117: REFRESH Nonprofit Basics: Insider Transactions and Nonprofits

Welcome to EO Radio Show – Your Nonprofit Legal Resource. I'm Cynthia Rowland, and this is episode 117 of EO Radio Show. This episode is a "refresh" of episode 32, recorded in March 2023. It covers the Internal Revenue Code sections pertinent to business transactions between a nonprofit and its insiders, such as directors, executives, substantial contributors, and entities controlled by them. In the original episode, I also covered a general overview of California laws and reporting requirements that apply when such insider transactions occur.

This episode aims to give the listener a solid understanding of what constitutes a problematic insider transaction at a public charity or private foundation. We want listeners to understand the rules that apply to insider financial transactions so that nonprofit directors, trustees, and executives can carefully assess whether a proposed transaction is permissible before it happens and understand the penalties and other adverse consequences to the charitable organizations and their managers and insiders if the transaction is not allowed under the applicable laws.

Resources:

IRS Resources on Rebuttable Presumption for Compensation

IRS Form 4720 and Instructions

California Form RRF-1 and Instructions

EO Radio Show EP 34: Nonprofit Basics: Best Practices for Approving Insider Compensation Decisions

EO Radio Show EP: 33: Nonprofit Basics: Conflict of Interest Policies and Best Practices for Approving Insider Compensation

EO Radio Show EP. 22: Loot and Private Foundation Rules - Part 2

EO Radio Show EP. 21: Loot and Private Foundation Rules – Part 1

EO Radio Show EP. 5: Nonprofit Basics: Navigating the Complex Rules That Describe A Public Charity

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