Conflict of Interest Policy

Article I — Purpose

The purpose of this Conflict of Interest Policy is to protect the integrity of Science and Freedom for Everyone Foundation (the "Organization") when it is contemplating entering into a transaction or arrangement that could result in private benefit or excess benefit transactions of an officer, director, or key employee of the Organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations.

Article II — Definitions

Section 2.1. Interested Person

Any person who has responsibilities, powers, or influence over the Organization as a whole that is similar to those of an officer, director, or trustee.

Section 2.2. Financial Interest

A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:

1. An ownership or investment interest in any entity with which the Organization has a transaction or arrangement;
2. A compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement; or
3. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement.

Section 2.3. Restriction on Interested Persons

Pursuant to California Corporations Code § 5227, at no time shall more than 49 percent of the persons serving on the Board of Directors be "interested persons." For purposes of this section, an "interested person" is (a) any person currently being compensated by the Organization for services rendered to it within the previous 12 months, whether as a full-time or part-time employee, independent contractor, or otherwise; and (b) any family member (spouse, ancestor, descendant, or in-law) of such person.

A financial interest is not necessarily a conflict of interest. Under Article III, Section 3.2, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.

Article III — Procedures

Section 3.1. Duty to Disclose

In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board delegated powers considering the proposed transaction or arrangement.

Section 3.2. Determining Whether a Conflict of Interest Exists

After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.

Section 3.3. Procedures for Addressing the Conflict of Interest

(a) Presentation and Recusal: An interested person may make a presentation at the governing board or committee meeting regarding the transaction or arrangement. However, after the presentation, the interested person must leave the meeting during the discussion of, and the vote on, the transaction. Their presence shall not be counted for the purpose of a quorum for that specific vote.

(b) Investigation of Alternatives: The chairperson shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction.

(c) Exercise of Due Diligence: The Board or committee shall exercise due diligence to determine whether the Foundation can obtain a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest, provided such an alternative is available through reasonable efforts.

(d) Final Determination and Board Action: If a more advantageous, conflict-free arrangement is not reasonably possible, the Board shall determine by a majority vote of the directors then in office (excluding the vote of any interested director) whether:

1. The transaction is in the Foundation's best interest and for its own benefit;
2. The transaction is fair and reasonable to the Foundation; and
3. The Foundation is entering into the transaction for its own advantage rather than for the benefit of the interested person.

Section 3.4. Violations of the Conflicts of Interest Policy

If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.

If, after hearing the member's response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

Article IV — Records of Proceedings

The minutes of the governing board and all committees with board delegated powers shall contain:

• The names of the persons who disclosed or otherwise were found to have a financial interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing board's decision as to whether a conflict of interest in fact existed.
• The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken.

Article V — Compensation

Section 5.1. A voting member of the governing board who receives compensation, directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member's compensation. The Board must document the basis for the compensation, including data from comparable organizations, to ensure the arrangement is fair and reasonable to the Organization.

Section 5.2. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation from the Organization is precluded from voting on matters pertaining to that member's compensation.

Article VI — Annual Statements

Each director, principal officer, and member of a committee with governing board delegated powers shall annually sign a statement which affirms such person:

1. Has received a copy of this Conflict of Interest Policy;
2. Has read and understands the policy;
3. Has agreed to comply with the policy; and
4. Understands the Organization is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.

Article VII — Periodic Reviews

To ensure the Organization operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include:

• Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm's length bargaining; and
• Whether partnerships, joint ventures, and arrangements with management organizations conform to the Organization's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes, and do not result in inurement, impermissible private benefit, or in an excess benefit transaction.

Article VIII — Use of Outside Experts

When conducting the periodic reviews as provided for in Article VII, the Organization may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.