AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
Question Can a nonprofit sell excess equipment, like a computer or vehicle, to a staff member, without violating a conflict of interest policy? What are the requirements?
Answer The Board of Directors should decide on the matter as to the price and, assuming the staff members is not a relative of any member of the Board, then there is no conflict, as long as the sale is for fair market value.
If the Board can not handle the matter, but the CEO does, then there also will not be a conflict as long as the CEO is not related.
Some organizations have already adopted conflict of interest
policies and, certainly you would need to consult that document
also if it exists.
The IRS has published at
www.irs.gov/irm/part7/ch10s05.html#d0e92076
---Start of Excerpt--
Where an exempt organization engages in a transaction with an
insider and there is a purpose to benefit the insider rather than
the organization, inurement occurs even though the transaction
ultimately proves profitable for the exempt organization. The
test is not ultimate profit or loss but whether, at every stage
of the transaction, those controlling the organization guarded
its interests and dealt with related parties at arm's-length. See
Leon A. Beeghly Fund v. Commissioner, 35 T.C. 490 (1960).
(Inurement occurred when organization entered a transaction to
benefit the stockholders of a particular business corporation,
not to benefit the charity, even though corporation suffered no
financial loss.)
---End of Excerpt--
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
