Nonprofit Private Inurement – When Can Insiders Benefit?

The main potential problem areas for nonprofits regarding private inurement are: 1) Compensation agreements for executive employees or trustees; 2) Business relationships with entities in which an organization insider or insider’s family member has an interest; and 3) Benefits paid to an insider or a member of the insider’s family as a member of the charitable class the organization serves. Fortunately, there are steps that non-profits can take to ensure these improper benefits do not occur.