Is This Self-Dealing? Three Questions to Ask

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Can a private foundation make a grant to an organization if a board member sits on the organization’s board? If a family foundation operates from a family office, can the foundation pay rent to the family business?

These situations and many similar ones relate to self-dealing, a type of transaction between a private foundation and its insiders that risks a severe penalty from the Internal Revenue Service. The self-dealing rules are known for being tricky and counterintuitive: Self-dealing can occur even when the foundation benefits—but three straightforward questions allow your foundation to determine what constitutes self-dealing.

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