What are the rules for donors, family members, and staff of family foundations in terms of accepting tickets to events?

This month we are pleased to feature answers to two of the many questions asked during our December 2014 webinar with Andrew Schulz of Arabella Advisors, titled Toeing the line: Addressing common legal pitfalls in family foundation governance. To view a complete collection of Andrew’s answers on a variety of governance matters, please visit the Ask the Center section of the NCFP Knowledge Center (login required).

When it is suggested that the executive director and board chair attend an event, does that mean that it is not justified for additional board members or family members to attend?

Certainly, more than two people can attend an event. The number of people who can attend varies. They all need to have a good foundation reason for being there. Family members and staff who do not have work to do on behalf of the foundation cannot go to the event. But, the entire board could go if it is a 10- person table, for example. Just be very cautious about when people without foundation work go to attend an event. That should not happen.

In terms of family members, if it’s clear that they are going for legitimate foundation reasons, that’s fine, they can go. But if you have questions or think that it may be a violation of the law, you instincts are probably correct and you just have to tell them they can’t.

A nonprofit has an exhibition that includes invitation-only receptions and preview parties. Individuals must become “sponsors” at a certain dollar level in order to attend these receptions and preview parties. A donor makes a grant to the nonprofit through their foundation that is equal to the sponsorship level. May the donor accept free tickets to these receptions and parties if the nonprofit mails them or offers them after receiving the grant?

This is really on the line between personal benefit and legitimate foundation business. If there isn’t a justification for the foundation to make the grant, you really shouldn’t use it for this purpose. For instance, if you are an education organization and this is the only grant you make to an arts organization, you should consider if it furthers your mission. If not, you should pay for it out of your own pocket.

But if it’s the type of organization the foundation would support, and you make that grant, and there’s a legitimate reason for being there, you can go. But this is an area that sounds like it’s starting to push that line