Self-Dealing Issues for Private Foundations That Co-Invest With Disqualified Persons

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Private foundations occasionally consider making investments in vehicles in which one or more of their disqualified persons (e.g., officers, directors, substantial contributors) also have invested or also are considering an investment. The investment often involves equity investments in closely held or non–publicly traded companies. The investment vehicles may include mutual funds, investment partnerships, corporate stocks or bonds, and so on.

This article addresses one key legal issue: whether the co-investment may violate the section 4941 self-dealing rules that apply to private foundations.

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