Paying compensation or reimbursing of expenses by a private foundation to a disqualified person (except for a government official) for personal services that are reasonable and necessary to carry out the exempt purpose of the private foundation is not considered an act of self-dealing if the compensation or reimbursement is not excessive. Personal services include the services of a broker serving as the foundation's agent, but not the services of a dealer buying from the foundation as a principal and reselling to a third party. Furthermore, if a foundation makes a cash advance to a foundation manager or employee to cover anticipated out-of-pocket expenses, it is not an act of self-dealing if the advance is reasonable in relation to the duties and expense requirements of the foundation manager. An advance ordinarily is considered reasonable if it is not more than $500. For example, if a foundation makes an advance to a foundation manager to cover anticipated out-of-pocket current expenses for a reasonable period (such as a month) and the manager accounts to the foundation under a periodic reimbursement program for actual expenses incurred, the foundation is not considered to have engaged in an act of self-dealing: When it makes the advance, When it replenishes the fund upon receipt of supporting vouchers from the manager, or If it temporarily adds to the advance to cover unusual expenses expected to be incurred in carrying out a special assignment. Return to Life Cycle of a Private Foundation
