Where the organization proposes to engage in a business transaction with a Board member or an organization with which the Board member is affiliated or in which he or she has an ownership interest, prior to any action by the Board, the existence and nature of the conflict should be fully described to the committee or the Board and procedural safeguards concerning decision-making discussed above should be followed.
This organization recognizes that there are occasions where the Board member's relationship affords this Board advantageous rates and prices or better service through familiarity with special concerns of this Board. In some cases, the organization is simply the preferred supplier based upon quality or general business considerations. Such transactions shall be permitted.
A. When they are for the actual or reasonable value of the goods or services or for a discounted value and the transaction is fair to the organization;
B. The transaction is approved by a 2/3 majority of the governing Board. These transactions must be kept on a list disclosing the names of those to whom the benefit accrued and the amount of the benefit. This list should be available to the members of the governing Board and contributors to this organization. The list shall be reported to the Director of Charitable Trusts each year as part of their annual reporting.
If the transaction or the aggregate of transactions to the same Board member is in the amount of $5,000 or more, this organization must publish notice thereof in a newspaper and give written notice to the Director of Charitable Trusts before consummating the transaction. This notice must state that it is being published in compliance with RSA 7:19 a Section II (d) and shall include the name of this organization, the name of the Board member receiving pecuniary benefit from the transaction, the nature of the transaction and the specific dollar amount of the transaction.
This Board shall comply with all other sections in RSA 7:19, the following of which is included in its entirety.
AN ACT REGULATING CERTAIN TRANSACTIONS BETWEEN CHARITABLE TRUSTS AND DIRECTORS, OFFICERS AND TRUSTEES OF SUCH CHARITABLE TRUSTS
1. Only Charitable Service Allowed. RSA 7:19, II is repealed and reenacted to read as follows:
2. New Section; Pecuniary Benefit Transactions. Amend RSA 7 by inserting after Section 19 the following new section: 7:19-a Regulation of Certain Transactions Involving Directors, Officers and Trustees of Charitable Trusts.
I. Definitions. In this section:
(a) "Director, officer or trustee" means a director, officer or trustee of a charitable trust.
(b) "Financial interest" means an interest in a transaction exceeding $500 in value for any officer, director or trustee, on an annual aggregate basis. An "indirect" financial interest arises where the transaction involves a person or entity of which a director, officer or trustee or a member of the immediate family of a director, officer or trustee is a proprietor, partner, employee or officer.
(c) "Pecuniary benefit transaction" means a transaction with a charitable trust in which a director, officer or trustee of the charitable trust has a financial interest, direct or indirect. However, the following shall not be considered as pecuniary benefit transactions:
(1) Reasonable compensation for services of an executive director and expenses incurred in connection with official duties of a director, officer or trustee;
(2) A benefit provided to a director, officer or trustee or member of the immediate family thereof if:
(A) The benefits are provided or paid as part of programs, benefits or payments to members of the general public; and
(B) The charitable trust has adopted written eligibility criteria for such benefit in accordance with its bylaws or applicable laws; and
(C) The director, trustee or family member meets all of the eligibility criteria for receiving such benefit;
(3) A continuing transaction entered into by a charitable trust, merely because a person with a financial interest therein subsequently becomes a director, officer or trustee of the charitable trust.
(d) "Charitable trust" does not include, for purposes of this section only, an organization qualified as a private foundation under the applicable provisions of the United States Internal Revenue Code.
II. A pecuniary benefit transaction shall be prohibited unless it is in the best interest of the charitable trust and unless all of the following conditions are met:
(a) The transaction is for goods or services purchased or benefits provided in the ordinary course of the business of the charitable trust, for the actual or reasonable value of the goods or services or for a discounted value and the transaction is fair to the charitable trust;
(b) The transaction is approved by a 2/3 majority of the governing board of the charitable trust:
(1) After full and fair disclosure of the material facts of the transaction to the governing board and after notice and full discussion of the transaction by the board;
(2) Without participation, voting or presence of any director, officer or trustee with a financial interest in the transaction or who has had a pecuniary benefit transaction with the charitable trust in the same fiscal year, except as the board may require to answer questions regarding the transaction; and
(3) A record of the action on the matter is made and recorded in the minutes of the governing board;
(c) The charitable trust maintains a list disclosing each and every pecuniary benefit transaction, including the names of those to whom the benefit accrued and the amount of the benefit, and keeps such list available for inspection by members of the governing board and contributors to the charitable trust. The list shall also be reported to the director of charitable trusts each year as part of the charitable trust’s annual report required under RSA 7:28;
(d) If the transaction, or the aggregate of transactions with the same director, officer or trustee within one fiscal year, is in the amount of $5,000 or more, the charitable trust publishes notice thereof in a newspaper of general circulation in the community in which the charitable trust’s principal New Hampshire office is located, (or if there is no such office, then in a newspaper of general circulation throughout the state), and gives written notice to the director of charitable trusts, before consummating the transaction. At a minimum, such notice shall state that it is given in compliance with this section and shall include the name of the charitable trust, the name of any director, officer or trustee receiving pecuniary benefit from the transaction, the nature of the transaction and the specific dollar amount of the transaction.
III. Every director, officer or trustee, or member of the immediate family of such director, officer, or trustee, who engages in a pecuniary benefit transaction with a charitable trust shall provide copies of all contracts, payment records, vouchers, other financial records or other financial documents at the request of the director of charitable trusts in accordance with RSA 7:24. All documents so provided may be disclosed to the public for inspection and copying, subject to applicable confidentiality laws.
IV. Every charitable trust shall adopt policies pertaining to pecuniary benefit transactions and conflicts of interest.
V. No charitable trust shall lend money or property to its directors, officers or trustees. Any director, officer or trustee who assents to or participates in the making of any such loan shall be jointly and severally liable to the charitable trust for the amount of such loan until it is repaid.
VI. No charitable trust shall sell, lease for a term of greater than five years, purchase, or convey any real estate or interest in real estate to or from an officer, director or trustee without the prior approval of the probate court after a finding that the sale or lease is fair to the charitable trust. However, this paragraph shall not apply to a bona fide gift of an interest in real estate to a charitable trust by a director, officer or trustee of the charitable trust.
VII. A pecuniary benefit transaction undertaken in violation of this section is voidable. The director of charitable trust may investigate complaints regarding pecuniary benefit transactions and if, after an investigation pursuant to RSA 7:24, the director determines that a pecuniary benefit transaction is in violation of this section, the director may institute appropriate proceedings under RSA 7:28-f to enforce these provisions.
VIII. Any member of the governing board of a charitable trust shall have standing to petition, pursuant to RSA 491:22, for a declaratory judgment that one or more pecuniary benefit transactions of the charitable trust are void.
IX. The provisions of this section shall not apply to transactions between a charitable trust and its incorporators, members or other contributors who are not also directors, officers or trustees of the charitable trust, provided that such transactions are fair to the charitable trust.
3. New Section; Size and Membership of Governing Boards. Amend RSA 292 by inserting after Section 6 the following new section:
