AD83 Institutional Financial Conflict of Interest
Subject Matter Expert:
Policy Steward:Senior Vice President and Chief of Staff>
- Non-compliance / Failure to Disclose
- Further Information
- Cross References
The purpose of this policy is to set forth the standards and procedures for reporting and reviewing potential Institutional Conflicts of Interest and to provide a process by which the University will manage, reduce, or eliminate those conflicts. As a steward of public funds, the University strives to ensure that its research, teaching, outreach, business transactions, and other activities are not inappropriately affected by, nor appear to be inappropriately affected by, the financial or business interests of the University or of University Officials. While it is widely recognized that university-industry relationships are essential in advancing scientific knowledge and enabling the commercial development of academic discoveries to the benefit of the public, the University will not allow its financial or business interests, or the financial or business interests of University Officials, to compromise the integrity of the University’s primary mission or to inappropriately influence decisions regarding University Activities.
Financial or business interests of the University or of University Officials must be identified, disclosed, and reviewed for potential Institutional Conflicts of Interest according to the processes set forth below. Institutional Financial Interests can be created by gifts, payments, royalty income, equity, and other financial benefits from or interests in for-profit entities. Institutional Financial Interests can also be created by financial and fiduciary interests of University Officials. When an Institutional Conflict of Interest is identified, a management plan will be implemented to manage, reduce, or eliminate the Institutional Conflict. The University’s Institutional Conflict of Interest Committee shall review and evaluate the financial or business interests of the University or of University Officials to identify potential Institutional Conflicts of Interest; shall create, in collaboration with the appropriate University officials or offices, management plans to manage, reduce, or eliminate Institutional Conflicts of Interest that are identified and shall provide oversight to the implementation and monitoring of management plans created. The Institutional Conflict of Interest Committee may also implement additional administrative procedures associated with this policy in order to assist in its responsibilities outlined here. The University will strive to manage or eliminate each Institutional Conflict of Interest identified before any contract, sponsored project, dedicated gift, or transaction is executed; any contractual relationship is initiated; or any action is taken that might be inappropriately affected or appear to be inappropriately affected by the Institutional Conflict of Interest. Potential conflicts of interest that involve members of the Board of Trustees are covered by the conflict of interest provisions applicable to Trustees in the University Bylaws.
Conflict of Interest Official (COIO): The COIO is the Associate Vice President for Research and Director of the Office for Research Protections (ORP), who also serves as the COIO pursuant to the University’s Individual Conflict of Interest policy, RP06. The Associate Vice President for Research and Director of the ORP reports directly to the Vice President for Research for all administrative matters pertaining to the Senior Vice President and Director position. For matters related directly to this policy and to Institutional Conflicts of Interest, the COIO shall report to the President. If the Institutional Conflict of Interest matter involves the President, the COIO shall report directly to the Chairperson of the University’s Board of Trustees. The COIO is responsible for developing, promulgating, and updating procedures and guidelines for the implementation of this policy and for providing administrative support to the ICOI Committee. The COIO is also responsible for reviewing all reports and disclosures submitted under this policy, determining which disclosures and potential Institutional Conflicts of Interest must be reviewed by the ICOI Committee, and for informing the ICOI Committee of all potential ICOI situations handled by the COIO. The COIO may delegate its responsibilities under this policy to staff within the ORP.
Institutional Conflict of Interest (ICOI): A situation in which the financial or business interests of the University, or of a University Official acting within his or her authority on behalf of the University, can inappropriately affect or reasonably appear to inappropriately affect the research, teaching, outreach, business transaction, or other activities of the University.
Institutional Conflict of Interest Committee (ICOI Committee): A committee appointed by the President to evaluate Institutional Conflict of Interest situations; to develop, in collaboration with the appropriate University officials or offices, conflict of interest management plans; to review and assist with the monitoring of management plans developed; to review reports made by the Conflict of Interest Official; to review information relating to post-approval implementation and monitoring of Conflict of Interest management plans; and to recommend corrective actions and/or sanctions for non-compliance with this policy. The ICOI Committee shall be comprised of at least five (5) voting members, including at least one senior leader at the University with sufficient independence, expertise, and seniority; at least one faculty member; a representative from the Office of Internal Audit; a senior representative from the College of Medicine; and the Conflict of Interest Official. The Associate Vice-President for Research and Technology Transfer, the Vice-President for Development or their designee, a staff member from the Office for Research Protections, and General Counsel will serve as non-voting/ex-officio members of the ICOI Committee.
Institutional Financial Interests: Institutional Financial Interests means the following financial or business interests of the University:
- Royalty arrangements: payments, including royalty payments and licensing fees, resulting from technology transfer, licensing, and business activities that, for each arrangement, exceed $100,000 in the preceding twelve (12) month period;
- Non-publicly traded equity: equity and ownership interests of any amount in any for-profit entity that is not publicly traded;
- Publicly traded equity: equity and ownership interests valued at greater than $100,000 in the preceding twelve (12) month period in any publicly traded, for-profit entity, except for equity held in the University’s endowment (please see “Note regarding endowment” below);
- Gifts greater than one million dollars ($1,000,000.00) from any for-profit entity or philanthropic unit associated with a for-profit entity (please see “Note regarding gifts” below); and
- Certain other payment or financial benefits: from time to time, the University enters into contractual relationships with outside parties which include a payment or other financial benefit to the University from the contracting party that are based on factors outside the course of business between the University and the contracting party (e.g., number of units sold or new accounts established, philanthropic support for the University). The University recognizes that certain types of these contracts, if not properly managed or disclosed by the University, and which because of the University’s unique position and relationships, may create the perception that the University was improperly influenced to enter into the contract or endorses the contracting party as a “preferred provider” or may improperly influence consumer choices by third parties, in particular University students.
Note regarding endowment: The University hereby affirms that the Office of Investment Management and its outside investment managers, are forbidden from communicating with University Officials or University investigators concerning the conduct and interpretation of ongoing or planned research performed at the University for the purpose of influencing investment decisions. Maintaining this robust “firewall” is essential for ensuring the core activities of the University are not affected, or perceived to be affected, by the University’s interests in maximizing the value of its endowment pool. If an individual becomes aware of a situation in which there appears to be a conflict of interest involving philanthropic gifts, solicitation of gifts, or management of the endowment pool, the individual must notify the ICOI Committee or the COIO for review and determination as outlined below.
Note regarding gifts: Gifts, pledges, and solicitation of gifts to the University are important to its mission. However, no charitable donation is allowed to be contingent upon the outcome of any research conducted at or by the University. The University hereby affirms that it will not solicit or accept gifts that in any way limit the ability of its investigators to conduct and/or report the results of research in accordance with the highest scientific, medical, professional, and ethical standards.
The goal of this policy is not to preclude the University from accepting philanthropy from companies that sponsor research or otherwise conduct business with the University. Rather, the policy is intended to help the University develop means of identifying and examining such circumstances, and of managing, through disclosures, separation of responsibilities, and as otherwise appropriate, any actual or apparent conflicts of interest that may result.
The COIO, in coordination with the contracting units, shall make reasonable efforts to identify these types of contracts for review by the ICOI Committee or the COIO under authority granted from the Committee.
Institutional Financial Interests shall also mean the following financial or business interests of University Officials (and those of the University Official’s spouse or partner):
- Equity and/or ownership interests in publicly traded, for-profit entities if the value exceeds $25,000 in the preceding twelve (12) month period. Not included are equity or ownership interests in mutual funds and retirement accounts, as long as the University Official does not directly control the investment decisions made in these investment vehicles;
- Equity (including stock, options, warrants), ownership, or founders’ interests of any amount in non-publicly traded entities;
- Income, including royalties, equity, consulting fees, honoraria, gifts, and other payments, from for-profit entities that, in the aggregate, exceed $25,000 from each entity in the preceding twelve (12) month period;
- Any fiduciary role with a for-profit entity, regardless of compensation or income, such as service on the board of directors, management role in a company or partnership (e.g., President, CEO, COO, or Treasurer); and
- Any fiduciary role with a non-profit entity that could reasonably lead to a potential Institutional Conflict of Interest.
University Activities: Research, teaching, outreach, business transactions or other activities performed by or on behalf of the University.
University Officials: Persons holding the following positions, including those persons holding these positions in a temporary or interim capacity:
- Vice President
- Associate Vice President
- Assistant Vice President
- Vice Provost
- Associate Vice Provost
- Assistant Vice Provost
- Members of President’s Council
- Chief Academic Officer of Commonwealth Campuses
- Vice Dean
- Associate Dean
- Assistant Dean
- Director of the Applied Research Laboratory
- Office of Budget and Finance
- University Budget Officer
- Assistant Treasurer
- NCAA Division I Athletic Director
- NCAA Division I Head Coach
- Executive Director of Investment Management
- Director of Procurement Services
- Director of Internal Audit
- Director of Ethics and Compliance
- University Risk Officer
- Director of the Office for Research Protections
- Director of the Office of Sponsored Programs
- Director of the Office of Technology Management
- Chief Executive Officer of Ben Franklin Technology Partners for Northern and Central Pennsylvania
- Chairperson(s) of the Institutional Review Board, Institutional Animal Care and Use Committee, Individual Conflict of Interest Committee, Institutional Biosafety Committee, stem cell review committee; and
- Voting and non-voting members of the Institutional Conflict of Interest Committee
- Chief Executive Officer of the Penn State Alumni Association
- Any other position designated by the COIO to be subject to this policy
A. Disclosure Reports by Certain Offices
Each of the following offices shall designate a responsible person and report at least semi-annually to the COIO all Institutional Financial Interests of the University as defined above in their designated areas and shall update their reports as needed:
- Office of Technology Management (for licensing arrangements, patents, invention disclosures, and any associated royalties or other fees);
- Office of Sponsored Programs (for sponsored research agreements and federal and state research grants or contracts);
- Office of Development (for gifts);
- Office of General Counsel (for institutional contracts or business partnerships); and
- Finance and Business (for institutional contracts or business partnerships)
B. Disclosure by University Officials
University Officials shall disclose all Institutional Financial Interests (as defined above) at least annually and shall update their disclosures as new Institutional Financial Interests arise. This disclosure requirement does not affect the disclosure requirements or other responsibilities outlined under University Policy RP06, Disclosure and Management of Significant Financial Interests, which may apply to the University Official.
C. Review and Determination
Administration of ICOI matters will be handled by the COIO and their staff. The COIO shall be responsible for (i) the review of all reports of activities described above and all annual disclosures made by University Officials in order to determine whether they are Institutional Financial Interests that could lead to a potential ICOI and (ii), if so, referral to the ICOI Committee in order to determine whether there is an ICOI unless the Committee has delegated its authority to the COIO to make this determination.
1. Review of the University’s Institutional Financial Interest:
The University shall use reasonable efforts to manage potential ICOI matters prior to finalization of the proposed University transaction (e.g., prior to the gift, contract, or sponsored project being executed or accepted) that gives rise to the potential ICOI. In order to do this, the COIO shall semi-annually provide a list of entities in which there has been a disclosed Institutional Financial Interest of the University to any office the ICOI identifies as a necessary recipient, including but not limited to:
- Office of Technology Management;
- Office of Sponsored Programs;
- Office of Development;
- Office of General Counsel;
- Office of Budget and Finance; and
- Office for Research Protections/IRB.
Responsible staff in the above identified offices will notify the COIO when a proposed transaction with one of the entities on the list arises so that the COIO or ICOI Committee can review the proposed transaction and the related disclosure(s) and manage, if necessary, any identified ICOI in accordance with this policy prior to finalization of the proposed transaction.
The University recognizes that some transactions will be finalized prior to a review and determination by the COIO or ICOI Committee. In these instances, the Institutional Financial Interests will still be reviewed by the COIO or the ICOI Committee and any identified ICOI’s will be managed in accordance with this policy so as to allow the transaction or relationship to continue uninterrupted while also appropriately mitigating or managing any potential ICOI concerns.
2. Review of Institutional Financial Interests of University Officials:
The COIO shall also collect and review all disclosures made by University Officials. If a University Official discloses an Institutional Financial Interest that is related to that Official’s University role and responsibilities, then the COIO shall assign the Disclosure for review by the ICOI Committee as outlined below.
3. ICOI Determination:
The ICOI Committee or the COIO, under authority granted by the ICOI Committee, shall determine whether the Institutional Financial Interest could inappropriately affect or reasonably appear to inappropriately affect University Activities. In making the ICOI determination, the ICOI Committee or the COIO shall consider whether the Institutional Financial Interests disclosed as outlined above have the potential to, or appear to, affect any of the following:
- Safety of human research subjects;
- Integrity of research;
- Appropriate allocation of resources;
- Objectivity and independence of educational activities;
- Independence of professional practice judgment; and
- Objectivity in business and contracting decisions.
If the ICOI Committee or COIO shall find that an ICOI exists, then it shall also determine whether the ICOI shall be managed or eliminated.
To ensure efficiency, the ICOI Committee is authorized to delegate to the COIO its authority to determine whether an Institutional Financial Interest constitutes an ICOI and, in the event the ICOI Committee has delegated that authority to the COIO through specific guidelines set forth in a Standard Operating Procedure, the COIO may determine whether the Institutional Financial Interest constitutes an ICOI without referral to the Committee.
D. ICOI Management
The ICOI Committee or COIO shall document its ICOI determination and, if applicable, a management plan, which shall specify the actions that have been and/or shall be taken to manage the ICOI. Examples of conditions and restrictions that may be imposed to manage an ICOI, either as a single condition or restriction or as a combination of conditions and restrictions, and on either an interim or permanent basis include, but are not limited to:
- Public disclosure of the ICOI (e.g., in public presentations or publications of the related research);
- Disclosure of the ICOI to human participants, if applicable;
- Appointment of an independent monitor capable and willing to take appropriate measures to protect the design, conduct, and reporting of the research against potential bias resulting from the ICOI;
- Where the ICOI involves a University Official, formal recusal of the conflicted official from the chain of authority over the related project and, possibly, also from authority over salary, promotion, and space allocation decisions affecting the investigator or staff, as well as communication of the recusal arrangements to the Official’s superior and colleagues;
- Where the ICOI involves a University Official, designation of a “safe haven” (e.g., a non-conflicted senior individual) with whom the investigator or staff can address ICOI-related concerns;
- Reduction or elimination of the Institutional Financial Interest (e.g., sale of an equity interest); or
- Severance of the relationship giving rise to the ICOI.
The COIO shall communicate to the IRB summary information about the nature and amount of any Institutional Financial Interest related to human participants in research along with the ICOI Committee's findings, ICOI determination, and any institutional management plan approved by the ICOI Committee.
The COIO shall also, as deemed necessary, communicate summary information about the nature and amount of the Institutional Financial Interest, along with the ICOI Committee's findings, ICOI determination and any institutional management plan approved by the ICOI Committee to appropriate University offices.
NON-COMPLIANCE / FAILURE TO DISCLOSE
Non-compliance with this policy and any disciplinary action resulting due to non-compliance with this policy will be managed in accordance with applicable University policies and processes as determined by the status of the individual involved in the non-compliance.
For questions, for additional details, or to request changes to this policy, please contact the Office of the Associate Vice President for Research, Director of the Office for Research Protections.
Other Policies may have specific application and should be referred to, especially:
AC80 - Faculty Outside Professional Activities and Conflict of Commitment
AD47 - General Standards of Professional Ethics
FN14 - Use of Tangible Assets, Equipment, Supplies and Services
HR35 - Public Service by Members of the Faculty and Staff
HR91 - Conflict of Interest
RP02 - Addressing Allegations of Research Misconduct (Formerly RA10, Handling Inquiries/Investigations Into Questions of Ethics in Research and in Other Scholarly Activities)
IP06 - Technology Transfer and Entrepreneurial Activity (Faculty Research)
RP06 - Disclosure and Management of Significant Financial Interests (formerly RA20, Individual Conflict of Interest)
Most recent changes:
January 6, 2023 - Changed Corporate Controller's Office to Office of Budget and Finance
June 28, 2022 - Editorial changes and reordering of text to correct grammatical errors and inconsistencies.
Revision History (and effective dates):
February 11, 2021 - Editoral Change. Reference to HR80 changed to AC80.
January 17, 2020 - Editorial changes to update the list of University officials. Edit to the last sentence of the paragraph under the section "Review of the University's Institutional Financial Interest" to include "any office the ICOI identifies as a necessary recipient."September 17, 2019 - Changed Vice President for Research to Senior Vice President for Research
- June 8, 2018 - Added Chief Executive Officer of Ben Franklin Technology Partners for Northern and Central Pennsylvania to list of University Officials.
January 3, 2018 - Editorial change to remove Director of the Electro-Optics Center from list of University Officials.
- July 17, 2017 - Changes have been made throughout the entire policy to better clarify the handling of conflict of interest.
- June 9, 2015 - Editorial changes in the DEFINITIONS (Conflict of Interest Official -"COIO"), IMPLEMENTATION and CROSS REFERENCES sections to reflect policy renumbering from the migration of RA10 and RA20 to the Research Protections Policies RP02 and RP06, respectively.
- April 3, 2015 - Editorial changes; addition of policy steward information, in the event that there are questions or requests for changes to the policy.
- September 10, 2013 - New Policy, replacing Policy RA21.
Date Approved:December 16, 2019>
Date Published:January 17, 2020>