Administration Policies: Conflict of Interest

Chapter 6. Conflict of Interest

Introduction

This conflict of interest policy is designed to help directors, officers and employees of the Great River Regional Library System identify situations that present potential conflicts of interest and to provide Great River Regional Library System with a procedure which, if observed, will allow a transaction to be treated as valid and binding even though a director, officer or employee has or may have a conflict of interest with respect to the transaction. The policy is intended to comply with the procedure prescribed in Minnesota Statutes, Sections [471.87] [471.88] [471.89] [471.895] governing conflicts of interest for public officials. In the event there is an inconsistency between the requirements and procedures prescribed herein and those in the applicable Minnesota Statutes, the Statute shall control.

The purpose of the conflict of interest policy is to protect GRRL’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of a trustee or Leadership Support Team member or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to regional public library systems, nonprofit and charitable organizations.

 

6A. Definitions

6A.1 Interested Person

Any trustee, Leadership Support Team member, or member of a committee with governing board delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.

6A.2 Financial Interest

A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:

  1. An ownership or investment interest in any entity with which GRRL has a transaction or arrangement,
  2. A compensation arrangement with GRRL or with any entity or individual with which GRRL has a transaction or arrangement, or
  3. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which GRRL is negotiating a transaction or arrangement.

Compensation includes direct and indirect remuneration as well as gifts or favors that aren’t insubstantial. A financial interest isn’t necessarily a conflict of interest. A person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.

 

6B. Procedures

6B.1 Duty to Disclose

In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the trustees and members of committees with governing board delegated powers considering the proposed transaction or arrangement.

6B.2 Determining Whether a Conflict of Interest Exists

After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.

6B.3 Procedures for Addressing the Conflict of Interest

  1. An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/ she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
  2. The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
  3. After exercising due diligence, the governing board or committee shall determine whether GRRL can 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.
  4. If a more advantageous transaction or arrangement isn’t reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested trustees whether the transaction or arrangement is in GRRL’s best interest, for its own benefit, and whether it is fair and reasonable. ln conformity with the above determination it shall make Its decision as to whether to enter into the transaction or arrangement.

6B.4 Violations of the Conflict of Interest Policy

  1. If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.

  2. lf, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

     

6C. Records of Proceedings

The minutes of the governing board and all committees with board delegated powers shall comply with Minnesota Statute 13D open meeting law and contain:

  1. The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing board’s or committee’s decision as to whether a conflict of interest in fact existed.

  2. The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.

     

6D. Compensation

  1. A voting member of the governing board who receives compensation, directly or indirectly, from GRRL for services is precluded from voting on matters pertaining to that member’s compensation.
  2. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from GRRL for services is precluded from voting on matters pertaining to that member’s compensation.
  3. No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from GRRL, either individually or collectively, is prohibited from providing information to any committee regarding compensation.

  4. No member of the board or immediate relative of a board member shall be considered for staff employment. No member of the board or immediate relative of a board member shall use for personal use or profit the resources, business, finances or contracts of the library that are not intended for personal use or profit.

     

6E. Annual Statements

Each trustee, Leadership Support Team member and member of a committee with governing board delegated powers shall annually sign a statement which affirms such person:

  1. Has received a copy of the conflict of interest policy,
  2. Has read and understands the policy,
  3. Has agreed to comply with the policy, and

  4. Understands GRRL is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.

     

6F. Periodic Reviews

To ensure GRRL operates in a manner consistent with charitable purposes and doesn’t engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:

  1. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s length bargaining.
  2. Whether partnerships, joint ventures, and arrangements with management organizations conform to GRRL’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and don’t result in inurement, impermissible private benefit, or in an excess benefit transaction.
  3. An annual report will be submitted by April 1 of each year to the Minnesota Department of Education including the amounts expended and for what purposes, the number of library materials on hand, the number purchased and loaned in compliance with Minnesota Statute 134.13.

  4. An annual audit by an independent auditor will be performed in compliance with Minnesota Statute 134.34 and the Government Auditing Standards issued by the Comptroller General of the United States as required by the Minnesota Department of Education-Minnesota State Library Agency.

     

6G. Use of Outside Experts

When conducting the periodic reviews, GRRL may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.

 

Approved Date: 05/21/19
Reviewed Date: 11/19/2024