Tropical Real Estate Investors Association
To provide education, guidance and direction to those who are interested in investing in Real Estate.
To be active members of our community for the purpose of giving back and being a helping hand in its continual growth.
Code of Ethics
A Code of Tropical Real Estate Investors Association Ethics serves to strengthen the association’s image and enhance our role as a vital and respected part of our industry. Our code of ethics is applicable to your Board of Directors, general members, and for the most part, your vendors.
All members of Tropical REIA become members of National REIA; therefore, we hold our members to a high standard in business relationships with a Code of Ethics.
Among the general categories of ethical conflicts that are endemic to associations are accountability, conflict of interest and disclosure. Specific issues of interest are relationships between board members and the staff; board members and the organization (such as business relationships); self-dealing; the degree to which donations finance fundraising costs rather than programs; the accumulation of surpluses and the appropriateness of reimbursements, benefits, and perquisites.
Associations have a special obligation to their members to be accountable for the results of their activities. Organizations should continually challenge themselves by asking if the outcomes produced are worth the member’s investment.A board of directors has a special obligation to govern with integrity. Governing with integrity means that the organization recognizes its accountability to the membership. Accountability includes the concept that associations exist only to produce worthwhile results in furtherance of their missions.In addition, accountability encompasses a core system of values and beliefs regarding the treatment of members, vendors, community, and all that you affect. Yet, organizational survival needs too often undercut core values. Although everyone in the organization is responsible, it is the board’s ultimate responsibility to assure that its values are not compromised, and that the activities are conducted within acceptable limits.
A more subtle issue of accountability is seldom discussed when the organization will sometimes pursue grants and contracts, engage in direct solicitation campaigns, for the primary purpose of growing the organization. “Growing the organization” cannot be a primary measure of success for an organization. Boards have an obligation to ensure that all activities support the organization’s mission.
Conflict of Interest
A potential conflict of interest occurs any time organizational resources are directed to the private interests of a person or persons who have an influence over the decision. Examples might include the leasing of property owned by a relative of a board member, the board awarding itself a salary, the organization hiring a board member to provide legal representation or the hiring of a board member’s relative.
A conflict also can occur when the person (or persons) making a decision expects something
in exchange from the person in whose favor the decision is made. One example is the case in which a board member retains a printer, and the board member’s child gets a job with the printer shortly thereafter.
There is much disagreement within the nonprofit sector regarding how much disclosure is required. The first obligation of every organization is to obey the laws and regulations governing disclosure. Nonprofits have a legal and ethical obligation to report fundraising costs accurately on their IRS Form 990, to obey the requirement regarding what portion of the cost of attending a fundraising event is deductible, and to comply with state charitable registration laws and regulations. However, there are obviously no such regulations for a for profit organization.Nonprofits face a more difficult ethical issue when deciding how much disclosure to make that is not required by law, particularly if the organization believes that some people may not contribute if those disclosures are made.In the for-profit corporate world, the Securities and Exchange Commission demands full, written disclosure of pertinent information, no matter how negative, when companies are offering stock to the public. There is no comparable agency that regulates charitable solicitations by nonprofits. Nor is there any sort of regulation for those groups that operate as individual, non-stock-offering, for-profit organizations. Nonprofits must be very careful to disclose voluntarily all relevant information and to avoid the kind of hyperbole that misrepresents the organization.
Accumulation of Surplus
One national charitable watchdog agency, the Better Business Bureau’s Wise Giving Alliance, has suggested that a nonprofit’s unrestricted net assets available for use should be no more than three times the size of the past year’s expenses or three times the size of the current year’s budget, whichever is higher. In REIA organizations this is generally not a problem as few ever reach that amount of surplus.It is important that organizations conscientiously engage in discussions about ethics and values on a regular basis, recognizing that associations have a special obligation to uphold the very highest standards. Boards of directors have a pivotal role in this regard. Boards cannot play a more important role than ensuring that their associations are accountable, and that they operate as mission and value driven organizations.
There are eight areas where ethics need to be reviewed.
- Mission and Program
- Governing Board
- Conflicts of Interest
- Human Resources
- Financial and Legal Accountability
- Openness and Disclosure
- Public Policy and Public Affairs
There are several key pieces to an ethics policy. They include:
- HONESTY & INTEGRITY
An organization and its members should conduct business with honesty and integrity.
- COMPLIANCE WITH APPLICABLE LAWS, REGULATION & RULES
An organization and its members should seek to comply fully with all laws, regulations and rules applicable
- PROFESSIONALI SM
An organization and its members should conduct business in a fair and professional manner.
- CONFLICTS OF INTEREST
An organization should strive to avoid all conflicts of interest where possible.
If your association is a nonprofit there are other guidelines that apply as well.
The Accountable Nonprofit Organization
- Each nonprofit organization holds a public trust to improve the quality of life.
- The accountable organization clearly states its mission and purpose, articulates the needs of those being served, explains how its programs work, how much they cost and what benefits they produce.
- The accountable organization freely and accurately shares information about its governance, finances and operations. It is open and inclusive in its procedures, processes and programs consistent with its mission and purpose.
- The nonprofit organization is accountable to all those it exists to serve, to all those who support it, and to society.
- The accountable nonprofit organization is responsible for mission fulfillment, leadership on behalf of the public interest, stewardship and quality.
The accountable nonprofit is responsible for:
- Doing what it says it will do.
- Maintaining relevance by meeting needs in a changing environment.
Leader ship on behalf of the public interest
- Enhancing the well-being of communities and society.
- Educating the public, business, nonprofit organizations and government, including appropriate advocacy and lobbying.
- Maintaining effective governance and management.
- Generating adequate resources, managing resources effectively, supporting and recognizing volunteers, and appropriately compensating staff.
- Avoiding conflict of interest and abuse of power.
- Striving for and achieving excellence in all aspects of the organization.
- Evaluating the total organization and its outcomes on an ongoing basis.
An organization should strive to:
- Maintain the highest standards of business conduct by using only legal and ethical means in all business activity.
- Actively promote and encourage the highest level of integrity within our industry.
- Cooperate in every reasonable and proper way with other Association members and work with them in the advancement of our industry.
- Be fair and respectful to members, employees, vendors, the public, and all business or professional relationships.
- Adhere to honesty in advertising and in all representations to the public concerning our organization.
- Observe all state and federal laws and local regulations.
- Represent REIA, its positions, policies and members without rancor. Support the Association, and the industry, by participation and contributing to effective change.
- Be in agreement with REIA’ s Core Values and declare that it will make every effort to uphold this Code of Ethics.
Industry self-regulation and codes of ethics should avoid:
- Requiring refusal to deal with any member violating the association’s code of ethics.
- Arbitrary enforcement of the code.
- Unreasonably severe penalties for violation of the code.
- Regulations or policies which have price-fixing implications, such as preventing the advertising of prices.
For a REIA group the question of ethics within the membership is addressed in many ways. To make expectations clear from the outset a formal, written code of ethics should be distributed and signed by all members. This makes your policy clear and lets all members know your standard.
How that policy is enforced becomes the next issue. Many REIA groups establish an Ethics Committee to review and arbitrate ethics complaints between members.
The Ethics Committee is usually chaired by the President or another current Director. The responsibilities of this committee include but are not limited to:
- Developing and implementing procedures for ethics inquiries, hearings and remedies.
- Reviewing ethics concerns and providing recommendations to the Board based on the Code of Ethics.
- Reviewing Code of Ethics to ensure its content is relevant to a changing business environment.
- Maintaining an in-depth familiarity with the current By-Laws.
In regard to the ethics committee there are a few important points to keep in mind. You cannot act as if you are a private corporation and dismiss a member completely without cause. This is the reason for adoption and publication of your Code of Ethics. Think your choices through carefully as you develop this document. It will be your authority for dismissal. As soon as you have factual, documented information that a member has breached your Code of Ethics you have grounds for dismissal. The Code of Ethics is to be developed to ensure the standards of the group are preserved. The Code is for the betterment of the entire membership. The American Society of Association Executives says, “It is the obligation and power of the board to maintain the standards of the organization.” In this way the Ethics Committee plays a large part in maintaining the quality of the organization. They review complaints and make recommendations
to the Board for action or no action.
The committee should be very well rounded and comprise all aspects of your membership. For example, you may want to consider a current board member, at least one general member and possibly even a vendor member. The committee MUST be aware that their duty is to keep all matters absolutely confidential during the period of review and deliberation. When the decision is made the Board will be informed. However, each member of the committee should sign a document agreeing that all committee discussions are private in nature and no information should be discussed outside the committee meetings with any other members or even outside individuals.
A written policy should be established for dealing with ethics complaints. This policy should include items such as:
- All complaints should be in writing.
- The committee will address all written complaints in a timely manner.
- The committee will send a written response to the individual making the complaint that the issue is under review.
You may want to provide provision for temporary removal of membership until a final decision can be made.
- A written response should be sent to the individual under complaint. This letter should be drafted and forwarded to the Secretary of the Board for final written form and signature by the Secretary. A record of the complaint and a copy of any correspondence will be kept by the committee chair and the secretary.
- The Committee should investigate all areas of the complaint. Requesting additional information from the complainant and from the individual may be needed to reach a recommendation.
- A face-to-face meeting of the committee with the individual may be necessary. Request this in writing along with a timely date for the meeting.
- After the Committee has determined the level of the complaint and arrived at a recommended decision, the information is forwarded to the Board of Directors for a further discussion.
- After the Board has reviewed the issue and the Ethics Committee has made a recommendation, a letter should be sent to the individual by the Secretary of the Board with final results.
- Upon removal of membership, a copy of the final letter will be part of the membership file of that individual, a record will be kept in the database and a record should be included in the business records for that year.
You may choose to have a separate committee for vendor oversight. Many groups have a standing vendor committee that deals with all aspects of vendor membership. This committee often comprises both vendor and regular members. Some complaints against vendors may be resolved by a call from the Vendor chair. The Vendor chair may be able to solve any misunderstandings by simply having a conversation with both parities to sort out possible confusion. However, if the accused action is so egregious that a simply helping the parties sort it out is not appropriate the Vendor Chair can hand the complaint off to the Ethics Committee if he believes it is warranted. All information that the Vendor Chair has received should also be forwarded to the committee. Even if there are no actions taken on a single complaint against a vendor you may want to adopt a “ three strikes and you’re out” policy for your vendors. This would mean that if three formal complaints, from separate individuals are submitted against the same vendor, even if Ethics Committee action was not taken, they may be removed as a member.