Exceptions - Self-Dealing by Private Foundations: Paying compensation or reimbursing expenses by a private foundation to a disqualified person
Paying compensation or reimbursing of expenses by a private foundation to a disqualified person (except for a government official) for personal services that are reasonable and necessary to carry out the exempt purpose of the private foundation is not considered an act of self-dealing if the compensation or reimbursement is not excessive.
Personal services include the services of a broker serving as the foundation's agent, but not the services of a dealer buying from the foundation as a principal and reselling to a third party.
Furthermore, if a foundation makes a cash advance to a foundation manager or employee to cover anticipated out-of-pocket expenses, it is not an act of self-dealing if the advance is reasonable in relation to the duties and expense requirements of the foundation manager. An advance ordinarily is considered reasonable if it is not more than $500.
For example, if a foundation makes an advance to a foundation manager to cover anticipated out-of-pocket current expenses for a reasonable period (such as a month) and the manager accounts to the foundation under a periodic reimbursement program for actual expenses incurred, the foundation is not considered to have engaged in an act of self-dealing:
- When it makes the advance,
- When it replenishes the fund upon receipt of supporting vouchers from the manager, or
- If it temporarily adds to the advance to cover unusual expenses expected to be incurred in carrying out a special assignment.