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Nonprofit Law/Obtaining a Credit Card for a Non-Profit


A trustee of a non-profit foundation would like to apply for a credit card to use for gifting to charities that accept credit cards.  The trustee is doing this to gain airmiles for personal use.  Is this a conflict of interest?

  A conflict of interest is present whenever a director, and in
some states an officer) or a close relative of that person has a
material personal interest in a proposed contract or transaction to
which the 501(c)(3) organization may be a party. Some conflicts do
not result in any illegality. We would need to look at the
decisions of the organization or the Directors to decide if their
actions are illegal. This forum is only for federal tax questions
regarding 501(c)(3) public charities as I have explained in my

The IRS has published at
---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.
---End of Excerpt--

It is not in the Foundation's interest to make grants to charities via credit card payments.  In fact, as the charities will need to pay some credit card fees, it would be inimical to the purpose of the Foundation to use a credit card as then less aid results. From what you wrote, therefore, the proposed transaction would be for the benefit of the trustee and prohibited.

Generally, under state law, the interested director should
disclose to the Board the particular conflicts annually and before
any vote and then should not vote in the matter, but
I suggest you check your particular state's law as to the details.
is the Washington legislature's publication of the Washington
Nonprofit Corporation Act which you can look at if the organization is a Washington Nonprofit Corporation.

Harvey Mechanic
Attorney at Law

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.

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Harvey Mechanic


I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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