Many donors give to nonprofits via family foundations. There are times that this type of donation could pose a conflict of interest, which could eventually lead to ethical or legal issues down the line. Rob’s guest, Stephanie Yan, explains that this conflict of interest is known as “self-dealing.” She also explains how foundations can avoid finding themselves in this type of situation.
Stephanie is the Private Foundation Practice Leader of GHJ, a national advisory and accounting firm that provides a broad range of audit, accounting, tax, participations and advisory services to nonprofits, food and beverage, entertainment and media and health and wellness companies.
Stephanie explains what “self-dealing” is and the implications it can have on foundations and those involved within the foundation. She shares that this type of transaction can happen either intentionally or unintentionally, but that either way, the penalties for engaging in self-dealing can be quite impactful. Stephanie goes on to describe the seven types of transitions that the IRS considers as self-dealing, and offers specific examples of what it can look like in action. She offers ideas of internal processes and policies foundations can have in place, in order to avoid participating in self-dealing. Finally, Stephanie highlights the importance of hiring a CPA or attorney who has expertise and experience working with tax-exempt organizations.
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