What type of activities constitute self-dealing by a nonprofit organization?

Self-dealing is when members of a nonprofit organization use its resources for personal gain. In New York, activities that constitute self-dealing include when an insider (e.g., board member, officer, director, etc.) buys property from the nonprofit at a price lower than market value, or when an insider enters into a transaction with the nonprofit that results in financial benefit to the insider. Self-dealing also occurs when an insider obtains a loan from the nonprofit, or when an insider provides services to the nonprofit and gets paid more than a comparable professional. Another type of self-dealing is when an insider diverts funds from the nonprofit to themselves or someone else. Self-dealing also extends to compensation. In New York, it is considered self-dealing when an insider receives excessive or unreasonable compensation from the nonprofit—meaning they receive more than is fair and equitable considering their duties and responsibilities. Lastly, if an insider uses their position to influence the nonprofit to enter into a transaction, and they will financially benefit from the transaction, this is also considered self-dealing. All self-dealing activities are considered illegal and punishable by law in New York. Thus, it is important that nonprofits take extra precautions to ensure that any transactions or services they enter into are not unfairly benefiting any insiders.

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What type of activities constitute self-dealing by a nonprofit organization?

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