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2.2 Ethics & Responsibility

Overview #

Pursuant to Article VIII (Conflicts of Interest) of the University of Tennessee Foundation (UTFI) Bylaws, pursuant to Article IV, Paragraph 5 of the “Affiliation and Services Agreement between The University of Tennessee and The University of Tennessee Foundation, Inc.,” and in light of its mission and responsibility to operate in an open and transparent manner, the UTFI Board of Directors establishes the following Ethics and Responsibility Policy.

To effectively carry out its mission of supporting the educational, research, and public service activities of the University of Tennessee through fundraising, it is essential that the activities of UTFI be accomplished with unquestioned credibility.

Gratuities and Gifts #

No director, officer or staff member of UTFI shall accept or give any gift or gratuity that is offered, or reasonably appears to be offered, because of the individual’s position with UTFI. Any potential violations should be reported to the chair of the UTFI Audit Committee (the committee) and will be considered as outlined below in Section II.B.4.

Conflicts of Interest #

The purpose of this section of the policy is to provide guidelines to help the UTFI Board and President maintain objectivity and integrity in situations that may involve a conflict of interest. Board members and the President are expected to take all reasonable precautions to ensure that their outside financial interests do not place them in conflict with carrying out their responsibilities.

Definitions #

  • Interested Person: Any UTFI board member, whether elected, ex officio, voting or non- voting, who has a direct or indirect financial interest, as defined below, is an “interested person” for purposes of this policy.
  • Financial Interest: A person has a financial interest if the person has, directly or indirectly through business, investment, or family one or more of the following:
    • An ownership or investment, except those held in a mutual fund, in any entity with which the foundation has a transaction or arrangement,
    • A compensation arrangement with the foundation or with any entity or individual with which the foundation has a transaction or arrangement, or
    • A potential ownership or investment interest, except for those held in a mutual fund in, or compensation arrangement with, any entity or individual with which UTFI is negotiating a transaction or arrangement.
  • Family: Family includes all immediate family, including children and their spouses who no longer reside with interested person.
  • Compensation: Compensation includes all direct and indirect remuneration and includes gifts or favors that are substantial in nature.
    • As a guide, substantial in nature would include ownership, either legally or equitably, in excess of 5% or $100,000, in face value of the stock of a publicly or privately-held corporation or business interest, except for those held in a mutual fund.

Procedures #

  • Duty to Disclose: An interested person must disclose the existence of any financial interest to the committee should he or she perceive the financial interest constitutes a conflict of interest.
    • The UTFI President or Executive Vice President and Chief Operating Officer (COO) shall report any financial interests held by UTFI employees to the committee.
  • Determining Whether a Conflict of Interest Exists: The committee shall convene in accordance with UTFI Bylaws and its charter to review all financial interest disclosures.
    • After discussion with the interested person and consideration of any other relevant material, the committee shall convene in executive session, with only committee members present, to determine if a conflict of interest exists.
    • If the interested person is a member of the committee, he or she shall not participate in the executive session.
    • Nothing in this section shall preclude the committee from meeting by conference call, where deemed appropriate.
  • Procedures for Addressing the Conflict of Interest:
    • A conflict of interest shall not necessarily invalidate any transaction or arrangement entered into as a result of a bid process whereby at least three bids are received and the winning bid is determined by a person who does not have a financial interest.
    • The President or Chairman of the board shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
    • After exercising due diligence, the committee shall determine whether UTFI can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that would not give rise to a conflict of interest.
    • If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the UTFI audit committee shall determine by a majority vote of the disinterested committee members whether the transaction or arrangement is in UTFI’s best interests and for its own benefit and whether the transaction is fair and reasonable and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination.
  • Failure to Disclose: If a UTFI board member or the UTFI President has reasonable cause to believe that an interested person has failed to disclose actual or possible conflicts of interest, he/she shall inform the committee chair. The committee chair shall inform the interested person of the allegations and afford the interested person an opportunity to explain the alleged failure to disclose to the committee.
    • If, after hearing the response of the interested person and making such further investigation as may be warranted in the circumstances, the audit committee determines that the interested person has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
    • Notwithstanding any other provision in the UTFI bylaws to the contrary, by a two-thirds (2/3) vote of its elected directors, the UTFI board may remove any member of the UTFI board for a material violation of the Ethics and Responsibility Policy.
      • A vote to remove a member shall only be taken after the accused member has been afforded a due process contested case hearing in accordance with the Tennessee Uniform Administrative Procedures Act, compiled in Tennessee Code Annotated title 5 chapter 4 and a finding has been made that the member did violate UTFI’s Ethics and Responsibility Policy.
      • If a member is removed in accordance with this subsection, such position shall be considered vacant and the vacancy shall be filled as provided for in the bylaws.
  • Records of Proceedings
    • The minutes of any committee and board meeting(s) held pursuant to section II (B)(4) of this policy shall contain 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 committee’s or board’s decision as to whether a material violation in fact existed.
    • The minutes of all committee meetings held pursuant to sections II (B)(2) or II (B)(3) of this policy shall disclose 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 therewith.

Annual Statements #

Each UTFI board member and officer shall receive a copy of this Ethics and Responsibility Policy, shall certify that she or he has read and understands the policy, and agrees to comply with the policy by executing an assent form annually. All new board members will be provided with a list of those firms with whom UTFI is doing business at the time the member joins the board.

Policy Contents
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