Hawaiian Islands Ministries
Statement of Policy Concerning Conflicts of Interest
PLEASE READ THE FOREGOING CAREFULLY. THEN COMPLETE AND SIGN (BY ENTERING YOUR NAME IN THE APPROPRIATE FIELDS) THE CERTIFICATE THAT FOLLOWS THE CONFLICTS OF INTEREST RESOLUTION AND THE ANNUAL CONFLICTS OF INTERESTS QUESTIONNAIRE.
A copy will be sent for your records.
1. REASON FOR STATEMENT
Between Hawaiian Islands Ministries and its Board, officers and management employees [hereinafter “the ministry”], there exists a fiduciary duty which carries with it a broad and unbending duty of loyalty. The Board, officers and management employees have the responsibility to administer the affairs of the ministry honestly and prudently, and to exercise their best care, skill and judgment for the sole benefit of the ministry. Those persons shall exercise the utmost good faith in all transactions involved in their duties, and they shall not use their positions in the ministry or knowledge gained therefrom for their personal benefit. The interests of the ministry must have the first priority, and all purchases of goods and services must take place in a manner that secures for the ministry full competitive advantages as to product(s), service(s) and price(s).
As a nonprofit, tax-exempt entity, the ministry depends on charitable contributions from the public. Maintenance of its tax-exempt status is important both for its continued financial stability and for the receipt of contributions and public support. Therefore, the IRS and state corporate and tax officials view the operations of the ministry as a public trust, accountable to both governmental authorities and members of the public.
The ministry initiated and sustained by God, has a mandate to conduct all of its affairs decently and above reproach both in the sight of God and man. That accountability includes a commitment to operate with the highest level of integrity and to avoid conflicts of interest.
2. PERSONS CONCERNED
This Conflicts of Interest Policy is directed not only to directors and officers, but to all employees who can exercise influence over the actions or affairs of the ministry or its Board, or make commitments on their behalf. For example, this would include all who make purchasing decisions, all other persons who might be described as “management personnel,” and all who have proprietary information concerning the ministry. For purposes of the intermediate sanctions provisions of section 4958 of the Internal Revenue Code (IRC), this also includes family members of those covered by the above description, and any corporation, partnership, trust or estate in which the affected individual(s) own more than 35% of the combined voting power.
3. AREAS IN WHICH CONFLICTS MAY ARISE
Conflicts of interest may arise in, but are not limited to, the relations of directors, officers, and employees with any of the following third parties:
3.1 Persons or entities supplying goods and services to the ministry.
3.2 Persons or entities from whom the ministry leases property and/or equipment.
3.3. Persons or entities with whom the ministry is dealing or planning to deal in connection with the gift, purchase or sale of real estate, securities, or other property.
3.4 Persons or entities paying honorariums or royalties for products or services delivered by the ministry or its agents or employees.
3.5 Other ministries or nonprofit organizations.
3.6 Donors or others supporting the ministry.
3.7 Stations or programmers carrying the ministry’s programming.
3.8 Agencies, organizations and associations that affect the operations of the ministry.
4. NATURE OF CONFLICTING INTEREST
A material conflicting interest may be defined as an interest, direct or indirect, between any persons or entity mentioned in Section 3 and a director, officer or employee, who might affect, or might reasonably be thought by others to affect, the judgment or conduct of a director, officer or employee of the ministry. Such an interest might arise through, but is not limited to:
4.1 Owning stock or holding debt or other proprietary interests in any third party dealing with the ministry or an affiliate. (4)
4.2 Investing in a business in which the ministry or an affiliate holds an interest that reasonably could affect the value of the individual’s investment.
4.3 Investing in a non-publicly traded business in which a director or senior manager of the ministry either owns more than 5% of the voting stock, or in any way exercises effective control of the business.
4.4 Holding office, serving on the Board, participating in management or being other wise employed (or formerly employed) in any third party dealing with the ministry or an affiliate.
4.5 Receiving remuneration for services with respect to individual transactions involving the ministry or an affiliate.
4.6 Using the ministry’s or an affiliate’s personnel, equipment, supplies or good will for other than ministry approved activities, programs and purposes.
4.7 Receiving personal gifts or loans from third parties dealing with the ministry or an affiliate. Receipt of any gift is disapproved except gifts of nominal value which could not be refused without discourtesy. No personal gift of money should ever be accepted.
4.8 Obtaining an interest in real estate, securities or other property that the ministry or an affiliate might consider buying or leasing.
4.9 Expending staff time during normal business hours for personal affairs or for other organizations, civic or otherwise, to the detriment of work performance for the ministry.
4.10 Engaging in a non-fair-market-value deal or an “excess benefit transaction,” (5) as defined in section 4958 of the IRC.5 Examples include below-market rate or interest- free loans if the arrangement results in private inurement.
(4) An affiliate is any entity (whether nonprofit or for-profit) which the ministry directly or indirectly owns or controls, or which directly or indirectly owns or controls the ministry, or a principal purpose of which is to benefit the purposes of the ministry, or any entity under common control with the ministry. For the purposes of this definition, “own” means holding over 50% of the voting stock or voting membership rights. “Control” means that over 50% of the governing body are representatives of or are directly or indirectly controlled by the ministry.
(5) “Excess benefit transaction is defined as: “any transaction in which an economic benefit is provided…directly or indirectly to or for the use of any disqualified person if the value of the economic benefit provided exceeds the value of consideration received (including the value of services performed) for providing such benefit...” IRC section 4958.
5. INDIRECT INTERESTS
As noted above, conflicting interests may be indirect. A director, officer or management employee will be considered to have an indirect interest in another entity or transaction if any of the following have an interest:
5.1 A family member of a director, officer or management employee. (Family member is defined for these purposes as all persons related by blood or marriage, including siblings and their spouses.)
5.2 An estate or trust of which the director, officer or management employee or member of his family is a beneficiary, personal representative, or trustee.
5.3 A company of which a member of the family of the director, officer or management employee is an officer, director or employee, or in which he has ownership or other proprietary interests.
5.4 A partner or employee of a law firm, accounting firm, or other professional entity of which the individual or family member is a partner or employee.
6. INTERPRETATION OF THIS STATEMENT OF POLICY
The areas of conflicting interest are listed in Section 3, and the relations in those areas which may give rise to conflict as listed in Section 4, are not exhaustive. Conceivably, conflicts might arise in other areas or through other relations. It is assumed that the directors, officers, and employees will recognize such areas and relation by analogy.
The fact that one of the interests described in Section 4 exists does not necessarily mean that a conflict exists, or that the conflict, if it exists, is material enough to be of practical importance, or if material, that upon full disclosure of all relevant facts and circumstances that it is necessarily adverse to the interests of the ministry. However, it is policy of the Board that the existence of any of the interests described in Section 4 shall be disclosed before any transaction is consummated. It shall be the continuing responsibility of directors, officers and management employees to scrutinize their transactions and outside business interests and relationships for potential conflicts and to immediately make such disclosures.
Disclosure should be made to the President (or if he/she is the one with the conflict, then to the Chairman of the Board), who shall bring these matters to the attention of the Board. The Board shall then determine whether a conflict exists and whether it is material. In the presence of existing material conflict, the Board will also determine whether the contemplated transaction may be authorized as just, fair and reasonable as to the organization. The decisions of the Board on these matters will rest in their sole discretion, and their first concern must be the welfare of the organization and the advancement of its purposes.
For the Board of Directors
By Dan Chun
Chairman of the Board
Hawaiian Islands Ministries
Conflicts of Interest Resolution
WHEREAS, service as an officer, director, management-level employee, or other individual who occupies a position in which he/she may exercise substantial influence over the ministry (hereinafter collectively referred to as “Managers”), carries with it a requirement of loyalty, fidelity, and
WHEREAS, it is the responsibility of the members of the Board to govern the affairs of the ministry honestly and prudently, and for all Managers to exercise their best care, skill and judgment for the benefit of the ministry, and,
WHEREAS, possible conflicts of interest of all Managers can best be handled through full disclosure of any such interest, together with noninvolvement in any vote wherein the interest is involved;
IT IS THEREFORE RESOLVED: That the following Conflicts of Interest Resolution is hereby adopted:
Any possible conflict of interest on the part of any Manager shall be fully and promptly disclosed to the President (or if the President is involved in the conflict, then to the Chairman of the Board) who shall investigate the facts and report to the Board as a matter of record. Disclosure shall be made at any time when such interest could affect the activities, property, employees or services of the organization, or any matter potentially requiring Board action.
Any Member of the Board having a possible conflict of interest on any matter shall not vote or use his/her personal influence on the matter, and shall not be counted in determining the quorum for the meeting, even where permitted by law. The Minutes of the Board will reflect such disclosures, the abstention from voting, and the existence of a quorum following such abstention. The ministry shall require a two-thirds majority vote of disinterested directors to approve any interested director transaction.
All Managers must be mindful of potential conflicts of interest. Before entering into transactions presenting such problems, they shall disclose to the Board through the President (or to the Chairman if the President is involved in the conflict) any actual or potential interest which may produce such conflict. The Board shall determine whether the contemplated transaction is just, fair and reasonable to the ministry, and, after so determining affirmatively, the directors may authorize the transaction in the best interests of the ministry.
The attached Conflicts of Interest Policy is hereby adopted as binding corporate policy.
RESOLVED FURTHER: That this resolution and the attached Conflicts of Interest Policy shall be reviewed annually for the information and guidance of all Managers and that any new Manager shall be advised of the policy required to subscribe thereto prior to commencing his/her duties for the ministry.
Distribution of this statement does not imply a lack of confidence in the recipients. Rather, the statement serves as a reminder of their duty to reveal any conflict problems in advance, and of the high fiduciary standards that must guide all those related to the ministry’s operations to protect and further its reputation.
Annual Conflicts of Interests Questionnaire
Hawaiian Islands Ministries policy requires disclosure of any conflict of interest at the time an individual becomes aware of such conflict. In futherance of this policy, please complete and sign this questionnaire as an affirmation of the existence or nonexistence of any conflicts of interest.
If any statement below might reasonably be applicable to you at any time from July 1, 2001 to the present, please mark the “Yes” column, and give an explanation of the conflict of interest below. As you complete this questionnaire, please refer to the following definitions:
Material Conflict of Interest: An interest, direct or indirect, between any person or entity engaged in a transaction or other financial relationship with Hawaiian Islands Ministries and a director, officer or employee, or related party thereof, which might affect the influence, or might reasonably be thought by others to affect or influence, the judgment or conduct of a director, officer or employee of the ministry.
Related Party: A family member (including all persons related by blood or marriage); an estate or trust of which you or a family member is a beneficiary, personal representative, or trustee; a company or organization of which you or a family member is an officer, director or employee, or in which you or a family member have ownership or other proprietary interests; or a partner or employee of a law firm, accounting firm, or other professional entity of which you or a family member is a partner or employee.