HARVARD-YENCHING INSTITUTE, INC.
(the “Corporation”)
POLICY REGARDING FINANCIAL CONFLICTS OF INTEREST

Article I: Purpose
The purpose of this policy on financial conflicts of interest is to protect the Corporation’s
interest when it is contemplating entering into a transaction or arrangement that might benefit theprivate interest of an officer or Trustee of the Corporation. This policy is intended to supplement
but not replace existing provisions in Article VIII of the Corporation’s By-Laws (set forth below)
or any law governing conflicts of interest related to tax-exempt charitable corporations.
Article II: Corporate By-Law Provisions
Article VIII of the Corporation’s By-Laws provides as follows:
Except as provided in Article VII above and in the absence of fraud or
misrepresentation, no contract or other transaction between this Corporation and anyother person or organization, and no act of this Corporation, shall be affected by the factthat a Trustee, officer or employee of this Corporation has a financial or other interest insuch other person or organization. Any Trustee, officer or employee, individually, or any
firm or corporation in which such Trustee, officer or employee may have an interest, may
be a party to, or may have a financial or other interest in, any contract or transaction ofthis Corporation, provided that the fact that such person, firm or corporation has such aninterest (other than an interest of less than 1% in any class of securities of a corporation
which are publicly traded) shall be disclosed to or shall be known by the Board ofTrustees or a majority of the members thereof, and provided further, that such person
shall not vote upon such matter.
Article III: Definitions
1.

Interested Person

Any Trustee, officer, or member of a committee with board-delegated powers who has adirect or indirect financial interest in any transaction or arrangement which may involve theCorporation, as defined below, is an interested person.
2.

Financial Interest

A person has a financial interest if the person has, directly or indirectly, th roughbusiness, investment or family:a)an ownership or investment interest in any entity with which the Corporation has
a transaction or arrangement;

2b)

a compensation arrangement with any entity or individual with which theCorporation has a transaction or arrangement; orc)

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

Compensation includes direct and indirect remuneration as well as gifts or favors thatare substantial in nature.
Article IV: Procedures
1.

Duty to Disclose

In connection with any actual or possible financial conflict of interest, an interested
person shall disclose the existence and nature of his or her financial interest to the Trustees
and members of committees with board-delegated powers considering the transaction orarrangement proposed by or for the Corporation.
2.

Determining Whether a Financial Conflict of Interest Exists

After disclosure of his or her financial interest, the interested person shall leave any
board or committee meeting while the financial interest and/or the related transaction or
arrangement proposed by or for the Corporation is discussed and voted upon. The remaining
board or committee members shall decide if a conflict of interest exists with respect to suchinterested person.
3.

Procedures for Addressing a Financial Conflict of Interest

If it is determined that any Trustee, officer or member of a committee with boarddelegated powers is an interested person and that a financial conflict of interest exists:a)If determined by the board or committee to be appropriate, the chairperson of theboard or committee shall appoint a disinterested person or committee toinvestigate alternatives to the transaction or arrangement proposed by or for theCorporation.

b)

After exercising due diligence, the board or committee shall determine whether
the Corporation can obtain a more advantageous transaction or arrangement withreasonable efforts from a person or entity that would not give rise to a financial
conflict of interest.

c)

If a more advantageous transaction or arrangement is not reasonably attainable
under circumstances that would not give rise to a financial conflict of interest,
the board or committee shall determine by a majority vote of the disinterested
Trustees whether the proposed transaction or arrangement is in theCorporation’s best interest and for its own benefit and whether the transaction

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is fair and reasonable to the Corporation, and the board or committee shallmake its decision as to whether to enter into the transaction or arrangement inconformity with such determination.
4.

Violations of the Conflicts of Interest Policya)

If the board or committee has reasonable cause to believe that a member hasfailed to disclose any actual or possible financial conflict of interest, it shallinform the member of the basis for such belief and afford the member an
opportunity to explain the alleged failure to make such disclosure.

b)

If, after hearing the response of the member and making such further
investigation as may be warranted in the circumstances, the board orcommittee determines that the member has failed to disclose an actual or
possible financial conflict of interest, it shall take such disciplinary, corrective
or other action as a majority of the disinterested members of such board orcommittee shall determine.
Article V: Records of Proceedings

Minutes for meetings of the board and for meetings of all committees with boarddelegated powers shall disclose:a)the names of the persons who disclosed or otherwise were found to have afinancial conflict of interest related to an actual or possible transaction or
arrangement proposed by or for the Corporation, the nature of such persons’financial interests, any action taken to determine whether any such financial
conflict of interest was present, and the board’s or committee’s decision as towhether a conflict of interest in fact existed; andb)

the names of the persons who were present for discussions and votes relating
to any proposed transaction or arrangement which involved or might involve
any such financial conflict of interest, the conclusions or results of thediscussion, including any alternatives to the proposed transaction orarrangement which were considered, and a specific record of all votes taken inthat regard.
Article VI: Compensation Committees

No member of the board or of any committee which has responsibility for determining orreviewing compensation matters and who receives compensation, directly or indirectly, from theCorporation for services shall vote on any matter pertaining to that member’s compensation.

4Article VII: Annual Statements
Each Trustee, officer and member of a committee with board-delegated powers shallsign a statement, and shall annually be reminded of such statement, which affirms that suchperson:a)has received a copy of this policy on financial conflicts of interest;b)

has read and understands the policy;c)agrees to comply with the policy; andd)

understands that the Corporation is a tax-exempt organization and that in order tomaintain its tax exemption the Corporation must engage primarily in activities
that accomplish one or more of its tax-exempt purposes.

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