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

Because of the legal issues involved, foundations should carefully consider whether foundation funds should be used to cover certain expenses. This is especially true where the foundation is considering paying travel and related expenses for children and other family members who are not currently board members or staff.

Accepting and using tickets and other tangible benefits of more than minimal value raises questions for foundation managers. Here's what the general Tax Code rules say is acceptable.