Indirect Self-Dealing: Private Foundation grants to Intermediaries


A grant by a private foundation to another organization controlled by the foundation, coupled with a transaction between the organization and a disqualified person with respect to the foundation, may be indirect self-dealing. In addition, contributions to public charities that are earmarked for the use of a disqualified person may be indirect self-dealing.

However, the term indirect self-dealing does not include a transaction between a government official and an intermediary organization that receives a grant from a private foundation if:

  • The private foundation does not control the organization;
  • The private foundation does not earmark the use of the grant for any named government official; and
  • No agreement exists, oral or written, whereby the grantor foundation may cause the selection of the government official by the intermediary organization.

A grant by a foundation is earmarked if the grant is made under an oral or written agreement that the grant will be used by any named individual. A grant by a private foundation will not be an indirect act of self-dealing even though the foundation had reason to believe that certain government officials would receive benefits from the grant as long as the intermediary organization controls the selection process and makes the selection independent of the private foundation.

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