Compensating Foundation Insiders

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Categories: Supporting Your Foundation

Search Topics: Compliance Foundation Management

When individuals devote time to foundation matters—whether as officers, directors, trustees, executive directors, employees, or professional service providers—they may expect to be fairly compensated for their time and effort. Unfortunately, because of a few bad actors, the issue of compensating insiders for their work on the foundation has become something of a lightning rod for controversy.

For those foundations that do compensate insiders (substantial contributors and their family members, among others), attention must be paid to make sure compensation is both “reasonable and necessary.” Failure to do so could expose the foundation, and possibly the compensated individual, to federal tax penalties—not to mention humiliating press coverage and public derision.

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