What is private inurement and why should social enterprises be concerned about it?
(1) From Rupert Ayton Private inurement relates to a couple of things. First, did the board of the non-profit do its research into the market price/value, and second, was the transaction struck at market. If the deal is a franchise deal just like any other franchise deal, it’s market. The rule of thumb is to have the board review and document everything well ahead of time. [Posted 1/20/05] (2) From Allen R. Bromberger To qualify for exemption under Section 501(c)(3) of the Internal Revenue Code, organizations have to be organized and operated “exclusively” for exempt purposes, and no part of their income or assets may be used for the private benefit of any individual. “exclusively” is defined in Treasury regulations to mean “primarily. “Therefore, whenever a charity acts in a way that serves to further the private interests of individuals or businesses rather than the legitimate interests of the charity, its tax status may be in jeopardy. The obvious and most significant qualifier is t
