CONFLICT OF INTEREST AND PROHIBITION AGAINST SELF-DEALING POLICY

Introduction
The Sam L. Cohen Foundation (the "Foundation") believes that effective governance and operation depend on decision making by directors and staff which is unbiased and appears to be unbiased. The Foundation values the active roles that its directors and employees play by serving on boards and committees in their communities and recognizes that directors and employees have financial interests unrelated to the Foundation. As such, it is inevitable that situations of dual interest may occur. Directors and employees must neither use nor appear to use their Board position or their employment for personal or professional gain or to promote the solicitations of their affiliated organizations. For this reason, directors and employees must be mindful of actual and potential conflicts of interest or the appearance thereof. Timely disclosure and candid discussions are critical to minimize the likelihood that a director's or employee's affiliation with other public, private or governmental organizations will be perceived as conflicting or promoting undue influence.

Additionally, directors and employees of the Foundation and their immediate families are or may be 'disqualified persons' as defined in provisions of the Internal Revenue Code applicable to private foundations, and they may subject the Foundation or themselves to penalties for prohibited acts of self-dealing under the Internal Revenue Code.

In order to avoid impermissible conflict between the personal interests of directors or staff and the interests of the Foundation or situations of self-dealing, the directors of the Foundation have adopted the following policy to identify and respond to potential conflicts of interest and transactions that may involve self-dealing.

Conflict of Interest
A conflict of interest may exist when a director, a member of his or her immediate family or an employee has a financial interest in a decision by or on behalf of the Foundation or, when affiliations or other dual loyalties of a director or employee, without having any financial interest, may lead to, or suggest influence in, a decision by or on behalf of the Foundation. This policy focuses on two types of conflicts which may arise as part of the activities and operations of the Foundation: the Business Conflict and the Grantmaking Conflict. Each of these types of conflicts is described below.

If an actual or potential conflict of interest also constitutes an act of self-dealing, then the conflict will be treated as an act of self-dealing by the directors.

1. Business Conflict. A director or an employee of the Foundation has a Business Conflict when a director, a family member or an employee has a financial interest as an owner (either as a sole proprietor or a partner), shareholder, partner, or trust beneficiary of any entity with which the Foundation has, or might be expected to have, a business relationship, including but not limited to being a supplier, lessor, lessee, borrower, lender, or contractor.
2. Grantmaking Conflict. A director of the Foundation has a Grantmaking Conflict when a director, a family member or an employee either serves as a volunteer or compensated board member, a compensated member of a standing committee, or is a paid employee or independent contractor of an organization (private or governmental) applying for support from the Foundation. Such a fiduciary relationship exists not only at the time of the application, but also with respect to a future relationship that could be anticipated if an organization receives funding from the Foundation.
3. Family Member. The members of a director's family include first-degree relatives (such as spouse or domestic partner, children, stepchildren, and parents) and any other member of the director's household with whom the director has a significant long-term relationship.

Self-Dealing
The Sam L. Cohen Foundation will not engage in any act of self-dealing as defined in section 4941(d) of the Internal Revenue Code, or the corresponding section of any future federal tax code.

1. Acts of Self-Dealing. An act of self-dealing is defined as a prohibited transaction between a private foundation and a disqualified person.
2. Transactions Constituting Self-Dealing. Under section 4941 of the Internal Revenue Code and the Treasury Regulations, the following actions constitute acts of self-dealing.
   • Sale, exchange or leasing of property between the Foundation and a disqualified person.
   • Lending money or other extension of credit between the Foundation and a disqualified person, other than the lending of money by a disqualified person to the Foundation without interest or other charge, so long as the loan proceeds are used exclusively for charitable purposes.
   • Furnishing of goods, services and facilities between the Foundation and a disqualified person, other than the furnishing of goods, services or facilities by a disqualified to the Foundation without charge so long as the goods, services or facilities are used exclusively for charitable purposes; the Foundation may furnish goods, services and facilities to a disqualified person so long as they are furnished on a basis no more favorable than that on which they are made available to the general public.
   • Payment of compensation (or payment or reimbursement of expenses) to a disqualified person, other than the payment of compensation and the payment or reimbursement of expenses by the Foundation to a disqualified person for "personal services" that are reasonable and necessary to carry out the exempt purposes of the Foundation, so long as the compensation, payment, or reimbursement is not excessive ("personal services" include foundation management by directors and officers, legal and accounting services and investment management; payment of directors' and officers' liability insurance premiums on behalf of the directors can be part of a reasonable (not excessive) compensation package).
   • Transfer to, or use by or for the benefit of, a disqualified person of the income or assets of the Foundation, except when the benefit is incidental and tenuous, such as some public recognition for grants.
   • Payment to government officials
   • Transactions involving corporate securities
   
   This list of actions is not exhaustive. Other actions may also constitute acts of self-dealing. Foundation directors and employees who are unsure whether any contemplated action may be forbidden to them as 'disqualified persons' under the Internal Revenue Code should consult the Foundation's executive director or legal counsel.


3. Disqualified Persons. Disqualified persons are defined to include the following persons.
   • Foundation managers (officers, directors or individuals with similar responsibilities)
   • Substantial contributors
   • Owners of more the 20% of the ownership interest of any business entity which is a substantial contributor to the Foundation
   • Family members of any person described above (spouse, ancestors, lineal descendants and spouses of lineal descendants)
   • A business entity where the persons described above own more than 35% of the voting or beneficial or profits interests thereof

The Sam L. Cohen Foundation will not engage in any act of self-dealing as defined in section 4941(d) of the Internal Revenue Code and the Treasury Regulations, or the corresponding section of any future federal tax code issued Treasury Regulations.

If a transaction, agreement or other relationship involving the Foundation or person who would otherwise be a disqualified person is not an act of self-dealing, then it is the policy of the Foundation that no director or employee shall derive any personal profit or gain, directly or indirectly, by reason of his or her directorship or employment by the Foundation, except as authorized by the directors.

Each individual serving as a director or employed by the Foundation shall annually complete a Conflict of Interest Statement (as more fully described below).

If a transaction, agreement or other relationship should arise which might be an act of self-dealing, then the remaining directors shall determine if the situation is or is not an act of self-dealing. If the remaining directors determine that the transaction, agreement or other relationship is an act of self-dealing, then the Foundation shall not complete or consummate the transaction, agreement or relationship. If the remaining directors determine that the transaction, agreement or other relationship is not an act of self-dealing, then the remaining directors will determine the extent of the conflict of interest arising from the transaction, agreement or other relationship and the extent (if any) the affected director or employee can participate in the discussion or decision about the transaction, agreement or other relationship.

With respect to any transaction, agreement or other relationship determined not to be an act of self-dealing, each individual covered by this Policy agrees that such individual will not participate in any decision by or on behalf of the Foundation that benefits such individual, a member of such individual's immediate family, or any organization with which such individual has a formal relationship, except as authorized by the directors.

All directors and covered employees (who are defined below) must complete a Conflict of Interest Statement that identifies and discloses any existing or potential relationships that may lead to an actual or perceived conflict of interest or act of self-dealing. The Conflict of Interest Statements will be completed annually. Directors and covered employees are responsible for informing the President and Executive Director of any subsequent changes in a timely manner. Information will be updated as needed, but no less frequently than annually. The President and the Executive Director will review each Conflict of Interest Statement. These statements may be distributed to the Foundation's Board members and Foundation staff, and also may be disclosed publicly on request. Requests by directors that any portion of this statement be kept confidential will be evaluated on a case-by-case basis.

Covered employees shall be senior employees, other employees who have a decision making role in hiring, contracting or grant making, and any other employee whom the Executive Director determines should be a covered employee. Each new director or employee shall be advised of the policy and furnished a disclosure statement upon undertaking the duties of such position.

Disclosure. Prior to each meeting of the Board of Directors, the Executive Director will cause an agenda, and all necessary accompanying information, to be mailed to each of the directors and the covered employees. After receipt of such materials, each director and covered employee must review the materials to determine if any action to be taken by the Foundation could give rise to an act of self-dealing or a conflict of interest.

If the responding director or covered employee reports that an action may constitute an act of self-dealing, then the remaining directors shall confirm this position at the meeting. No reported action can be taken on this matter until this decision is confirmed. If it is determined that the action is not an act of self-dealing, then the remaining directors must determine if the action constitutes a conflict of interest or a perceived conflict of interest and follow the procedures set forth below.

If an action does not constitute an act of self dealing, but does involve or may involve a potential Business Conflict or Grantmaking Conflict, the director or employee involved shall make known the potential conflict of interest, whether disclosed by his/her written statement or not, at the first possible opportunity.

Recusal Concerning a Conflict of Interest. When a potential conflict has been identified, any director or employee involved shall answer any questions that may be asked of him or her concerning the nature of the potential conflict, and shall disclose all material facts. The affected director or employee shall not exert personal influence to affect the Board's decision, and shall not be counted in determining whether a quorum exists for the Board meeting. After disclosure and discussion, the remaining directors (exclusive of the involved director) shall determine whether a conflict of interest exists by a majority vote.

Minutes of Board Meetings. Whenever a potential conflict of interest is disclosed, discussed, considered, or acted upon, the minutes of the Board Meeting shall thoroughly document all actions taken with respect to the potential conflict of interest.

No Prohibited Acts. No transaction, agreement or other relationship or act shall be entered into or taken on behalf of the Foundation if such transaction, agreement or other relationship or act would jeopardize the Foundation's tax-exempt status under section 501(c)(3) of the Internal Revenue Code or constitute an act of self-dealing under section 4941 of the Code.

Business Conflicts. If the Board of Directors determines that a business conflict exists with respect to a proposed transaction, such transaction must be rejected, unless the directors determine the transaction would not constitute self-dealing under section 4941 of the Code and accompanying regulations.

Grantmaking Conflicts. Directors should protect their objectivity by maintaining an arms-length relationship with prospective and actual grantees relative to the design of specific projects, the preparation and submission of specific proposals, and the review and oversight of funded projects.

It is inevitable that situations will arise in which the Board must reach a decision about an organization or activity in which one of its members or an employee of the Foundation has an interest that represents an actual or apparent conflict. The Foundation will not automatically disqualify the organization from receiving grant funds on the grounds of a grantmaking conflict in which a director (or family member) or an employee is a compensated or volunteer trustee, director, officer of a potential grantee organization, or is compensated as an employee or independent contractor. However, director and staff conflicts must be disclosed in advance of any Board discussion or action in which the conflict may be a factor. Upon disclosure, the Board must assure through its policies and procedures that its decisions are based on objective review by disinterested parties.

In the case of a grantmaking conflict, the Board may reach one of the following conclusions:

• The conflict or appearance of a conflict is grounds to reject the grant application.
• The conflict or appearance of a conflict is not grounds to reject the grant application, but the affected director or employee may not participate in the discussion and/or the vote.
• The benefit to the affected director or employee from the relationship under consideration is less than tenuous and incidental, allowing the director or employee to participate in both the discussion and the vote. The director or employee may decide to recuse him or herself from the discussion and/or vote.
Nothing in this policy should be interpreted as preventing the Board from rejecting a grant proposal partially or solely on the basis of conflict or the appearance thereof.