Is it self-dealing for our private foundation to invest in the same funds as our board members?

Private foundations, or PFs, occasionally consider making investments in vehicles in which one or more of their disqualified persons, or DPs (e.g., officers, directors, substantial contributors) also have invested or also are considering an investment.

A handful of IRS private letter rulings address the issue of co-investment and self-dealing, allowing us to extract the key factors that the IRS considers in analyzing a co-investment.

For example, to avoid self-dealing, the amount the DP pays in fees and costs should not be reduced because of the PF’s participation in the co-investment.

You can read more in this article written for Exponent Philanthropy by attorney Ingrid Mittermaier.

If your foundation is interested in securing legal services, consider Exponent Philanthropy’s SignaturePLUS membership level, which includes up to 10 hours of legal services.

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