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Policy Number: BT-03

Effective: 10/13/2023

Last Revised: 10/13/2023

Responsible Executive: Chair of the Board

Contact Information: 765-677-2100

Conflict of Interest Policy for Board of Trustees

I. Scope

This policy applies to all members of the Board of Trustees.

II. Policy Statement

Members of the Board of Trustees (“Members”, individually a “Member”) occupy positions of trust and are obligated to discharge their duties in good faith and with undivided loyalty to Indiana Wesleyan University (“IWU” or “University”). They must act solely in the University’s best interests without regard to the interests of any other organization with which they are associated or person(s) with whom they are related or associated. Members must disclose all circumstances that could give rise to any actual, perceived or potential Conflict of Interest (“Conflict”), as defined in this policy, and refrain from taking part in any decision related to the transaction or arrangement giving rise to the conflict. 

III. Related Information

IWU is committed to its mission of developing students in character, scholarship and leadership. Developing students in character means Members must embody and model high ethical and moral behavior while they conduct the affairs of the University and engage in external interests and commitments.

The purpose of this Policy is to protect the University’s interest and reputation when it considers any transaction or arrangement that might benefit the private interest of a Member or might result in a possible Excess Benefit Transaction, as defined in this policy.

This policy also exists to maintain compliance with Internal Revenue Service requirements that tax-exempt organizations like IWU avoid the appearance or actuality of personal benefit to Members who hold positions with substantial authority and influence.

IV. Procedures

A. Initial & Annual Duty to Disclose.  Upon initial election or appointment, and annually thereafter, each Member must submit a disclosure form acknowledging receipt of this Policy and disclosing certain relationships, benefits received and business transactions that may give rise to an actual, perceived or potential Conflict. The Audit Committee will receive a summary report involving all disclosures and will further inquire with any Member whose disclosure requires additional information or review.

B. Ongoing Duty to Disclose. Members also have an ongoing duty to disclose, to the best of their knowledge, all potential Conflicts as soon as they become aware of them and always before any proposed transaction involving the University. The disclosure should be made in writing to the Board Chair and Chair of the Audit Committee and should include all material facts about the potential Conflict. The Board Chair and/or Chair of the Audit Committee may inquire with the Member for additional details involving the potential Conflict.

C. Determining Whether a Conflict of Interest Exists.  After the Member’s disclosure and any additional inquiry as contemplated by section IV. B. of this Policy, the Audit Committee shall meet and determine if a Conflict exists. 

In exercising its due diligence, the Audit Committee may appoint a disinterested person or committee to investigate alternatives to the proposed transaction giving rise to the potential Conflict. The Audit Committee shall determine whether the University can obtain with reasonable efforts a more advantageous transaction or arrangement that would not give rise to a Conflict. If a more advantageous transaction is not reasonably possible, the Audit Committee shall consider whether the proposed transaction is fair, reasonable and in the University’s best interest and shall decide by a majority vote whether to enter into the transaction. 

The Audit Committee may also approve a management plan to preserve objectivity and integrity in the transaction and mitigate the risk of reputational harm to the Member and the University. Depending on the materiality of the transaction, the Audit Committee may recommend the transaction be reviewed and approved by the Board of Trustees.

D. Minutes of Meetings.  The minutes of any meeting of the Audit Committee and Board of Trustees involving any potential Conflict shall contain:

  1. The name of any Member who disclosed a possible Conflict, the nature of the Conflict, any action taken to determine whether a Conflict in fact existed, any alternatives to the proposed transaction that were considered, and the course of action taken with respect to the proposed transaction giving rise to the Conflict; and
  2. The names of the Members who were present for discussions and votes relating to the Conflict and proposed transaction along with a record of any votes taken in connection with the meeting.

E. Recusal. Members shall excuse themselves from any meeting where a committee or the Board is discussing or voting on a potential Conflict involving that Member, that Member’s compensation, or the compensation of that Member’s family member.

F. Periodic Reviews. The Audit Committee may initiate or enlist the expertise of outside experts to conduct periodic reviews to ensure the University operates in a manner consistent with its charitable purposes and does not engage in activities that could jeopardize its tax-exempt status. Such periodic reviews may 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; and
  2. Whether partnerships, joint ventures, and arrangements with management organizations conform to written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further the University’s charitable purposes and do not result in inurement, impermissible private benefit or an Excess Benefit Transaction.

V. Definitions

A. Conflict of Interest. A Conflict of Interest may exist when a Member has a personal interest (financial, family, business, investment or other relational) that does, may be perceived to or has the potential to compete with that Member’s objectivity and fiduciary duty to act in the best interests of the University. 

Some examples that may give rise to a Conflict include when a Member, a Member’s family member, or a Member’s business associate:

  1. Owns stock, holds debt or has any other financial interest in a third-party entity that has a business or contractual relationship with the University;
  2. Holds office, serves on the board, participates in management, or is otherwise employed by any third-party entity that has a business or contractual relationship with the University;
  3. Holds office, serves on the board, participates in management, or is otherwise employed by any third-party entity that competes with the University;
  4. Receives remuneration for services provided to the University;
  5. Has an interest in real estate or other property the University might consider buying or leasing; or
  6. Has a family member or business associate who is employed by the University or has a business or contractual relationship with the University.

B. Excess Benefit Transaction. Any transaction or arrangement whereby the University provides a direct or indirect economic benefit to a Member (including the Member’s family and any entity in which the Member has an ownership stake exceeding 35%) and the value of the economic benefit the University provides exceeds the value of the consideration (including the performance of services) the University receives for providing such benefit. Such transactions will incur Internal Revenue Service sanctions for the Member, the University, and in some cases, an officer or director of the University. These transactions must be avoided. See Section 4958 of the Internal Revenue Code.

VI. Sanctions

A. If the Audit Committee has reasonable cause to believe a Member failed to disclose an actual or possible Conflict, it shall inform the Member of the basis for such belief and afford the Member an opportunity to explain the alleged failure to disclose.

B. If, after hearing the response of the Member, and after making such further investigation as may be warranted by the circumstances, the Audit Committee determines the Member failed to disclose an actual or possible Conflict of interest, it shall take appropriate disciplinary and corrective action.

C. The Member may appeal to the Board of Trustees in the event the Member disagrees with any finding and/or decision by the Audit Committee.