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

Self-dealing is an activity that occurs when a nonprofit organization’s insiders, such as directors, officers, or trustees, use the organization’s property or assets for their own personal gain, or to benefit family members or other close associates. In New York, such activity is prohibited under the state’s Not-For-Profit Corporation Law. Common examples of self-dealing by a nonprofit organization include the following activities: • Making payments to the organization’s insiders for services they did not provide • Selling property to or from the organization at a discount or for more than its fair market value • Providing services, benefits, or loans to the organization’s insiders • Using the organization’s assets for personal use, such as a vacation home for the benefit of insiders or use of the organization’s vehicle for personal travel • Paying generous salaries or bonuses to the organization’s insiders. Additionally, self-dealing applies to any transaction in which a nonprofit organization engages in business with a related person. This means that if the organization enters into a contract or deals with a person who has any familial, business, or financial ties to the organization’s insiders, the transaction may be considered self-dealing. If the nonprofit organization’s board of directors become aware of self-dealing occurring within the organization, they must take prompt and corrective action. It is important for directors to ensure that all transactions are conducted in accordance with the Not-For-Profit Corporation Law and all other applicable state and federal laws.

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

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