# WHISTLEBLOWER AND FRAUD-REPORTING POLICY

**BAU Farm Foundation** — A North Carolina Nonprofit Corporation

*Draft — starter template. Review and adopt by the Board of Directors. Consult NC nonprofit counsel before execution.*

**Adopted:** __________, 20__
**Last reviewed:** __________, 20__

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## ARTICLE I — PURPOSE

**Section 1.1 Purpose.** BAU Farm Foundation (the "Foundation") requires its directors, officers, employees, volunteers, contractors, grantees, and other agents (collectively, "Covered Persons") to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. This Whistleblower and Fraud-Reporting Policy (the "Policy") is intended to:

1. encourage and enable Covered Persons and other stakeholders to raise serious concerns internally so that the Foundation can address and correct inappropriate conduct and actions;
2. protect Covered Persons from retaliation for reporting in good faith suspected violations of law, Foundation policy, or ethical standards; and
3. satisfy the requirements referenced by IRS Form 990, Part VI, Section B, Line 13 and the whistleblower provisions of the Sarbanes-Oxley Act (18 U.S.C. § 1513(e)) and the federal False Claims Act (31 U.S.C. § 3730(h)), each of which applies to tax-exempt organizations.

**Section 1.2 Scope.** This Policy applies to any suspected or actual violation involving the Foundation, including but not limited to:

- fraud, theft, embezzlement, or misappropriation of Foundation assets;
- accounting, internal-controls, or auditing irregularities;
- forgery, alteration, or falsification of documents or records;
- bribery, kickbacks, or improper gifts;
- violations of the Foundation's Conflict-of-Interest Policy;
- self-dealing, private inurement, or excess-benefit transactions under IRC §§ 4941 or 4958;
- unauthorized political campaign activity or excessive lobbying under IRC § 501(c)(3);
- violations of federal, state, or local law or regulation, including grant terms and charitable-solicitation requirements under N.C. Gen. Stat. Chapter 131F;
- workplace harassment, discrimination, or retaliation;
- endangerment of health, safety, or the environment; and
- any other serious breach of the Foundation's Bylaws, policies, or Code of Ethics.

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## ARTICLE II — REPORTING PROCEDURES

**Section 2.1 Duty to Report.** Every Covered Person has an affirmative duty to report, in good faith, any conduct they reasonably believe constitutes a violation described in Section 1.2. Reports may be made anonymously.

**Section 2.2 Reporting Channels.** A report ("Report") may be made through any of the following channels:

1. **Direct Supervisor or Executive Director** — for routine concerns not involving the person receiving the Report;
2. **Compliance Officer** — the officer designated by the Board under Section 3.1. Reports may be delivered by mail, email, or in person;
3. **Chair of the Finance and Audit Committee** — for concerns involving accounting, financial reporting, internal controls, auditing matters, or any officer or director;
4. **Chair of the Board** — for concerns involving the Executive Director or the Compliance Officer;
5. **Anonymous Intake** — via a dedicated email address, mailing address, or third-party hotline designated by the Board and published on the Foundation's website and in employee/volunteer onboarding materials.

**Section 2.3 Content of Report.** A Report should include, to the extent known:

- the nature of the suspected violation;
- the persons involved;
- relevant dates, locations, and amounts;
- supporting documents or witnesses; and
- the reporter's contact information (optional).

**Section 2.4 Good-Faith Requirement.** A Report must be made in good faith, meaning the reporter has reasonable grounds to believe the information disclosed indicates a violation. Reports made maliciously or with knowledge that they are false are not protected and may subject the reporter to disciplinary action, up to and including termination.

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## ARTICLE III — HANDLING OF REPORTS

**Section 3.1 Compliance Officer.** The Board shall designate a Compliance Officer, who shall initially be the **Secretary** of the Foundation. The Compliance Officer is responsible for receiving, logging, and coordinating investigation of Reports, and reports functionally to the Finance and Audit Committee for purposes of this Policy.

**Section 3.2 Acknowledgment.** The Compliance Officer (or the appropriate Committee Chair for Reports involving the Compliance Officer) shall acknowledge receipt of a non-anonymous Report within **five (5) business days**.

**Section 3.3 Investigation.**

1. All Reports shall be promptly investigated, with the scope and depth proportionate to the nature and severity of the allegation.
2. Reports involving financial, accounting, or auditing matters shall be referred to the Finance and Audit Committee.
3. Reports involving the Executive Director, an officer, a director, or the Compliance Officer shall be referred to the Chair of the Board or, if the Chair is implicated, to the Vice Chair, and investigated by a special committee of disinterested directors.
4. The Foundation may engage independent legal counsel, forensic accountants, or other outside experts as needed.
5. All persons involved in an investigation shall cooperate fully and truthfully.

**Section 3.4 Timing.** Investigations should be substantially completed within **sixty (60) days** of receipt of the Report, subject to extension by the Finance and Audit Committee for good cause documented in writing.

**Section 3.5 Corrective Action.** If a violation is substantiated, the Board or its designee shall take appropriate corrective action, which may include:

- disciplinary action up to and including termination or removal;
- recovery of misappropriated assets;
- restitution to affected parties;
- referral to law enforcement or regulators;
- self-reporting to the IRS on Form 990, Schedule L or Schedule O, or to the NC Department of the Secretary of State; and
- changes to internal controls, policies, or training.

**Section 3.6 Reporting to the Board.** The Compliance Officer shall provide the Finance and Audit Committee with a quarterly summary of all Reports received, investigations underway, and matters closed, redacted as needed to protect reporter identity. The Committee shall report material matters to the full Board.

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## ARTICLE IV — CONFIDENTIALITY

**Section 4.1 Reporter Confidentiality.** The Foundation shall treat the identity of a reporter as confidential to the maximum extent consistent with the need to conduct an adequate investigation and comply with applicable law. Identity will not be disclosed except: (a) as required by law or legal process; (b) as necessary to conduct the investigation; or (c) with the reporter's consent.

**Section 4.2 Investigation Records.** All Reports, investigation notes, interview records, and findings shall be maintained in a secure, access-controlled file by the Compliance Officer for at least **seven (7) years** from the date the matter is closed.

**Section 4.3 Anonymous Reports.** Anonymous Reports will be investigated to the extent practicable given the information provided. Anonymous reporters are encouraged to provide sufficient detail to enable meaningful investigation and, if possible, a means of follow-up contact.

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## ARTICLE V — NON-RETALIATION

**Section 5.1 Prohibition.** No Covered Person who, in good faith, makes a Report, participates in an investigation, or refuses to participate in conduct they reasonably believe violates law or Foundation policy shall be subject to retaliation. Prohibited retaliation includes, without limitation, termination, demotion, suspension, harassment, threats, discrimination in compensation or terms of employment, denial of volunteer opportunities, exclusion from Foundation activities, or any other materially adverse action.

**Section 5.2 Remedy.** A Covered Person who believes they have been subjected to retaliation in violation of this Policy may report the retaliation through any channel in Section 2.2. Substantiated retaliation is itself a violation of this Policy and shall result in disciplinary action, up to and including termination or removal.

**Section 5.3 Preservation of Legal Rights.** Nothing in this Policy limits a Covered Person's right to report suspected violations of law directly to any governmental agency, including the IRS, U.S. Department of Labor, Occupational Safety and Health Administration, Securities and Exchange Commission, NC Attorney General, or NC Department of the Secretary of State, or to participate in any government investigation, or to receive an award under any applicable whistleblower award program. The Foundation will not require any Covered Person to waive these rights as a condition of employment, volunteer service, or receipt of any benefit.

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## ARTICLE VI — FRAUD-SPECIFIC PROVISIONS

**Section 6.1 Definition of Fraud.** For purposes of this Policy, "fraud" means any intentional act of deception, misrepresentation, concealment, or abuse of position designed to obtain an unauthorized benefit — monetary or otherwise — for the actor or a third party, or to cause harm or loss to the Foundation.

**Section 6.2 Examples.** Fraud includes, but is not limited to:

- theft, embezzlement, or misappropriation of cash, property, grants, restricted funds, or donor contributions;
- falsification or destruction of financial records, grant reports, timesheets, expense reports, receipts, or donor acknowledgments;
- unauthorized use of Foundation credit cards, bank accounts, or vendor relationships;
- fictitious vendors, ghost employees, or duplicate payments;
- misuse of restricted grant funds or donor-restricted contributions;
- inflated or fabricated program metrics reported to funders;
- kickbacks from vendors, contractors, or grantees; and
- misuse of Foundation resources for personal or political benefit.

**Section 6.3 Preservation of Evidence.** Any Covered Person who suspects fraud shall not attempt to personally investigate, confront the suspected individual, or discuss the matter with anyone other than the persons identified in Section 2.2. Preserving evidence and maintaining confidentiality is critical to a successful investigation and any subsequent legal action.

**Section 6.4 Insurance and Recovery.** The Foundation shall maintain appropriate crime, fidelity-bond, and directors-and-officers liability coverage. The Board shall pursue civil and, where appropriate, criminal recovery of losses attributable to fraud.

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## ARTICLE VII — TRAINING AND DISTRIBUTION

**Section 7.1 Distribution.** This Policy shall be provided to every director, officer, employee, and regular volunteer upon appointment or hire and annually thereafter. Each such person shall acknowledge receipt in writing.

**Section 7.2 Training.** The Foundation shall provide, at least annually, training to directors, officers, and staff on this Policy, the Conflict-of-Interest Policy, and applicable federal and North Carolina requirements.

**Section 7.3 Publication.** A summary of this Policy and the anonymous reporting channels shall be published on the Foundation's public website and posted in any physical workplace.

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## ARTICLE VIII — REVIEW AND AMENDMENT

**Section 8.1 Review.** The Finance and Audit Committee shall review this Policy at least every **three (3) years** and recommend changes to the Board.

**Section 8.2 Amendment.** This Policy may be amended by the affirmative vote of a majority of directors then in office at any regular or special meeting, provided the proposed amendment has been provided in writing to all directors at least **fourteen (14) days** in advance. Amendments must remain consistent with the Foundation's Bylaws, Articles of Incorporation, IRC § 501(c)(3), and applicable federal and NC law.

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## CERTIFICATION

I certify that the foregoing Whistleblower and Fraud-Reporting Policy was adopted by the Board of Directors of BAU Farm Foundation on __________, 20__.


____________________________
**Secretary**, BAU Farm Foundation


____________________________
**Chair**, BAU Farm Foundation

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## APPENDIX A — REPORTING CONTACTS (to be completed upon adoption)

| Channel | Name | Contact |
|---|---|---|
| Compliance Officer (Secretary) | __________ | __________ |
| Chair, Finance and Audit Committee | __________ | __________ |
| Chair of the Board | __________ | __________ |
| Anonymous email | | __________@baufarmfoundation.org |
| Anonymous mail | | BAU Farm Foundation, Attn: Compliance — CONFIDENTIAL, __________, NC __________ |
| Third-party hotline (optional) | __________ | __________ |

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## APPENDIX B — ANNUAL ACKNOWLEDGMENT

I acknowledge that I have received, read, and understand the BAU Farm Foundation Whistleblower and Fraud-Reporting Policy. I agree to comply with its terms and to report in good faith any conduct I reasonably believe violates the Policy or applicable law.

Name: __________________________

Role: __________________________

Signature: __________________________

Date: __________________________