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Self-Dealing
The origin of the rules against self-dealing for private foundations stems from the enactment of Section 4941 of the Internal Revenue Code as part of the Tax Reform Act of 1969. The self-dealing rules were just one of a series of prohibited actions initiated by Congress at that time to address negative activities by private foundations, and they allow the IRS to levy excise taxes on the foundation and (in some cases) on foundation managers when various prohibited activities occur.Whether the donor to a private foundation is an individual, a family, or a for-profit company, it is important to understand that once cash or other assets are gifted (or bequeathed) to a private foundation, those assets then belong to a separate legal entity that is subject to many restrictions. Said as plainly as possible: Its not your money anymore.
Learn more about the self-dealing rules and what foundations must do to ensure they are following the letter and the spirit of the law.
Materials
- Conflict of Interest and Self-Dealing Teleconference Series
Teleconference series discussing critical issues pertaining to conflict of interest and self-dealing rules. - Conflicts of Interest at Foundations: Avoiding the Bad and Managing the Good (PDF)
Outlines the law and factors related to conflict of interest and includes examples of situations that foundations regularly encounter. - Self-Dealing: A Concise Guide For Foundation Board and Staff (PDF)
An overview on the self-dealing law, including definitions, common problem areas, exceptions, penalties, and resources.
