Whenever the Board holds a meeting at which a trustee's non-University association or interest in a matter is disclosed, a determination regarding the existence of a conflict of interest is made, or a transaction or arrangement with respect to which a trustee has a material conflict of interest is considered, the Board's consideration of these issues shall be reflected in the minutes of the meeting.
IX. Actions not Void or Voidable
No transaction or action undertaken by the University shall be void or voidable, or may be challenged as such by an outside party, by reason of having been undertaken in violation of this policy or the principles set forth herein.