Conflicts of Interest Policy

Patient Safety Movement Foundation (the “Corporation”) has adopted this Conflict of Interest Policy (the “Policy”) to supplement California law governing conflicts of interest and nonprofit public benefit corporations.

Recitals

This Policy will serve as a practical guide that the Corporation’s board of directors (the “Board”) can use to deal with conflicts of interest. The Board’s actions, or decisions not to act, should be based on the best, unbiased judgment of the persons involved.

Complete disclosure is key to appropriately and adequately dealing with a conflict of interest. When a person, participating in decisions, fully discloses the relationship between his or her personal interests and his or her official responsibilities, misunderstandings and subsequent charges of impropriety or self-dealing can be avoided. Disclosure of a relationship or past relationship may indicate that the person involved should abstain from participating in the decision-making process.

Purposes

This Policy’s purposes are to:

1. Prevent the personal interests of the Corporation’s directors, officers, and managing employees from interfering with the performance of their duties to the Corporation.
2. Prevent the Corporation’s directors, officers, and managing employees from benefiting financially, professionally, or politically at the Corporation’s expense or at the expense of the Corporation’s stakeholders and without the Corporation’s knowledge.
3. Protect the Corporation’s interests when it is contemplating entering into a transaction or arrangement in which a director or an officer of the Corporation has a financial interest.

Definitions

A Board member, officer, or managing employee has a financial interest when the person has, directly or indirectly, through business, investment, or family — An ownership or investment interest in any entity with which the Corporation has a transaction or arrangement;

a. An ownership or investment interest in any entity with which the Corporation has a transaction or arrangement;

b. A compensation arrangement with the Corporation or with any entity or individual with which the Corporation has a transaction or arrangement; or

c. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Corporation is negotiating a transaction or arrangement.

Compensation includes direct and indirect remuneration as well as gifts or favors that are substantial in nature.

Existence of a Conflict of Interest

In general, a conflict of interest may exist when a Board member’s, officer’s, or managing employee’s private interests and official responsibilities are connected. A financial interest is not necessarily a conflict of interest. A person who has a financial interest will have a conflict of interest only if the Board or appropriate committee decides that a conflict of interest exists.

Full disclosure must be made to the Board of all relationships and financial interests with third parties that may give rise to a conflict of interest, including but not limited to the following:

a. Persons or entities supplying goods and services to the Corporation;

b. Persons or entities from which the Corporation leases property and equipment;

c. Persons or entities with whom the Corporation is dealing or planning to deal in connection with a gift, purchase, or sale of real estate, securities, or other property;

d. Persons or entities paying honoraria, commissions, or royalties for products or for services delivered by the Corporation for its agents or employees;

e. Other nonprofit organizations with which the Corporation is involved;

f. Donors and others supporting the Corporation; or

g. Agencies, organizations, and associations that affect the Corporation’s operations.

Board Procedure

Following the disclosure of a significant conflict of interest, the Board chair will appoint a committee to determine the specific nature of the conflict of interest and investigate alternatives to the proposed transaction or arrangement.

After investigating alternatives, the committee must determine whether the Corporation 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 Board or committee must determine by a majority vote of disinterested Board members whether the transaction or arrangement is in the Corporation’s best interest, for the Corporation ’s own benefit, and fair and reasonable to the Corporation . The Board or committee will then make its decision as to whether to enter into the transaction or arrangement in conformity with such determination.

Following the disclosure of a significant conflict of interest not involving a financial interest, the Board chair will appoint a committee to determine the specific nature of the conflict of interest and determine the actions necessary, if any, to ensure the Corporation’s interests are adequately protected and impropriety avoided.

Abstention Requirement

An interested Board member, officer, or managing employee may not participate in any discussion or debate with the Board, or of any committee or subcommittee thereof in which the subject of discussion is a contract, transaction, or situation in which the Board member, officer, or managing employee has a conflict of interest. However, the interested person may be present to provide clarifying information in such a discussion or debate unless objected to by any present Board or committee member.

Duty to Disclose

Anyone in a position to make decisions about the Corporation’s resources (i.e., transactions such as purchase contracts) – who also stands to benefit from that decision – has an affirmative duty to disclose that conflict as soon as it arises or becomes apparent; he may not participate in any final decisions.

Duties of the Chief Executive Officer

The Corporation’s Chief Executive Officer (CEO) is responsible for the application and interpretation of the principles contained in this Policy as they relate the Corporation’s managing employees. The CEO will report to the Board any case that has occurred that might involve a violation of the principles contained in this Policy. The CEO should bring before the Board any instance he perceives requires additional guidance.

Distribution and Disclosure

Each Board member, officer, and managing employee must receive a copy of this Policy upon commencement of that person’s relationship with the Corporation or upon the Policy’s official adoption. Each Board member, officer, and managing employee will sign and date the policy at the beginning of their term of service or employment and each year thereafter. Failure to sign does not nullify the policy.