Conflicts of Interest

The directors, investment committee members, and staff of the MacArthur Foundation (collectively “Covered Persons”) aspire to the highest level of ethical conduct in our work. The Foundation also values the knowledge gained from such individuals’ involvement with other organizations and respects that Covered Persons may wish to participate in the civic life of their communities by joining boards or other collective efforts to improve communities. Inevitably, however, from time to time, such affiliations may create or appear to create conflicts with the individual’s duty to the Foundation. To ensure that the Foundation’s decisions are free of any conflicts or other inappropriate influences, the Board has adopted the following policy concerning conflicts of interest and gifts (the “Policy”).

In carrying out the Policy, the Foundation relies on the good judgment and integrity of Covered Persons. The Foundation encourages a culture of transparency in which Covered Persons fully and promptly disclose all affiliations, interests, and gifts of which they are aware that might present a conflict relating to an actual or potential transaction, or might otherwise affect, or appear to affect, their objectivity. Covered Persons should disclose all potential or actual conflicts of interest and gifts in accordance with the Policy. In situations where conflicts or the receipt of gifts are uncertain, the Foundation encourages individuals to err on the side of disclosure.

Application

The Policy is intended to cover any Covered Person’s potential and actual conflicts in connection with proposed and actual grants, investments, contracts, and other Foundation business transactions in which there is a conflict of interest.¹ A conflict of interest will be present if a Covered Person knows that they or their related parties will benefit financially or derive a significant personal benefit as a result of the transaction or have a material affiliation with or a material financial interest in the entity or with the individual involved in the transaction (such entity or individual referred to as a third party).

The Foundation will not proceed with the following transactions in which a conflict of interest is present:

• A grant to or transaction with or for the benefit of a third party in which a Covered Person is the principal executive officer and the grant or transaction is material to the third party.
• A transaction that will give rise to payment of fees, income, or profits to a Covered Person, or an entity in which any such Covered Person has a material financial interest. This provision does not prevent an investment by the Foundation in an entity in which a Covered Person is also an investor if the investment committee concludes after disclosure of relevant facts that such investment by the Foundation is in the best interests of the Foundation.

In all other transactions involving a conflict of interest of a director (including the president), an investment committee member or a related party thereto, or a disinterested decision-maker (other non-conflicted members of the Board or the Investment Committee, as the case may be) will determine whether proceeding with the transaction is in the best interests of the Foundation after considering all the facts and circumstances. In the case of a conflict of interest involving a staff member, the vice president and general counsel (“VP/GC”) shall advise the president, or the Board chair in the case of a conflict of the president, of the relevant facts and an analysis whether it is in the best interests of the Foundation to proceed and what, if any, protective steps should be taken to address the conflict of interest. In the case of a conflict involving the VP/GC, the president shall make such determination.

Disclosure

Covered Persons will disclose their affiliations annually to:

• Acknowledge that they have read this policy; and
• Disclose the names of any organization of which they or a related party have or have had during the preceding three years a material affiliation or a material financial interest.

Covered Persons should notify the VP/GC and update their affiliations whenever they acquire new affiliations or make changes to existing affiliations during the year. Individuals are not required to make inquiries regarding affiliations or interests of any person who is not a household member.

In addition, individuals who have knowledge of any conflict of interest that has not previously been disclosed will notify the VP/GC, who will, in turn, inform the president or the Board chair as the case may be, so that appropriate action can be taken.

Directors and investment committee members do not need to disclose the identity of clients to whom they or a related party provide professional services directly or through a firm or partnership unless they conclude that the services to the client constitute a material portion of the revenues of such professional services firm and disclosure would not violate any confidentiality obligations owing to such client.

Prior to any meeting or time in which a decision will be made on a grant or business transaction, any conflict of interest will be reported to the person(s) approving such transaction indicating the existence of any conflicts of interest together with any facts or circumstances relevant for consideration by the decision-maker to the extent such conflict or facts have been disclosed.

Participation in Process

Covered Persons who have a conflict of interest regarding a proposed grant or transaction should not vote on or approve the grant or transaction or otherwise participate in the process regarding such grant or transaction except as provided herein. A director should not comment on or participate in formal or informal discussions regarding a proposed transaction in which they have a conflict unless they are asked a question by another director or the president. In addition, a staff member should not work on the grant or transaction where the conflict is present unless requested to do so by the president.

The Board chair or Investment Committee chair, as the case may be, in consultation with the president and the VP/GC will determine whether a Covered Person with a material affiliation or a material financial interest should also be excused from the meeting when the matter is being discussed.

The prohibition against participation in the grant process does not apply when an individual is affiliated with a grantee at the written request of the Foundation, such as participating on an advisory committee. Any such request must be made by the President in the case of a staff member and, in the case of the president, approved by the Board chair.

Record and Reporting

The Foundation will maintain a record of actions taken when there is a conflict of interest present with respect to any grant or transaction.

The VP/GC will provide an annual report to the Audit Committee reflecting all transactions in which there was a conflict of interest and the actions taken.

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1. The Foundation maintains other policies in which conflicts of interest may be relevant, including the policy on Paid Work Outside the Foundation, the Nepotism Policy, the Employee Intimate Personal Relationship Policy, and the policy on Participation in Campaigns and Other Political Activity. Those policies govern the specific instances addressed therein.

General Rule Against Accepting Gifts

The Foundation discourages acceptance of gifts by Covered Persons or a related party of theirs from any other party doing or seeking to do business with the Foundation to avoid a perception that Foundation business decisions could be influenced by such gifts. Gifts include anything of value, including meals, loans, tickets for events, or other entertainment and payments to or for the benefit of a Covered Person or a related party of theirs.

In limited circumstances, a reasonable gift may be accepted. In considering whether to accept a gift, Covered Persons should consult the guidance memorandum prepared by the VP/GC and attached as an Exhibit hereto.

The Foundation may require that any gift a Covered Person receives in the course of their MacArthur work and employment be returned.

Gift Registry

Unless excused below, all gifts of $100 or more (or gifts received from the same person or entity aggregating $100 or more) received as a representative of the Foundation should be reported to the VP/GC who will keep a registry reflecting the nature of the gift and the approximate value and report annually to the Audit Committee on the registry.

Gifts required to be registered should generally be applied to the overall benefit of the Foundation to the extent practical. The following do not have to be reported:

• Gifts valued at less than $150 that are received as part of a broad-based promotion on the part of the donor and are made to similarly-situated persons at other organizations;
• Reasonable meals provided by existing or prospective investment managers in connection with the due diligence trips of members of the investment department or the impact investments department; and
• Meals or other modest entertainment received while attending charity events.

The words utilized in this Policy and not otherwise defined have the following meanings:

Related Party

A member of each Covered Person’s immediate family (children, grandchildren, parents, siblings, and spouses thereof, your spouse or significant other) and includes a household member. A household member means a person residing in such Covered Person’s household.

Entity

Includes a corporation, partnership, limited liability company, trust, organization, coalition, commission, university, or institute (including a school, department, center, committee, or research project within a university or institute or a fiscally sponsored project).

Principal Executive Officer

Includes the executive head or co-head of an entity, including the principal investigator of a research project or the co-chair of a commission or other entity.

Material Affiliation

Exists when a Covered Person or their related party:

• Is a board member, officer, or employee of the entity or individual;
• Is the owner of more than five percent (5%) of the ownership interest of the entity;
• Is a lender to the entity or individual;
• Is a landlord to or tenant of the entity or individual;
• Has an ongoing contractual relationship with an entity or individual (for example providing goods or services) that is significant to the Covered Person, the Covered Person’s related party, or the entity or the individual to whom the goods or services are being provided;
• Is a blood relative of the individual.

Material Financial Interest

Exists when a Covered Person or their related party:

• Holds an ownership interest in excess of five percent (5%) of the total equity interest in such entity; or
• Is a consultant or service provider to the entity or individual and is paid an amount that exceeds five percent (5%) of his/her overall income or the overall income of a related party to such individual; or
• Is a lender to the entity or individual and such loans are more than five percent (5%) of the indebtedness of such entity.

Material

A grant is material to an entity when the amount of the grant is more than five percent (5%) of the revenue of the entity.

Whether a director, staff, an Investment Committee member or a related party derives a “significant personal benefit” or has a “relationship to provide goods or services that is significant” will depend on the facts and circumstances of each case, including an assessment of whether an objective person would consider the benefit capable of affecting the individual’s objectivity or independence.

In interpreting all aspects of this Policy, the Foundation will rely on a rule of reason guided by the Policy and its underlying principles. Questions about the application and interpretation of this Policy should be directed to the VP/GC who is charged with deciding whether a conflict of interest exists and recommending action to the president and/or Board chair if the matter involves the president. If the matter involves the president, the VP/GC will recommend action to the Board chair; if the matter involves the VP/GC, the president will make the determination in consultation with the Board chair.

All Policies