Self-Dealing

Section 501(c)(3) organizations are prohibited from engaging in activities that result in “inurement” of the organizations earnings to insiders, such as founders, directors and officers. The essence of inurement is that a person in a position to influence the decisions of an organization receives disproportionate benefits. Find questions and answers on common self-dealing snares such as sharing office equipment, employees and receiving free tickets and other tangible gifts.

In-Depth knowledge on Self-Dealing

With Congress and the media focusing on corporate governance and foundation administration, it is a good time to make sure that all grantmakers have a strong conflict of interest policy in place. Both private foundations and public charities (such as community foundations) should have clear guidelines on financial or other interests that must be disclosed and transactions that must be scrutinized or avoided. The policy should cover both board members and foundation staff. A robust conflicts policy can not only help a grantmaker stay on the right side of the law but can also keep the organization from engaging in behavior that gives even the appearance of conflict.

Why do Council on Foundations membership materials and invoices state that if my foundation and corporate giving program share a membership, dues must be paid by the corporation? Is this true for other memberships as well?

How should the company foundation's grants and activities fit into the sponsoring company's efforts to develop strong relationships with government officials? Is it self-dealing for company lobbyists to mention the good works of the foundation? May foundation employees lobby legislators? Should foundation grantees play a role in promoting the interests of the sponsoring corporation?