Conflict-of-interest policy

This is the written policy the board adopts at founding under charter 7.11. It is a draft for the working group and counsel. Nothing in it is adopted yet.

1. Purpose

1. “We aim at what is honorable not only in the Lord’s sight but also in the sight of man” (2 Corinthians 8:21). Those who serve Isaac’s Well handle money that members and givers entrust to it. They must be above any suspicion of serving themselves (Exodus 23:8).
2. This policy puts into practice charter 7.11, together with 8.3, 8.5, 8.6 and 8.7. It protects Isaac’s Well, and those who serve it, whenever a decision touches what one of them stands to gain.
3. Having an interest is not wrong. Hiding it, or taking part in a decision about it, is.
4. Where this policy and the charter differ, the charter governs. Where either falls short of the law, the law governs.

2. Who it covers

1. This policy covers everyone who serves Isaac’s Well, called here a “covered person”:
   • the three directors, who also hold its offices (charter 7.7);
   • advisers on the advisory board (charter 7.8); and
   • staff and contractors, paid or volunteer. Where a contractor is a firm, its owners and everyone it puts to work for Isaac’s Well are covered.
2. Anyone who was a covered person at any time in the past five years is still covered for any pay or other benefit from Isaac’s Well.
3. Members of the site are not covered, unless they also serve in one of these ways.

3. What counts as an interest

1. A covered person has an interest in a matter when it could bring a financial gain or loss to them, their family or their business. While the matter is decided, they are the “interested person”.
2. Financial. Being paid, or hoping to be paid, by Isaac’s Well. Selling, renting or lending anything to it, or buying anything from it. Owning part of, being owed money by, or receiving more than token gifts or favors from anyone who does business with Isaac’s Well or seeks to.
3. Family means a spouse; anyone living in the same home; and any ancestor, child, stepchild, grandchild, great-grandchild, stepparent, brother, sister, half-brother, half-sister, stepbrother, stepsister, aunt, uncle, niece or nephew of the covered person or of their spouse, together with the spouse of any of these.
4. Business means a firm or other body that the covered person or a family member owns or controls, or that the covered person works for or helps govern as a director, partner or trustee.
5. Other ties. A director is also not free to decide a matter if they have any other tie to the interested person, family, financial, professional or of work, that could reasonably be expected to sway their judgment. That includes working under the interested person’s direction, and approving something for someone who approves something for them. Belonging to the same church is not such a tie by itself.
6. When it is unclear whether something counts, the covered person discloses it and lets the other directors decide.

4. Disclosure

1. A covered person discloses an interest as soon as they know of it, and always before the matter is decided. A director tells the other two directors in writing. Anyone else tells the chairman, or another director if the chairman is the interested person. An email is enough.
2. They disclose what the interest is, and every fact they know about the matter that someone without the interest would want to know before deciding. Tennessee law calls this “required disclosure”.
3. An interest that comes to light in a meeting is disclosed there and recorded in the minutes.
4. The annual statement (section 11) never takes the place of disclosure when a matter arises.

5. How a conflict is decided

1. The directors with no interest decide whether a disclosed interest is a conflict in the matter before them, meaning it could reasonably be expected to sway the judgment of the person who holds it.
2. If it is a conflict, the interested person may give information and answer questions. They then leave the discussion and the vote, and on a video call they leave the call for that item. They do not try to influence the decision in any other way.
3. A matter with a conflict is decided at a meeting, in person or by video, never by email (charter 7.9).
4. With three directors, this works plainly:
   • If one director has an interest, the other two decide. Both must agree. If they do not, the answer is no. If the chairman is the one with an interest, the other two choose which of them leads that item.
   • If two directors have an interest, the third may not decide alone, because Tennessee law requires at least two directors free of the interest. The matter waits until counsel advises a lawful way for someone without an interest to decide it, such as approval by the Tennessee Attorney General. Otherwise it is declined.
   • If all three have an interest, it is declined, unless counsel advises such a way.
5. Those deciding consider whether a better arrangement can reasonably be had from someone with no interest.
6. An adviser, staff member or contractor with an interest in a matter says so, and takes no part in advising on it, recommending it or handling it. For example, an adviser named by RBNet says so whenever Isaac’s Well’s money is to go to a gathering at RBNet’s General Assembly (charter 8.4).
7. This policy is about money and benefit. Who stands aside when a report about a member is handled is set out in charter 9.6.

6. Paying anyone who serves

1. This section governs any pay, contract, purchase or other arrangement by which a covered person, their family or their business receives money or property from Isaac’s Well. It applies to the project lead and his firm as to anyone else.
2. The charter sets a path to paying directors for the work they do, never for holding a seat (charter 8.5). Reasonable expenses agreed in advance may be repaid against receipts.
3. Isaac’s Well pays only for work it needs done, at a reasonable rate. Before the work begins, and before Isaac’s Well is bound to pay, all of these must be done:
   • Disclosure. The interested person discloses and leaves the discussion and the vote (sections 4 and 5).
   • Comparison. The other two directors see what the same work costs elsewhere. They gather at least three comparisons where three can reasonably be had, such as written quotes from other firms, published rates, or what similar ministries pay. The interested person does not gather them.
   • Approval. The other two directors approve it in advance, at a meeting, under section 5.4, finding that the price is fair and that the arrangement serves Isaac’s Well. If the price is above the comparisons, they say why.
   • Written contract. It states the work, the price or rate, and a limit on the total. Isaac’s Well may end it on thirty days’ notice. It gives Isaac’s Well ownership of what is made, while a firm keeps its general tools and gives Isaac’s Well a free, permanent license to use them (charter 8.10).
   • Record. The decision, the comparisons and the vote are recorded in the minutes by the next meeting (section 9).
4. Any change to the price, the limit or the work is approved the same way before it takes effect.
5. Each payment under the contract is approved by two people, and the treasurer, who is never the project lead, holds the account with another officer (charter 7.7, 8.6). No one approves a payment to himself, his family or his business.
6. Directors’ pay. A director’s pay is never above what the comparisons show. Each director’s pay is decided separately, and what each is paid is reported each year to the participating churches (charter 7.11).
7. Selling to members. No covered person promotes or sells their own paid products, courses or services to members through Isaac’s Well, unless it is approved under this section and members are told plainly of the connection (charter 8.3).

7. Work done before founding

1. Pay for work done before founding is possible only if, before founding, the person recorded in writing that they expected to be paid for it at a stated rate. Otherwise the work is a gift, and can never later be billed.
2. Where such a record exists, the founding directors may approve pay for the work under section 6, as though it were new, before Isaac’s Well is bound to pay anything. They may also decline.
3. Either way, what was made for Isaac’s Well, such as its designs, code, content and name, passes to it in writing (charter 8.10). The exception is the 2026 survey answers, which stay with the working group (charter 10.2).

8. Other safeguards

1. No loans. Isaac’s Well never lends money to, or guarantees a debt of, any covered person, including any director or officer (charter 8.7). An advance for expenses the board has approved is not a loan.
2. Gifts. No covered person accepts a gift, loan or favor worth more than [$50] from anyone who does business with Isaac’s Well or seeks to. If one is offered, they tell the chairman.
3. Information. No covered person uses what they learn through Isaac’s Well about members, churches or its plans for their own gain or anyone else’s.

9. Records

1. The minutes of every matter under this policy record who disclosed an interest and what it was; whether it was found to be a conflict; who left the discussion and the vote; who was present and how each director voted; the alternatives considered; and, for any pay, the terms, the comparisons relied on and how they were obtained, and why if the price is above them.
2. The secretary writes this up before the next meeting, where the directors who decided approve it as accurate. If the secretary is the interested person, another director writes it.
3. These minutes are shared with the advisory board like any other. Matters about individual members are left out (charter 7.9).
4. Every disclosure and annual statement is kept with the minutes, open to the directors only, for at least [seven] years.

10. Breaches and review

1. If the directors free of the matter have reasonable cause to believe that someone failed to disclose an interest, or took part when they should have stood aside, they tell the person why and hear their answer before deciding anything (Proverbs 18:17).
2. If they find a breach, they do what fits it: correction, putting the arrangement right and repaying any benefit beyond fair value, ending a contract, or removal from office or from the advisory board. A director may be removed under charter 7.13. A decision taken in breach is reconsidered, and undone where the law allows. An honest mistake, disclosed and put right promptly, is treated as one.
3. Each year, when the board approves the budget (charter 8.6), the directors free of each matter review every payment to a covered person or their business. They check that it is still needed, still reasonable against current prices, and still on its written terms. The board reviews this policy at the same time, and whenever the charter changes or counsel advises. It may use an outside accountant or lawyer, but remains responsible.

11. Annual statement

1. Each director, and each staff member and contractor who does regular work for Isaac’s Well, signs this statement when they begin and at the board’s first meeting each year. Advisers confirm once, when they join, that they have read this policy and will follow it. Anyone who has not signed takes no part in decisions until they do.
2. The statement reads:
   • I have read the conflict-of-interest policy of Isaac’s Well, and I will follow it.
   • I understand that Isaac’s Well is a nonprofit, and that its money may be used only for its purpose, never for private benefit beyond reasonable pay for work done.
   • Now, or in the past twelve months, these are the pay, gifts, business dealings or family ties that touch Isaac’s Well, and anything else a fair-minded person might think could sway my judgment: ________________ (or “none”).
   • I will tell the directors in writing straight away if any of this changes.
   • Name, role, signature and date: ________________.

Notes for counsel

• Sources.
  • IRS, Instructions for Form 1023 (Rev. 12/2024), Appendix A, Sample Conflict of Interest Policy: https://www.irs.gov/instructions/i1023. Sections 3 to 5 and 9 to 11 follow it in plainer words, adapted to a three-director board.
  • IRC § 4958, excess benefit transactions: https://www.law.cornell.edu/uscode/text/26/4958. A “disqualified person” is anyone who was in a position to exercise substantial influence at any time in the five years ending on the date of the transaction (§ 4958(f)(1)), with their family as defined in § 4946(d) plus brothers and sisters and their spouses (§ 4958(f)(4)). Sections 2.2 and 3.3 follow this, joined with Tennessee’s list of related persons. § 4958 taxes the person 25% of any excess benefit, and 200% if it is not corrected, and managers who knowingly approve it 10%. It reaches only organizations exempt under 501(c)(3) or 501(c)(4), and exemption may be backdated to incorporation, which is why this policy applies from founding on every path in charter 1.3.
  • Treas. Reg. § 53.4958-6, the rebuttable presumption of reasonableness: https://www.ecfr.gov/current/title-26/chapter-I/subchapter-D/part-53/subpart-E/section-53.4958-6. Section 6.3 is built to meet its three conditions: advance approval by those free of conflict, reliance on comparability data, and records made at the time. Its safe harbor for organizations with gross receipts under $1 million (data from three comparable sources) is the source of “at least three comparisons”. Section 9.2 meets its timing.
  • Tennessee Code §§ 48-58-701 to -704, director’s or officer’s conflicting interest transactions, effective 1 January 2015. Sections 3.3 and 3.5 follow § 48-58-701’s “related person” and “material relationship”, section 4.2 its “required disclosure”, and section 5.4 its “qualified director”. Under § 48-58-703(a), directors’ approval counts only if “a majority (but no fewer than two (2)) of the qualified directors” vote for it. § 48-58-702(b) also protects a transaction approved by the Attorney General and Reporter, or by a court of equity with the Attorney General joined, or shown to be fair. Please confirm against the current official code. https://codes.findlaw.com/tn/title-48-corporations-and-associations/tn-code-sect-48-58-702/
  • Tennessee Code § 48-58-303 bars loans to directors and officers. A religious corporation is exempt from it unless its articles or bylaws say otherwise (§ 48-67-102). Articles 5.5 and charter 8.7 apply it.
• When two directors have an interest (section 5.4). With three directors, one disinterested director cannot approve a conflicting interest transaction under § 48-58-703. The policy then holds the matter, or declines it. Please advise whether Attorney General approval under § 48-58-702(b)(4) is practical for a small nonprofit, or whether another route is better, such as seating a fourth, independent director for that purpose by amending the charter.
• No email decisions on conflicts (section 5.3). Charter 7.9 allows a decision by email only if all three directors agree in writing, which would draw the interested director in. Tennessee’s default rule for action without a meeting also needs every director’s signed consent (§ 48-58-202). So conflict matters are taken at a meeting.
• Fellow church members (section 3.5). The charter does not make fellow church members stand aside on money matters. Tennessee’s “material relationship” test may still catch a close tie in a given case, and section 3.5 leaves that to judgment.
• The project lead. As a voting director who leads the day-to-day work, he is a disqualified person under § 4958 once Isaac’s Well is exempt, and a firm he controls is one too. The treasurer is never the project lead (charter 7.7).
• Pre-founding work (section 7). Is approval by the founding directors, before Isaac’s Well is bound to pay, “advance” approval for the presumption when the work itself was done earlier? Donated services are not deductible to the giver. Please advise on the form of the written transfer of what was made before founding.
• Paid directors (section 6.6). All three directors may be paid for their work, so each director’s pay is approved by two who may be paid themselves. Under Treas. Reg. § 53.4958-6(c)(1)(iii), approving each other’s pay is a conflict, which may cost the rebuttable presumption once Isaac’s Well is exempt. The cap at the comparisons and the yearly report to the churches are meant to answer that. Please advise whether an outside reviewer, such as an adviser, should also sign off. Tennessee’s immunity for directors (§ 48-58-601(c)) applies “whether compensated or not”. The federal Volunteer Protection Act (42 U.S.C. § 14505(6)) does not protect anyone paid more than $500 a year, which is one more reason for the insurance in charter 7.12.
• Modified disclosure. § 48-58-703(b) lets a director withhold facts he is bound by law or confidentiality to keep, where the conflict arises only through another body he serves or his employer. It is not written into the policy. Advise whether a pastor’s confidences need it.
• Open questions for the board.
  • The gift limit in section 8.2, proposed at [$50].
  • How long records are kept (section 9.4), proposed at [seven] years.
  • The amount above which two people approve a payment (charter 8.6). Section 6.5 applies the two-person rule to every payment to a covered person, at any amount.