- ARCEIDIOCESAN CONFLICTS OF 1NTEREST/PRIVATE INURENEENTS POLICY PURPOSE
- IDENTIFYING A PRIVATE INUREMENT OR PRIVATE BENEFIT PROBLEM
- CONFLICTS OF INTEREST
- CONFIDENTIAL OR PRIVILEGED INFORMATION
ARCEIDIOCESAN CONFLICTS OF 1NTEREST/PRIVATE INURENEENTS POLICY PURPOSE #
The purpose of this conflicts of interest and private inurements policy is to protect the Archdiocese’s interest when it is contemplating entering into a transaction or arrangement that might benefit the interests of private individuals, including but not limited to employees and individuals performing work on behalf of the Archdiocese and other persons in a position to influence the affairs of the Archdiocese. This policy is intended to supplement but not replace any applicable state laws governing conflicts of interest applicable to non-profit and charitable corporations. This policy should be distributed to existing and future executives, officers, trustees, directors and members of advisory boards and committees.
Non-profit charitable, religious and educational organizations obtain their tax-exempt status under the theory that they perform valuable services for society and lessen the burdens of government. If a tax-exempt organization allows its money or other property to be used for private rather than public gain (i.e. for “private inurement” or “private benefit”), then it risks losing its exemption. In addition, under recently adopted “intermediate sanctions” provisions of the Internal Revenue Code, “disqualified persons” such as CEOs, CFOs, board members, major donors doing work for the Archdiocese, etc. who receive “excess benefits” are subject to an excise tax ranging from 25 % – 200 %, depending on the circumstances. Furthermore, any organizational manager who knowingly facilitates such an excess benefit is subject to a 10% tax. In light of these IRS restrictions and, more importantly, in order to assist the Archdiocese in fulfilling its responsibilities to act as a competent and trustworthy steward of Church goods, the Archdiocese has developed this policy.
IDENTIFYING A PRIVATE INUREMENT OR PRIVATE BENEFIT PROBLEM #
In brief; “private inurement” is the payment or diversion of an exempt organization’s assets to its officers, directors, employees, relatives, friends, major donors or others in a special relationship to the organization who can influence or control the policy or the day-to-day activities of the organization, for less than full and adequate consideration. It is a broad concept that can exist in a variety of transactions under a variety of circumstances. Private inurement also extends to the use of organizational assets for “private benefits” such as sales, leasing, construction contracts, service transactions, etc. at other than fair market value or the exploitation of the exempt organization for the benefit of a private business (e.g., “sweetheart deals,” promotional schemes and/or give aways to private individuals or businesses). Thus, under IRS regulations a private benefit is similar to, but broader than, private inurement.
In order to avoid the conferment of material private inurements or benefits in the types of transactions described above it is important that the particular diocesan parish, school or agency enter into transactions for its benefit, rather than for a private party’s benefit, and to exercise due diligence to assure that the proposed transaction is fair and reasonable such that under the circumstances the organization could not have obtained a more advantageous arrangement with reasonable effort. In addition to screening proposed transactions through the applicable corporate boards, parish/school advisory boards and committees, etc. care should be taken to follow Archdiocesan policies and procedures pertaining to the signing of contracts. For example, parish and school administrators may not execute contracts in excess of $10,000 in amount and/or one year in duration. These must be submitted to the Chancery. They must be reviewed by Archdiocesan legal counsel and signed by the applicable corporate officers at the Chancery. Additional procedures apply in connection with contract bids for building construction, renovation and repair projects.
CONFLICTS OF INTEREST #
A conflict of interest can exist when persons employed by the “Archdiocese” (i.e. the Chancery, parishes, schools, Archdiocesan agencies and/or affiliated corporate entities) or those volunteers of the Archdiocese holding trusteeships or other governance authority or those serving on advisory or consultative boards or committees, have a direct or indirect financial interest as defined below.
Financial Interest #
A person has a financial interest if the person has, directly or indirectly, through business, investment or family (including: spouses; brothers or sisters; spouses of brothers or sisters; ancestors; children, grandchildren, and great grandchildren; and spouses of children, grand children and great grandchildren):<