As a nonprofit charity, it’s natural to be worried about conflicts of interest; however, you don’t always have to be. In fact, certain instances are encouraged! In this week’s podcast, Alexander and Peter explain why.
Conflicts of interest implicate two main bodies of law—state and federal. On a federal level, it is of course vital to maintain the charitable organization’s tax-exempt status. When there is an event of a conflict of interest, the danger includes loss of tax-exempt status and excise taxes against the entity and potentially managers involved. When managed properly, however, conflicts of interest can be good for the organization and can help it flourish. It’s only when there is an excess benefit—compensation above what the organization receives compared to what it gives—that a conflict transaction is detrimental to the charity.
What is an excess benefit transaction? What are the penalties for coming across conflicts of interest that violate conflicts of interest laws? What are some tips to ensure that such incidences do not occur? How can you stay in the safe harbor? Listen to this week’s podcast to find out.