This is a direct quote from the State Ethics Commission guidance on improper activity:
Example of violation : An employee of the Massachusetts Cultural Council is also the director of a non-profit corporation dedicated to increasing art in public spaces. The non-profit applies to the Council for a grant, and the employee participates in rating the applications received for that grant.
Now let's fill in the blanks in Melrose's case:
Example of a violation: City of Melrose employees are also on the Board of MEF (Melrose Education Foundation). The non-profit(MEF) receives a non-competitive grant of taxpayer funds from the City's Human Resources budget and City Employees on the board of MEF participate in determining who receives grant funds, as well as controlling disbursement of those funds.