The Catholic University of America

Governance of the University: Conflict of Interest Board of Trustees Policy

Approved by:
Board of Trustees
History: Issued   -- December 16, 2008  
  Revised -- June 10, 2014  
  Additional History
Related Policies: Conflict of Interest Policy for Staff and Faculty
Additional References:
Responsible Official Secretary of the Board tel. (202) 319-5100
_______________________________________________________________________________________________
I.          Introduction
The University's trustees commonly have a range of professional and personal associations with and interests in other entities, including religious and educational nonprofit organizations. To assure the University's constituents of the integrity of its endeavors and to comply with District of Columbia law regarding trustee fiduciary obligations, trustees should avoid situations in which their financial or other ties to outside entities could present an actual, potential or apparent conflict of interest. 
No policy statement can address specifically every conceivable situation that might present a conflict of interest. Trustees have a 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.  Trustees should avoid actions or situations that might 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.
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 eighteen members of the United States Conference of Catholic Bishops, including all of the American cardinal archbishops, to participate in its governance.   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 IV and V of this policy in consultation with a competent canon lawyer.     
II.         Definitions
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.  
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.
A conflict of interest must always be disclosed, as described in Part III.
B.         Episcopal Member refers to a member of the board of trustees who is a bishop 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.         Material Conflict of Interest is a conflict sufficiently serious that it might require a trustee to refrain from voting on, and at times from discussion of, the matter under consideration. Some conflicts, though, are presumed to be material.  These are described in Part II.F. 
In other cases the responsibility for deciding whether a conflict is material rests with the Trusteeship Committee and the Board, as described in Part IV.  A material conflict must always be disclosed, and shall be further dealt with as described in Part V.
E.         Position of Authority includes service as a director, officer, trustee, or partner, whether or not one is compensated. 
F.          Presumed Conflict of Interest.  A conflict of interest is presumed to arise when theUniversity 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.  Not all presumed conflicts are material. 
G.         Presumed Material Conflict of Interest.  A conflict of interest is presumed to be material if it entails:
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 [i] equity in a publicly traded company amounting to less than a 5% ownership interest, and [ii]  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.
III.         Disclosure of Conflicts
Trustees shall disclose conflicts of interest to the Secretary of the Board as they arise.  Each trustee shall also submit to the Secretary of the Board an annual statement disclosing all presumed conflicts known to the trustee.  A trustee’s knowing failure to disclose a presumed conflict of interest, or knowing refusal to submit the completed annual disclosure statement, may be grounds for removal from the Board, subject to the bylaws.  Such trustee may also 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.
IV.        Review of Conflicts
The Secretary, in consultation with the University General Counsel, the University Chief Ethics and Compliance Officer, and in appropriate cases a competent canon lawyer, shall review disclosures of conflicts as they arise, and annual disclosure statements as they are submitted.  If after such review the Secretary has reason to believe that a conflict may be material, he shall promptly 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 transaction or business relationship that the Trusteeship Committee believes may be necessary to an appropriate disposition.
The Trusteeship Committee shall review the information and determine whether there is a material conflict of interest.  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 such information as it deems pertinent, including posing questions to the trustee involved. If the Committee determines that there is a material conflict of interest, it shall so advise the trustee, who shall have an opportunity to address the matter with the Committee.  If the Trusteeship Committee or the trustee involved believes it is appropriate, the matter may then be referred to the Board for review or further action.
If a matter is referred to the Board for review or further action, unless the trustee elects recusal, the Board shall decide whether the conflict is material.  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 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.
V.         Disposition 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.
VI.        Disposition of Some Other Conflicts
A.         Acceptance of Gifts
Trustees shall not accept or encourage gifts, meals, favors, or gratuities, other than of nominal or de minimisvalue, 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.
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.
VII.       Record of Proceedings
Whenever the Board holds a meeting at which a trustee's financial 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.
VIII.      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.