Policy #54

CONFLICTS OF INTEREST AND COMMITMENT

1. Introduction

The number and complexity of relationships between universities and members of their faculties and research staffs on the one hand and private enterprise, the federal and state governments, and the nonprofit sector on the other, have grown substantially in recent years. Faculty and EPA non-faculty employees are encouraged to engage in outside relationships if those activities are consonant with the university's threefold mission of teaching, research and service. Facilitating the transfer of knowledge and technology to improve society is an important goal of such cooperative relationships. The purpose of this Policy Concerning Conflicts of Interest and Commitment is to provide guidelines for those relationships and procedures that will help ensure both the primacy of academic integrity and compliance with federal guidelines published by both the Health and Human Services Department and the National Science Foundation.

II. Applicability

A. This policy applies to all full and part-time faculty other than adjunct faculty and to all full and part-time EPA non-faculty employees. This policy also applies to faculty and EPA non-faculty employees who are on leave of absence. Although faculty members and EPA non-faculty members are the subject of concern directly addressed in this policy, all other university employees similarly must avoid conflicts of time and commitment.

B. In the event that a possible conflict of interest is discovered when a "Notice of Intent to Engage in External Professional Activities for Pay" form is being reviewed, the definitions and conflicts described in Sections III. and V. of this policy shall be used to determine whether a conflict of interest exists. The procedures contained in the "External Professional Activities for Pay and Outside Employment" policy (Faculty Handbook, Section 4.10.02) shall be controlling, however.

III. Definitions

A. "Business" means any corporation, partnership, sole proprietorship, firm, franchise, association, organization, holding company, receivership, business or real estate trust, or any other entity organized for profit or non-profit purposes. "Business" excludes entities controlled by the university.

B. The term "employee" means all faculty and EPA non-faculty employees to which this policy applies.

C. "Significant financial interest" means anything of monetary value, including but not limited to, salary or other payments for services (e.g., consulting fees or honoraria); equity interests (e.g., stocks, stock options or other ownership interests); and intellectual property rights (e.g., patents, copyrights and royalties from such rights). The term does not include:

1. Salary, royalties, or other remuneration from the applicant institution;

2. Any ownership interests in the institution, if the institution is an applicant under the SBIR Program;

3. Income from seminars, lectures, or teaching engagements sponsored by public or nonprofit entities;

4. Income from service on advisory committees or review panels for public or nonprofit entities;

5. An equity interest that when aggregated for the Investigator and the Investigator's spouse and dependent children, meets both of the following tests: Does not exceed $10,000 in value as determined through reference to public prices or other reasonable measures of fair market value, and does not represent more than a five percent ownership interest in any single entity; or

6. Salary, royalties or other payments that when aggregated for the Investigator and the Investigator's spouse and dependent children over the next twelve months, are not expected to exceed $10,000.

D. An employee's "immediate family" or "household" includes the employee's spouse, life-mate, child, parent, sibling and grandparent.

IV. Conflicts of Commitment

Conflict of commitment relates to an individual's distribution of effort between obligations to one's university employment and one's participation in other activities outside of university employment. The issue, in each case, is whether the employee is meeting the requirements of the job. For example, if presented with evidence that a faculty member is not meeting full-time responsibilities to the university, the Code prescribes that "neglect of duty" is a ground for disciplinary action, including the possibility of discharge. In another relevant context, the Board of Governors and University's policies and procedures for monitoring external professional activity for pay address possible conflicts of commitment. In another example of special legislation, the Board of Governors has established rules for monitoring and regulating the involvement of university employees in political candidacy and office holding that could interfere with full-time commitment to university duties. Faculty and staff must adhere to and comply with existing guidelines to avoid conflicts of commitment.

V. Conflicts of Interest

The term conflicts of interest refers to situations in which financial or other personal considerations may compromise an employee's professional objectivity in meeting university duties or responsibilities. The bias that such conflicts may impart can affect many university duties, including decisions about personnel, the purchase of equipment and other supplies, the collection, analysis and interpretation of data, the sharing of research results, the choice of research protocols and the use of statistical methods. An employee may have a conflict of interest when the employee, or any member of the employee's immediate family, has a personal interest in an activity that may affect decision making with respect to the university.

It is the policy of the university that employees must avoid conflicts of interest that have the potential to affect adversely the university's interests, to compromise objectivity in carrying out university responsibilities, or otherwise to compromise the performance of university responsibilities. Accordingly, personal activities and financial interests must be arranged so as to avoid such conflicts. Failure to do so is a breach of this policy and may constitute misconduct or neglect of duty.

Activities that may involve conflicts of interest can be categorized under three general headings: First, those that otherwise might appear to involve such a conflict but that in fact do not, are allowable, and need not be reported; second, those that are questionable and must be reported, but that may be allowable with administrative approval; and third, those that generally are not allowable. The following examples are merely illustrative and do not purport to include all possible situations within the three categories:

A. Activities allowable, with no reporting required

The cited examples do involve activities external to university employment, and thus may present the appearance of a technical conflict, but they in fact do not have the potential for affecting the objectivity of the faculty member's performance of university responsibilities; at most, some such situations could prompt questions about conflicts of commitment.

1. A university employee receiving royalties from the publication of books or for the licensure of patented inventions subject to the UNC Patent and Copyright Policies.

2. A university employee having an equity interest in a corporation, the exclusive function of which is to accommodate the employee's external consulting activities.

3. A university employee receiving nominal compensation, in the form of honoraria or expense reimbursement, in connection with service to professional associations, service on review panels, presentation of scholarly works, and participation in accreditation reviews.

B. Activities requiring disclosure for administrative review

The cited examples suggest a possibility of conflicting loyalties that can impair objectivity, but disclosure and resulting analysis of relationships may render the activity permissible, perhaps with certain types of limitation or monitoring.

1. A university employee requiring students to purchase the textbook or related instructional materials of the employee or members of his or her immediate family, which produces compensation for the employee or family member.

2. A university employee receiving compensation or gratuities (other than occasional meals, gifts of desk copies of textbooks, and the like) from any individual or entity doing business with the university.

3. A university employee serving on the board of directors or scientific advisory board of an enterprise that provides financial support for university research conducted by the employee or a member of his or her immediate family.

4. A university employee serving in an executive position in a for-profit or not-for profit business which conducts research or other activities in an area related to the university duties of the employee.

5. A university employee having a significant equity in a for-profit business which conducts research or other activities in an area related to the employee's university duties.

6. A university employee having a financial interest in a business that competes with services provided by the university.

7. A university employee associating his or her own name with the university in such a way as to profit financially by trading on the reputation or goodwill of the university.

C. Activities or relationships that generally are not allowable

The cited examples involve situations that are not generally permissible because they involve potential conflicts of interest or they represent obvious opportunities or inducements to favor personal interests over institutional interests. Before proceeding with such an endeavor, the faculty member would have to sustain the burden of demonstrating that in fact his or her objectivity would not be affected or university interests otherwise would not be damaged.

1. A university employee participating in university research involving a technology owned by or contractually obligated to (by license or exercise of an option to license, or otherwise) a business in which the individual or a member of his or her immediate family has a consulting relationship, has an ownership interest, or holds an executive position.

2. A university employee accepting support for university research under conditions that require research results to be held confidential, unpublished, or inordinately delayed in publication (other than as allowed by university Patent and Copyright Policies or by policy of the Board of Governors dated February 12, 1988, Administrative Memorandum No. 260).

3. A university employee making referrals of university business to an external enterprise in which the individual or a member of his or her immediate family has a financial interest.

4. A university employee either participating in a university research project or assigning students or other trainees to a university research project which is funded by a grant or contract from a business in which the individual or a member of his or her immediate family has a financial interest.

5. A university employee making unauthorized use of privileged information acquired in connection with one's university responsibilities.

VI. Submission of Disclosure Forms

All employees are required to complete and submit a disclosure form, (Appendix A) on an annual basis as of September 1. Updated forms must also be submitted throughout the year if circumstances arise which either give rise to a potential conflict of interest or eliminate a potential conflict previously disclosed.

The disclosure forms shall be submitted to the employee's unit head. In the case of employees who hold administrative positions, Department Heads will report to their Dean, Deans and Directors will report to the appropriate Vice Chancellor, and Vice Chancellors and Directors who routinely report directly to the Chancellor will report to the Chancellor.

VII. Review of Disclosure Forms

A. Initial Review

The administrator designated to receive an employee's disclosure form (reviewing official) shall have the initial responsibility for reviewing the form and for determining compliance with this policy. That determination involves two questions, (1) has the form been properly submitted (i.e., on time and complete) and (2) does the information provided reveal any conflicts or potential conflicts described in paragraphs V. B. or V. C. above.

B. Failure to Submit or Improper Submission of Disclosure Forms

If the reviewing official determines that a form has not been submitted or is incomplete, the reviewing official shall take action to obtain compliance with this policy, including, if necessary, recommendations for disciplinary action.

C. Conflicts

If the reviewing official determines that an employee has a potential conflict the following options are available, depending on the circumstances:

1. The reviewing official may determine that an actual conflict either does or does not exist and mark the disclosure form accordingly.

2. The reviewing official may discuss the situation with the employee in hopes of reaching one of the following solutions (see also Appendix B):

a. The employee may take necessary steps to eliminate the conflict (e.g., through divestiture of a financial interest or through cessation of the activity) and appropriately supplement the information provided with the original form, resulting in a determination by the reviewing official on the original form that a conflict does not exist.

b. The reviewing official and employee may agree, with or without specified conditions or monitoring requirements, that the potential conflict is actually permissible.

3. If the reviewing official decides to permit, with or without conditions, a Paragraph V. C. conflict, the decision and the reason for it must be forwarded to and reviewed by the next highest administrator who may accept, reject or modify the decision.

4. The reviewing official may take or initiate other action as appropriate to address a conflict.

If the conflict involves an activity funded by a federal agency and if the reviewing official determines that he or she is unable to satisfactorily manage the actual or potential conflict, the reviewing official must notify Research and Graduate Studies. The appropriate funding agency must be notified of the situation by Research and Graduate Studies.

VIII. Appeals

An employee may appeal a reviewing official's determination that a disclosure form has been improperly submitted or that a conflict exists. The administrative appeal process shall begin with the reviewing official's supervisor and shall end with the appropriate vice chancellor. The appeal shall be initiated by a simple written request. After the vice chancellor's decision, the employee may file an employee grievance to be handled under existing grievance appeal procedures for faculty and EPA nonfaculty employees as appropriate.

IX. Confidentiality and Record-Keeping

Research and Graduate Studies shall ensure that the appropriate certifications related to research objectivity and financial disclosures are submitted to funding agencies who require them.

Completed disclosure forms, including attachments and supplemental documentation, are confidential personnel records as defined by the State Personnel Records Act. The provisions of that Act, governing access to and confidentiality of personnel records shall be strictly observed. A copy of the completed disclosure forms will be forwarded to the Dean of the appropriate College for his/her information.

Upon completion of the review process, the reviewing official should retain a copy of the disclosure form, with attachments and supplemental documentation, and send the originals to the custodian of the employee's official personnel file for storage. The originals must be kept for a minimum of three years after the termination or completion of the federal financial award, if any, to which they relate.

X. Undisclosed Conflicts

A member of the university community who has reason to believe that another employee has an undisclosed conflict of interest should consult confidentially with his or her supervisor regarding the basis for concern. Should an allegation be considered by the supervisor to be serious enough to constitute a possible undisclosed conflict of interest, a written, confidential report describing the allegation shall be prepared by the concerned party and sent to the supervisor of the accused party via appropriate supervisory personnel. The supervisor of the accused party shall immediately contact Research and Graduate Studies.

(By letter dated October 19, 1995, the Chancellor was notified that this policy had been reviewed and approved by the University of North Carolina General Administration.)

Formerly Executive Memorandum 95-112
Initially approved October 19, 1995
Administering office: Chancellor's Office

Posted June 08, 1999