May 30, 2002 | Read Time: 1 minute
Top 10 Ways Family Foundations Get Into Trouble, by Ellen Bryson and John A. Edie, points out areas of “murky and shifting ground” where family-foundation board members might run into legal problems. Most of the mistakes that family foundations make, say the authors, fall under the category of self-dealing—arrangements that provide financial benefit to the foundation’s donors, trustees, or staff members and that are typically considered illegal by the IRS. For example, a foundation that rents a building from a trustee could get into legal trouble. Other practices the authors advise family foundations to proceed with carefully include compensating board members, hiring family members as foundation employees, and making grants to individuals or to organizations that aren’t charities. Aside from listing common mistakes, the publication defines basic rules and guidelines that family foundations should follow and gives sources for additional information on each subject. Ms. Bryson is director of the council’s governing board programs department and Mr. Edie is senior vice president and general counsel.
