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May corporate foundation provide marketing information to creator?

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May corporate foundation provide marketing information to creator?

The corporation that created and funds our corporate private foundation has asked us to provide names of organizations that work with a specific part of the population for which they are developing a new product. They are particularly interested in names of organizations that we have funded to help that population.  Do we take on any legal exposure by providing that information?  

A private foundation may not provide goods or services to a disqualified person, except under the same circumstances as those goods or services are available to the general public.  The corporation that created and funded your foundation is a disqualified person with respect to your foundation.  If you publish a book, you can sell it to the corporation for the public price, but it is a self-dealing transaction if give them a copy.  (See Ready Reference Page: “Private Foundations Must Avoid Self-Dealing”)

Here, if you don’t normally supply marketing research to people, it would be an act of self-dealing to give them this kind of information.  You are essentially doing their market research for them, which constitutes a use of foundation resources for their personal benefit and an act of self-dealing.  Even if you charged them for it, it would be self-dealing if you don’t provide that service to anyone else at the same price. 

Ironically, they can read the grantee list on your Form 990-PF and do their own research to see which grantees work with this population.  They don’t have to ask you to do their work for them.  But if you give it to them, they and your managers could be liable for self-dealing taxes.

Tuesday, September 11, 2018


Important to determine if a D&O policy covers these "self dealing taxes" Some do others don't.

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