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

Self-dealing by a nonprofit organization is any type of transaction between the nonprofit organization and its directors, officers, or trustees, in which they benefit financially or otherwise. Such activities are prohibited by California state law and may drastically affect the organization’s tax-exempt status. Examples of activities that constitute self-dealing are: 1. Paying a director, officer, or trustee more than fair market compensation for services rendered; 2. Selling or leasing property to a director, officer, or trustee at less than fair market value; 3. Borrowing money from a director, officer, or trustee and not paying the loan back; 4. Making a loan to a director, officer, or trustee; 5. Transferring organizational assets to a director, officer, or trustee without fair consideration; 6. Providing an organizational benefit to a director, officer, or trustee not available to the general public; 7. Entering into any contract with a director, officer, or trustee that presents a conflict of interest. Self-dealing activities are highly regulated in California and can result in serious consequences for the nonprofit organization, including the revocation of its tax-exempt status and the imposition of fines and penalties. It is important for all nonprofit organizations to be aware of the laws and regulations surrounding self-dealing to ensure compliance.

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

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