This article discusses some of the risks involved when a family member runs a charitable foundation. For example, when Jay Ruderman was appointed to serve as president of the Ruderman Family Foundation in Boston he could not imagine many of the responsibilities that would come with the position. For example, charitable foundations cannot give unfair advantages to family member employees or else they could face sanctions from the IRS. Foundations need to carefully deliberate when determining what to pay family members that are working for the organization. The pay needs to be comparable to what other similarly situated foundations pay their employees. People need to be careful about how they manage a family foundation to avoid getting in trouble.
See Paul Sullivan, When Family Members Run Foundations, Scrutiny Never Ends, The New York Times, September 11, 2015.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
