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Charities May Not Confer Private Benefits

Charities May Not Confer Private Benefits

Charities May Not Confer Private Benefits

An organization will not qualify for charitable exemption if it provides private benefit which is not quantitatively and qualitatively incidental to the public benefit of its activities.

Section 501(c)(3) of the Internal Revenue Code provides that an organization can not be recognized as charitable if any part of its net earnings “inures to the benefit of any private shareholder or individual.”

This prohibition on private inurement is generally interpreted to prohibit unjust or unreasonable monetary gain by insiders, such as officers, directors or members of the organization.

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