Conflict of interest policy

1. Why we have this policy

Humanity Systems is a California nonprofit. Everything we do has to serve our public purpose, not the private interests of the people who run it.

This policy explains how we spot, disclose, and handle situations where someone’s personal interests could pull against the interests of Humanity Systems. It protects our donors, our mission, and the people who serve us. It adds to, and does not replace, the laws that apply to California nonprofit public benefit corporations.

2. Who this policy covers

This policy covers every director, every officer, every member of a committee that acts with power given by the board, and any staff member or contractor who has real influence over our decisions. In this policy, we call each of them a “covered person.”

3. What counts as a conflict of interest

A conflict of interest exists when a covered person, or a member of their family, has an interest that could affect, or could appear to affect, their judgment on a Humanity Systems decision.

A financial interest includes any of the following, held directly or indirectly:

• Owning part of, investing in, or being owed money by a business or person that Humanity Systems works with, buys from, sells to, partners with, or competes with.
• Being paid, or expecting to be paid, by that business or person, including as an employee, consultant, officer, or director.
• Any proposed deal, arrangement, or negotiation with Humanity Systems in which the covered person or their family stands to gain.

“Family” means a spouse or domestic partner, parents, children and their spouses, siblings and their spouses, and anyone living in the same household.

A conflict can also be non-financial, such as serving on the board of another organization that is seeking money or a partnership from us. Having an interest is not wrongdoing. Failing to disclose it is.

4. Disclosing a conflict

A covered person must tell the board, in writing, about any actual or possible conflict as soon as they become aware of it, and before the board or any committee discusses the matter. The disclosure must include all the facts the board needs to understand it.

When in doubt, disclose. The board, not the covered person, decides whether a conflict exists.

5. How the board decides

• After disclosing, the interested person may answer questions, then must leave the meeting while the matter is discussed and voted on.
• The remaining directors decide whether a conflict exists, by majority vote.
• If it does, the board may appoint a disinterested person or committee to look for alternatives that don’t involve a conflict.
• The board may approve the arrangement only if it finds, after a reasonable investigation, that the arrangement is fair and reasonable to Humanity Systems, is in our best interest, and that we could not get a better arrangement with reasonable effort.
• The interested person does not vote and is not counted toward the votes needed to approve it.

6. Self-dealing transactions

Any transaction in which a director has a material financial interest must be approved in advance by the board, following section 5 and California Corporations Code section 5233. The approval must happen with full knowledge of the material facts and the director’s interest, by a majority of the directors then in office, without counting the interested director’s vote.

7. Businesses owned by covered persons

Humanity Systems does not share money, staff, property, services, or confidential information with any business owned or controlled by a covered person, or their family, unless the arrangement is disclosed and approved under this policy and recorded in the minutes. No covered person may use their position to steer Humanity Systems toward, or to benefit, a business in which they have an interest.

8. Pay and compensation

• No one may vote on, or be present for the vote on, their own pay or the pay of a family member.
• Pay for directors, officers, and staff must be reasonable for the work done, based on what comparable organizations pay for comparable work, and approved in advance by disinterested directors.
• The data the board relied on, and the decision, are recorded in the minutes.

9. Who sits on the board

As California law requires, no more than 49 percent of the people serving on the board at any time may be “interested persons.” That includes anyone the corporation has paid for services in the past 12 months (other than reasonable pay as a director), and certain family members of those people.

10. Gifts

Covered persons may not accept gifts, meals, travel, or favors worth more than $100 in a year from any business or person that does business with, or wants to do business with, Humanity Systems, unless the board approves it in advance.

11. Records

The minutes of every board and committee meeting where a conflict comes up will record who disclosed what, what the board decided about whether a conflict existed, who left the room, what alternatives were considered, and how each director voted.

12. Annual statements

Every covered person signs a statement each year, and when they join, confirming that they have received, read, and understood this policy, agree to follow it, and listing any interests that could create a conflict.

13. Regular reviews

At least once a year, the board reviews pay arrangements and any dealings with businesses connected to covered persons. The goal is to confirm they are reasonable, serve our purpose, and do not create private benefit for anyone. The board may hire outside advisors to help, but the board stays responsible for the decisions.

14. Breaking this policy

If the board has reason to believe someone has failed to disclose a conflict, it will tell them and give them a chance to explain. If the board then finds that they broke this policy, it will take appropriate action, which can include removal from their role.

Annual disclosure statement

Each covered person completes this statement every year:

1. Name and role at Humanity Systems
2. Businesses or organizations in which you or your family own an interest, are paid, or serve as an officer or director
3. Any of those that do business with, seek money from, partner with, or compete with Humanity Systems
4. Any gifts received in the past year from someone who does or wants to do business with Humanity Systems
5. Your signature and the date, confirming you have read this policy, understand it, and agree to follow it