Is it legal for members of the same household to have a controlling or equal share of the Board of a 501(c)(3) nonprofit organization?
There is no IRS prohibition on such control, although the Service is always concerned about improper self-dealing when a family group controls a charity. Some state nonprofit corporation laws have requirements for a certain amount of independence on the Board, but that is not a universal requirement. If your organization is a corporation, check your state nonprofit corporation law.
The new Form 990 asks questions about family and business relationships among board members so they will need to be disclosed on the Form. (See Ready Reference Page: "New 'Core Form' 990 Presents Revised Look for Nonprofit finances.")
Monday, September 13, 2010