In the CZI case no - CZI can operate in the self interest of its members as an LLC if it is not a charity. Note that there is also the CZI Foundation (folks can

In the CZI case no - CZI can operate in the self interest of its members as an LLC if it is not a charity. Note that there is also the CZI Foundation (folks can get all this confused easily). For private foundations self dealing with disqualified people (directors / officers etc) is prohibited - even if the transaction is "fair". This is because it can be hard to say what is fair. But for public charities you can have self dealing transactions if they are "fair". This is where the problem is. By the time you have attorney's / appraisers etc involved - and you are paying all of them, there often is not someone in a position to challenge the results who cares about the transactions. And the IRS (which folks keep refering to here) is way WAY behind and this is bottom of their list stuff as they don't get much money from this (vs billions they could get elsewhere). This is not the case in all states. The IRS is way behind, but places like California have very active charitable oversight. In California you can go to the AG's office, tell them of the deal. They then have 2 years to complain or you can ask them to approve the deal in advance. If you DON'T request approval or give notice the AG's office has 10 years to sue you if they think the deal was unfair.