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Not-for-Profit Contractor Frequently Asked Questions (FAQ) and Information Guide
All italicized terms on this webpage are defined in the NYC Conflict of Interest and Related Party Transactions Policy and Guidance for Contractors of Human Services.
Related Party Transactions & Conflict of Interest HHS Prequalification Questions: General
Select a question to reveal its answer.
What are some examples of a related party transaction?
- A board member of a Contractor leases office space they own to the same Contractor.
- A board member of a Contractor is a partner at a law firm, and the Contractor pays for the services of the board member’s law firm.
- A Contractor hires the board chair’s spouse as a paid program consultant.
- A Contractor purchases office supplies from a retailer owned by a board member’s sibling.
What is an example of a conflict of interest?
An Executive Director rents office space from a private landlord. The Executive Director then chooses to hire the private landlord's daughter as the company's Program Director.
Is the grandchild of an executive director considered a ‘related party’?
Yes. You can find the definition of a related party in the Citywide Conflict of Interest and Related Party Transactions Policy found on the Mayor’s Office of Contract Services (MOCS) Contract Compliance Support webpage.
What are the best practices for nonprofit board members signing a Conflict-of-Interest Policy?
Directors must provide signed statements annually, disclosing any potential conflict of interest in compliance with the Contractor's conflict of interest policy and the State Not-for-Profit Corporation Law. An example of a conflict of interest disclosure statement is linked here.
Do you have any best practices to help me prepare for answering the additional questions?
Suggested best practices include, but are not limited to, conducting board meetings, discussing conflict of interest, and related party transactions on a routine basis. Once these transactions are disclosed, you should collect the details and written agreements for them. In addition, you should be aware of and accurately report the same transactions that are in your IRS Form 990. In other words, what is reported in the IRS Form 990 and this prequalification application should be consistent.
The HHS Accelerator Prequalification Application questions ask about relatives. What family members are considered in this category?
His or her spouse or domestic partner; (ii) his or her ancestors, brothers and sisters (whether whole or half-blood), children (whether natural or adopted), grandchildren, great-grandchildren; or (iii) the spouse or domestic partner of his or her brothers, sisters, children, grandchildren, and great-grandchildren.
Related Party Transactions & Conflict of Interest HHS Prequalification Questions: Not-for-Profit Contractors
Select a question to reveal its answer.
I. Financial Transactions with Related Parties Question
From the beginning of the Contractor’s last IRS Form 990 reporting period to the present, did the Contractor have any business transactions, make any payments, and/or enter into any Related Party Transaction with a Related Party, or Related Organization?
Understanding the Question:
The question is asking whether the Contractor had any transaction, agreement, or any other arrangement in which a related party or related organization has a financial interest and in which the Contractor or any affiliate of the Contractor participates. Here’s what that means, step by step:
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“From the beginning of the Contractor’s last IRS Form 990 reporting period to the present…” means: The IRS Form 990 is filed once a year, covering your organization’s fiscal year (not always the calendar year). Start with the first day of your fiscal year for the most recent tax year in which you filed your IRS Form 990. Continue through to today’s date.
Example: If your fiscal year is July 1st - June 30th and your last filed IRS Form 990 was for FY2023 (covering July 1, 2022 to June 30, 2023), the timeframe would be: July 1, 2022 to today (the day you submit the HHS PQL application).
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“…did the Contractor have any business transactions, make payments...” means: Was the Contractor involved in any economic or business activity involving the exchange of goods, services, or money?
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“…and/or enter into any Related Party Transaction with a Related Party, or a Related Organization” means: Did the Contractor enter into any transaction, agreement, or any other arrangement in which a related party or related organization has a financial interest and in which the Contractor or any affiliate of the Contractor is a participant.
Example: The Contractor paid $200,000 to a nonprofit for job preparation services, where the Contractor’s Executive Director also serves as a board member at that nonprofit.
Frequently Asked Questions:
What timeframe do I need to consider for the Financial Transactions with Related Parties question?
Please include responses relevant to the timeframe that starts with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ends with the submission date of this HHS PQL Application.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in this question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
If I answered “Yes”, what additional information would I need to disclose for this question?
The name(s) of the related parties and/or related organizations involved, total amount of payment, purpose of the payment, all funding sources for the payment, and any written agreements governing the transaction, if applicable.
What if the Contractor did not have any business transactions, make any payments, and/or enter into any related party transaction with a related party, or related organization?
The Contractor would answer “No” to this question.
Do I have to disclose if I am a Housing Development Finance Corporation (HDFC) or other related entities under the not-for-profit control?
Yes. An HDFC and other related entities should be disclosed and considered as a related party or related organization.
II. Familial Financial Transactions with Related Parties Question
2. From the beginning of the Contractor’s last IRS Form 990 reporting period to the present, did any of the Contractor’s Directors, Officers, Key Persons, and/or their Relatives receive Compensation from any Related Party or Related Organization in addition to Compensation from the Contractor?
Understanding the Question:
The question is asking whether any of the Contractor’s directors, officers, key persons, and/or their relatives receive compensation from: 1) a related party, 2) a related organization, or 3) the Contractor itself. Here’s what that means, step by step:
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“From the beginning of the Contractor’s last IRS Form 990 reporting period to the present…” means: The IRS Form 990 is filed once a year, covering your organization’s fiscal year (not always the calendar year). Start with the first day of your fiscal year for the most recent tax year in which you filed your IRS Form 990. Continue through to today’s date.
Example: If your fiscal year is July 1st - June 30th and your last filed IRS Form 990 was for FY2023 (covering July 1, 2022, to June 30, 2023), the timeframe would be: July 1, 2022, to today (the day you submit the HHS PQL application).
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“…did any of the Contractor’s Directors, Officers, Key Persons, and/or their Relatives receive Compensation from any Related Party or Related Organization in addition to Compensation from the Contractor” means: did any of the Contractor’s directors, officers, key persons, and/or their relatives receive, including but not limited to, gross salary, fringe benefits, deferred compensation, consultant payments, 1099 payments, and any items of value from any related party, related organization, or the Contractor itself.
Frequently Asked Questions:
What timeframe do I need to consider for the Familial Financial Transactions with Related Parties question?
Please include responses relevant to the timeframe starting with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ending with the submission date of this HHS PQL Application.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in this question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
If I answered “Yes”, what additional information would I need to disclose for this question?
Title of individual(s) involved, name(s) of individuals involved, name(s) of the related parties and/or related organizations that paid compensation, EIN of the related parties and/or related organizations that paid compensation, amount of compensation paid, purpose of the compensation, and all funding sources for the compensation.
III. Direct and Familial Beneficial or Financial Transactions with Related Parties Question
3. From the beginning of the Contractor’s last IRS Form 990 reporting period to the present, did any of the Contractor’s Directors, Officers, Key Persons or any Relatives of a Director, Officer, or Key Person have any beneficial interest or financial interest, whether direct or indirect, in any transaction involving the Contractor, any Related Party or Related Organization?
Understanding the Question:
The question is asking whether any of the Contractor’s directors, officers, key persons, or the relatives of these individuals benefited from any transaction involving the Contractor, any related party transaction, or related organization during a specific timeframe. Here’s what that means, step by step:
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“From the beginning of the Contractor’s last IRS Form 990 reporting period to the present” means: The IRS Form 990 is filed once a year, covering your organization’s fiscal year (not always the calendar year). Start with the first day of your fiscal year for the most recent tax year in which you filed your IRS Form 990. Continue through to today’s date.
Example: If your fiscal year is July 1st - June 30th and your last filed IRS Form 990 was for FY2023 (covering July 1, 2022 to June 30, 2023), the timeframe would be: July 1, 2022 to today (the day you submit the PQL HHS application).
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“…have any beneficial interest or financial interest, whether direct or indirect…” means: did any of the Contractor’s directors, officers, key persons, and/or their family members make any money or gain anything of value, even if they didn’t receive a direct payment. This includes financially, personally, or professionally. They do not have to be named in the transaction to benefit from it.
Direct Example:
A Contractor hires an education consulting firm, which is 50% owned by the Contractor’s Chief Compliance Officer, who is considered a key person.
Indirect Example:
A board member’s spouse is a majority shareholder of a company that the Contractor procures for their community center design services.
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“in any transaction involving the Contractor, any Related Party or Related Organization” means: in any transaction involving the Contractor, a related party, or a related organization.
Frequently Asked Questions:
What timeframe do I need to consider for the Direct and Familial Beneficial or Financial Transactions with Related Parties question?
Please include responses relevant to the timeframe that starts with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ends with the submission date of this HHS PQL Application.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in this question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
If I answered “Yes,” what additional information would I need to disclose for this question?
Title of individual(s) involved, name(s) of individuals involved, name of the entity involved in the transaction, nature of the beneficial or financial interest, EIN of the entity involved in the transaction, transaction purpose including any amounts if applicable, and all funding sources for the transaction.
IV. Real Property & Ownership Interest with Related Parties Question
4. From the beginning of the Contractor’s last IRS Form 990 reporting period to the present, did any of the Contractor’s Directors, Officers, or Key Persons, or any Relatives of a Director, Officer, or Key Person have real property and/or an ownership interest of 5% or more, whether direct or indirect, in any entity doing business with the Contractor, any Related Party, or Related Organization, or beneficial ownership of any privately-held subcontractors or vendors with payments exceeding $100,000 (including landlords, maintenance providers, food vendors, and other major suppliers)?
Understanding the Question:
The question asks whether any of the Contractor’s directors, officers, or key persons, or their family members, had a personal, financial, and/or property interest in any entity that did business with the Contractor, any related party, or related organization. The question also asks whether the Contractor’s directors, officers, or key persons, or the family members of these individuals, had any beneficial ownership of any privately-held subcontractors or vendors that received more than $100,000 in payment from the Contractor.
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“From the beginning of the Contractor’s last IRS Form 990 reporting period to the present…” means: The IRS Form 990 is filed once a year, covering your organization’s fiscal year (not always the calendar year). Start with the first day of your fiscal year for the most recent tax year in which you filed your IRS Form 990. Continue through to today’s date.
Example: If your fiscal year is July 1st - June 30th and your last filed IRS Form 990 was for FY2023 (covering July 1, 2022 to June 30, 2023), the timeframe would be: July 1, 2022 to today (the day you submit the PQL HHS application).
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“…did any of the Contractor’s Directors, Officers, Key Persons, or any Relatives of a Director, Officer, or Key Person have any real property and/or an ownership interest of 5% or more, whether direct or indirect…" means: Did any of the Contractor’s directors, officers, key persons and/or their family members either directly or through someone else have real estate used by the Contractor and/or a business that provides services to an organization or company that does business with the Contractor? Ownership can be direct (the individual(s) own themselves) or indirect (the individual(s) own it through someone else or through another company).
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“…or beneficial ownership of any privately-held subcontractors and vendors for payments exceeding $100,000 (including landlords, maintenance providers, food vendors, other major suppliers).” means: Did any of the Contractor’s directors, officers, or key persons and/or the family members of these individuals have any beneficial ownership of any privately-held subcontractors and/or vendors that received more than $100,000 from the Contractor during the reporting period. If a vendor or subcontractor that’s privately owned and any of the Contractor’s directors, officers, or key persons (and/or their relative) benefits from that ownership in any way, this must be reported.
Frequently Asked Questions:
What timeframe do I need to consider for the Real Property & Ownership Interest with Related Parties question?
Please include responses relevant to the timeframe that starts with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ends with the submission date of this HHS PQL Application.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in this question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
What is an example of ownership interest, and what does “ownership interest 5% or more” mean?
An example of ownership interest can include owning stocks, shares, and/or equity in a company, having a membership in an LLC or partnership, or any legal or beneficial ownership in property, real estate, or entities.
Ownership interest of 5% or more could be considered as someone who owns at least 5% of a business or real estate. This includes direct ownership (their name is on the deed) or indirect ownership (for example: through a spouse, relative, trust, business partnership, or other corporate entity).
What do you consider real property?
Real property, also called real estate, is land and generally anything built on or attached to it.
If I answered “Yes,” what additional information would I need to disclose for this question?
Title of individual(s) involved, name(s) of individuals with an ownership interest, name of the entity doing business with the Contractor, nature of the business and any transactions and payments, EIN of the entity doing business with the Contractor, written agreements governing the transactions if applicable, description of the beneficial ownership of the real property if applicable, and explanation if there were no written agreements governing the transaction if applicable.
V. Compliance with Disclosure Statement Requirements Question
5. In the last twelve months, did each Director complete a Conflict of Interest disclosure statement in accordance with Not-for-Profit Corporation Law Section 715-a(c)?
Understanding the Question:
The question asks whether each director of the Contractor completed a conflict of interest disclosure statement according to the State Not-for-Profit Corporation Law Section 715-a(c) during the last twelve months. Here’s what that means, step by step:
“In the last twelve months…” means: During the last twelve months from when you submit this HHS prequalification application.
“…did each Director complete a Conflict of Interest disclosure statement…” means: Did any of the Contractor’s board of directors complete a written statement disclosing conflict of interest.
“…in accordance with Not-for-Profit Corporation Law Section 715-a(c).” means: according to the rules and regulations stated in the State Not-for-Profit Corporation Law Section 715-a(c).
Frequently Asked Questions:
What timeframe do I need to consider for the Compliance with Disclosure Statement Requirements question?
The last twelve months from when you submit this HHS prequalification application.
What is a conflict of interest disclosure statement?
A formal document that outlines any personal, financial, or professional interests that may influence an individual's decisions or actions as related to the Contractor. An example of a conflict of interest disclosure statement is linked here.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in the question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
Where can I find the State Not-for-Profit Corporation Law Section 715-a(c)?
You can find the law on its website linked here.
Should every person on the board of directors complete a conflict of interest disclosure form even if there are no known conflicts?
Every director is required to complete the annual conflict of interest disclosure statement even if they have no conflict of interest to report.
If I answered “No,” what additional information would I need to disclose for this question?
An explanation as to why each director did not complete a conflict of interest disclosure statement.
Do I need to answer this question if I do not have any related party transactions and/or conflict of interest to disclose in my HHS prequalification application?
Yes, you must answer this question even if you have no related party transactions and/or conflict of interest to disclose.
VI. Compliance with Competitive Bidding Requirements Question
6. From the beginning of the Contractor’s last IRS Form 990 reporting period to the present, did the Contractor comply with competitive bidding requirements in the NYC Human Services Standard Contract, Section 4.05(B) in connection with any transaction that has been reported on in this prequalification application?
Understanding the Question:
The question asks whether the Contractor followed the procedures stated in the NYC Human Services Standard Contract Section 4.05(B) regarding any transactions during a specific period. Here’s what that means, step by step:
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“From the beginning of the Contractor’s last IRS Form 990 reporting period to the present…” means: The IRS Form 990 is filed once a year, covering your organization’s fiscal year (not always the calendar year). Start with the first day of your fiscal year for the most recent tax year in which you filed your IRS Form 990. Continue through to today’s date.
Example: If your fiscal year is July 1st - June 30th and your last filed IRS Form 990 was for FY2023 (covering July 1, 2022 to June 30, 2023), the timeframe would be: July 1, 2022 to today (the day you submit the PQL HHS application).
“…did the Contractor comply with competitive bidding requirements in the NYC Human Services Standard Contract, Section 4.05(B)…” means: Review the requirements in the NYC Human Services Standard Contract, Section 4.05(B). Did the Contractor follow these competitive bidding requirements?
“…in connection with any transaction that has been reported on in this prequalification application.” means: Regarding any transactions (related party transactions and/or conflict of interest) you are reporting in this HHS prequalification application.
Frequently Asked Questions:
If I DO NOT have any related party transactions and/or conflict of interest to disclose in this HHS prequalification application, how should I answer this question?
You should select “Not Applicable (N/A). I did not report any Conflict of Interest and/or Related Party Transactions in this prequalification application.” and input an explanation in the required comment box field.
What timeframe do I need to consider for the Compliance with Competitive Bidding Requirements question?
Please include responses relevant to the timeframe that starts with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ends with the submission date of this HHS PQL Application.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in the question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
What are the competitive bidding requirements stated in the NYC Human Services Standard Contract, Section 4.05(B)?
This provision requires the Contractor to use a competitive bidding process when purchasing goods, supplies, or services (including, but not limited to, consulting services). The kind of competitive bidding required depends on the value of the purchase. For example, for purchases or obligations worth more than $25,000, the Contractor must solicit at least three written estimates.
If I answered “No,” what additional information would I need to disclose for this question?
Description of the procurement of goods and/or services that did not comply with the competitive bidding requirements, name of the individual and/or entity that received the payment, explanation as to why the procurement was awarded in a manner that did not comply with the competitive bidding requirements, program name that funded such transaction or if it was allocated to the indirect cost rate, and contract number that financed the transaction, if applicable.
If I am hiring a lawyer or accountant who is not being directly reimbursed under my New York City human services standard contract, do I have to follow the competitive bidding requirements procedures?
Yes.
VII. Compliance with Board Procedure Requirements Question
7. Did the Contractor comply with the Not-for-Profit Corporation Law Section 715-a required procedures in connection with any transaction that has been reported in this prequalification application, including but not limited to disclosure of the potential conflict, recusal of the conflicted Director or Officer, board consideration of alternate transactions, board approval, and contemporaneous documentation of board actions?
Understanding the Question:
The question asks whether the Contractor complied with the required procedures outlined in Section 715-a of the State Not-for-Profit Corporation Law regarding any transactions (related party transactions and/or conflict of interest) reported in the HHS prequalification application you are currently completing. Here’s what that means, step by step:
“Did the Contractor comply with the Not-for-Profit Corporation Law Section 715-a required procedures…” means: Did the Contractor comply with the required procedures stated in the State Not-for-Profit Corporation Law Section 715-a.
“in connection with any transaction that has been reported in this prequalification application…” means: Specifically, regarding any transactions (related party transactions and/or conflict of interest) you reported earlier in this HHS prequalification application.
“…including but not limited to disclosure of the potential conflict, recusal of the conflicted Director or Officer, board consideration of alternate transactions, board approval, and contemporaneous documentation of board actions.” means: Required procedures including but not limited to disclosing potential conflicts, recusal of conflicted directors or officers, board consideration of alternate transactions, board approval, and synchronous documentation of board actions.
Frequently Asked Questions:
If I DO NOT have any related party transactions and/or conflict of interest to disclose in this HHS prequalification application, how should I answer this question?
You should select “Not Applicable (N/A). I did not report any Conflict of Interest and/or Related Party Transactions in this prequalification application.” and input an explanation in the required comment box field.
What timeframe should I consider for the Compliance with Board Procedure Requirements question?
Please include responses relevant to the timeframe that starts with the fiscal year start date on the annual filings (CHAR500 and IRS Form 990) uploaded to the ‘Documents Tab’ on this HHS PQL Application and ends with the submission date of this HHS PQL Application.
What are the procedures outlined in the State Not-for-Profit Corporation Law Section 715-a(c)?
The Contractor must adopt a conflict of interest policy, and the board of directors must submit conflict of interest disclosure statements. The conflict of interest policy should include the following provisions:
(1) a definition of the circumstances that constitute a conflict of interest;
(2) procedures for disclosing a conflict of interest or possible conflict of interest to the board or to a committee of the board, and procedures for the board or committee to determine whether a conflict exists;
(3) a requirement that the person with the conflict of interest not be present at or participate in board or committee deliberation or vote on the matter giving rise to such conflict, provided that nothing in this section shall prohibit the board or a committee from requesting that the person with the conflict of interest present information as background or answer questions at a committee or board meeting prior to the commencement of deliberations or voting relating thereto;
(4) a prohibition against any attempt by the person with the conflict to influence improperly the deliberation or voting on the matter giving rise to such conflict;
(5) a requirement that the existence and resolution of the conflict be documented in the corporation's records, including in the minutes of any meeting at which the conflict was discussed or voted upon; and
(6) procedures for disclosing, addressing, and documenting related party transactions.
I do not understand the terms used in this question. Where can I find the definitions?
You can find the terms used in this question in the Citywide Conflict of Interest and Related Party Transactions Policy found on the MOCS Contract Compliance Support webpage.
If I answered “No” to this question, what additional information would I need to disclose?
You are required to provide an explanation as to why you did not comply with the State Not-for-Profit Corporation Law Section 715-a(c) required procedures for the transactions you reported within the HHS PQL application.
If I answered “Yes,” what additional information would I need to disclose for this question?
Date(s) of board deliberation and vote, documentation and/or minutes for each board action, description of the transaction, and conflict of interest disclosure statements disclosing any potential conflict. If you have multiple transactions to report, you must document them all.
Do I need to include all transaction discussions, denied and approved, by the board?
Yes. The question refers to all discussions pertaining to transactions that specifically involve related party transactions and/or conflict of interest.
Do I need to provide conflict of interest disclosure form statements for ALL board members?
Please only upload any conflict of interest disclosure statement relevant to the transactions reported in this HHS PQL Application. For example, if a director or officer was involved in a transaction with the Contractor reported in this HHS PQL Application, you must upload the annual disclosure statement(s) for that director or officer for the period of the transaction, which may span multiple years. This question enables nonprofits to quickly demonstrate that their directors and officers complied with the State Not-for-Profit Corporation Law. The form should be signed and dated.