Compensating Private Foundation InsidersCompensating Private Foundation Insiders

The level of compensation paid by exempt organizations to their insiders has been under Internal Revenue Service scrutiny for some time now. The IRS often conducts audit checks, randomly sending out inquiries regarding an exempt organization’s compensation practices, and unsurprisingly, it’s an area that can provoke a great deal of unwanted media attention. If the IRS finds that a private foundation (PF) is paying an unreasonable amount of compensation, reputational damage could result and the PF, as well as its officers and board members, could be subject to penalties. Consequently, it’s imperative that your clients who are PF board members understand and comply with the compensation rules.

In our experience, many individuals who provide...