Article I

Purpose

The purpose of this Conflict of Interest Policy (“Policy”) is to protect the interests of the National Foundation for Infectious Diseases, a Virginia nonstock corporation and 501(c)(3) tax-exempt public charity (“NFID”) when NFID is contemplating entering into a transaction or arrangement that might benefit the private interest of an insider of NFID, or that might result in a possible “Excess Benefit Transaction” (defined below). Moreover, this Policy is intended to assist the NFID Board of Directors in upholding their fiduciary duty to act in the best interest of NFID, and to subordinate individual, third-party, and other interests to the welfare and best interests of NFID. This Policy is intended to supplement but not replace any applicable state and federal laws  governing conflicts of interest applicable to nonstock/nonprofit and charitable organizations and/or their governing bodies.

Article II

Definitions

1. Code. The Internal Revenue Code of 1986, as amended.

2. Disqualified Person. As defined in Section 4958 of the Code, a “Disqualified Person” with respect to NFID is any person who was in a position to exercise substantial influence over NFID affairs at any time during the 5-year period ending on the date of the Transaction (defined below) under consideration. This definition includes directors, officers, managers, members of a committee  with powers delegated by the NFID Board of Directors, and family members of the foregoing individuals. The term Disqualified Person also applies to any “35%-controlled entity,” a term which includes: (i) a corporation in which Disqualified Persons own more than 35% of the total combined voting power, or (ii) a partnership in which Disqualified Persons own more than 35% of the profits interest.

3. Excess Benefit Transaction. As defined in Section 4958 of the Code, any transaction in which an economic benefit is provided by NFID directly or indirectly to or for the use of any Disqualified Person, if the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing such benefit.

4. Financial Interest. A person has a “Financial Interest” if the person has, directly or indirectly, through business, investment, or family:

a. An ownership or investment interest in any entity with which NFID has (or is negotiating) a Transaction,
b. A compensation arrangement with NFID or with any entity or individual with which NFID has or is negotiating a Transaction, or
c. An interest as a director, officer, manager or trustee of an entity with which NFID has or is negotiating a Transaction.

5. Interested Person. “Interested Persons” are current directors, officers, managers, or members of a committee with powers delegated by the Board of Directors of NFID, who have a Financial Interest in the Transaction.

6. Transaction. Means any contract, agreement, transaction or arrangement giving rise to a possible conflict of interest that is under consideration by NFID. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.

A Financial Interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a Financial Interest may have a conflict of interest only if the NFID Executive Committee determines that a conflict of interest exists.

Article III

Procedures

1. Duty to Disclose. An Interested Person who has a Financial Interest in a Transaction must promptly disclose the existence of such Financial Interest and all material facts to the NFID Executive Committee at a duly convened meeting of the NFID Executive Committee. Additionally, any person who has personal knowledge that a Disqualified Person is a party to a proposed Transaction with NFID must disclose that relationship to the NFID Executive Committee.

2. Determining Whether a Conflict of Interest Exists. After disclosure of the Financial Interest and all material facts, and after any discussion with the Interested Person, the Interested Person shall leave the NFID Executive Committee meeting while the existence of a conflict of interest is discussed and determined by the vote of the majority of the disinterested members of the NFID Executive Committee. In cases where a proposed Transaction involves a Disqualified Person, a conflict is presumed to exist and the NFID Executive Committee must follow procedures for establishing the “rebuttable presumption” of reasonableness, set forth in the Treasury Regulations under Section 4958 of the Code. The recusal and record keeping procedures outlined below are intended to satisfy such Code Section 4958 requirements.

3. Procedures for Addressing the Conflict of Interest.

a. An Interested Person or a Disqualified Person may make a presentation at the NFID Executive Committee meeting at which the Transaction is discussed and may respond to questions from the NFID Executive Committee considering the Transaction. However, after such presentation and/or consultations, they shall leave the meeting during the discussion of, and the vote on, the Transaction.

b. The NFID President shall, if deemed appropriate, appoint a disinterested committee to investigate alternatives to the proposed Transaction.

c. After exercising appropriate due diligence, the NFID Executive Committee shall determine whether NFID can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.

d. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the NFID Executive Committee shall determine by a majority vote of the disinterested directors whether the Transaction is in the best interest of NFID, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, and subject in all respects to the limitations set forth in subsection (f), below, the NFID Executive Committee
shall make a determination as to whether to enter into the Transaction.

e. Where the proposed Transaction involves a Disqualified Person (e.g., proposed compensation of an officer, director, committee member, or manager for services provided to NFID, or a proposed exchange or sale of property with any Disqualified Persons), the disinterested members of the NFID Executive Committee or another relevant committee with powers delegated by the Board of Directors must obtain and review appropriate comparable data in advance to determine the fair market value for the goods or services provided by the Disqualified Person (e.g., compensation studies or third-party appraisals), and the NFID Executive Committee must contemporaneously document its basis for approving the Transaction in light of the comparable data, which documentation must include the terms of the Transaction and date of its approval, the members of the authorized body present during the discussion and vote on the  Transaction, and the comparable data obtained and relied upon. Payments to Disqualified Persons for any such goods or services may not exceed such fair market value.

f. Notwithstanding anything in this Policy to the contrary, NFID shall not enter into any Transaction with an Interested Person or Disqualified Person that will or is likely to cause impermissible private inurement or benefit, or which will or is likely to subject NFID or any other person to intermediate sanctions under Section 4958 of the Code and related Treasury Regulations in connection with Excess Benefit Transactions.

4. Violations of the Conflicts of Interest Policy. If the NFID Executive Committee has reasonable cause to believe an Interested Person has failed to disclose actual or possible conflicts of interest, the NFID Executive Committee shall inform such Interested Person of the basis for such belief and afford such Interested Person an opportunity to respond, and after making further investigation as warranted by the circumstances, if the NFID Executive Committee determines the Interested Person has failed to disclose an actual or possible conflict of interest, the NFID Executive  Committee shall take appropriate disciplinary and corrective action.

Article IV

Records of Proceedings

The minutes of the NFID Executive Committee meeting at which the Transaction is discussed shall contain:

a. The names of the Interested Persons who disclosed or otherwise were found to have a Financial Interest in connection with a Transaction, the nature of the Financial Interest, any action taken to determine whether a conflict of interest was present, and the NFID Executive Committee’s decision as to whether a conflict of interest in fact existed.

b. The names of any Disqualified Persons involved in the Transaction, and the relevant position or relationship(s) that cause such Disqualified Persons to be so classified for purposes of Code Section 4958.

c. The names of the persons who were present for discussions and votes relating to the Transaction, the content of the discussion, including any alternatives to the proposed Transaction, and a record of any votes taken in connection with the proceedings.

Article V

Compensation

a. Directors, officers, managers, and committee members shall not receive compensation for their services, except as otherwise determined by the Board of Directors in accordance with the Bylaws. Any compensation paid to such persons for their services as directors, officers, managers, or committee members shall be reasonable compensation that is not excessive, as determined by the  Board of Directors in accordance with the Bylaws. Expenses incurred by any director, officer, manager or committee member in the course of the performance of his or her duties for NFID shall be reimbursed at the discretion of the Board of Directors. In no event shall any part of the net earnings of NFID inure to the benefit of any directors, officers, managers, managers or committee members of NFID, or to the benefit of any other individual, within the meaning of Code Section 501(c)(3), or any corresponding provisions of any subsequent federal tax laws.

b. A voting member of the Board of Directors who receives compensation, directly or indirectly, from NFID for services, is not permitted to vote on matters pertaining to such member’s own compensation.

c. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from NFID for services, is not permitted to vote on matters pertaining to such member’s own compensation.

d. No voting member of the Board of Directors or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from NFID, is prohibited from providing information to any committee regarding compensation.

e. Notwithstanding anything in this Policy to the contrary, no part of the net earnings of NFID shall inure to the benefit of any director, officer, manager, or committee member of NFID, or any private individual (except that reasonable compensation may be paid for services rendered to or for NFID to effect one or more of its purposes), and no director, officer, manager, or committee member of NFID, or any private individual, shall be entitled to share in the distribution of any of the corporate assets upon the dissolution of NFID.

Article VI

Annual Statements

Each director, officer, and member of a committee with Board of Directors delegated powers shall annually sign a statement which affirms such a person:

a. Has received a copy of the Policy;

b. Has read and understands the Policy;

c. Has agreed to comply with the Policy; and

d. Understands that NFID is a 501(c)(3) public charity, and that in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.

Article VII

Periodic Reviews

To ensure NFID operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews of NFID activities and expenditures shall be conducted. When conducting the periodic reviews, NFID may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the Board of Directors of its responsibility for ensuring periodic reviews are conducted.

Article VIII

Outside Activities–Officers and Directors

All NFID officers shall direct their attention and energy to the activities of NFID and shall not engage in any service on the board of directors or similar body of any other related organization without approval by the NFID Executive Committee. Officers will not engage in any outside activities that might interfere with NFID activities or reflect unfavorably on the reputation and name of NFID as determined at the sole discretion of the NFID Executive Committee. Notwithstanding the above, officers may engage in charitable, professional, and civic activities that do not constitute a conflict of interest or otherwise impact the performance of the officer’s duties to NFID

 

Approved March 2025