---
title: "Check board pay and related-party dealings against the private-inurement and excess-benefit rules"
url: "https://ailawframework.com/practice/not-for-profit-charities-and-associations/draft-board-governance-materials-against-the-charity-standards/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A35-T1-R8-US"
practice_area: "Not-for-Profit, Charities & Associations"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Check board pay and related-party dealings against the private-inurement and excess-benefit rules

> Extract compensation, loans and other benefits to insiders from the minutes and the accounts into a table with the consideration the file records. Do not decide whether a benefit is excess.

Canonical page: https://ailawframework.com/practice/not-for-profit-charities-and-associations/draft-board-governance-materials-against-the-charity-standards/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Not-for-Profit, Charities & Associations](https://ailawframework.com/practice/not-for-profit-charities-and-associations.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | Extract compensation, loans and other benefits to insiders from the minutes and the accounts into a table with the consideration the file records. Do not decide whether a benefit is excess. |
| What the lawyer must review | Section 501(c)(3) requires that no part of net earnings inure to a private shareholder or individual. The IRS exemption page says an excess-benefit transaction with a person who has substantial influence can bring an excise tax on that person and on organisation managers who agree to it. Section 4958 imposes a tax equal to 25 percent of the excess benefit on the disqualified person, and a tax equal to 10 percent of the excess benefit on an organisation manager who knowingly participates, unless the participation is not wilful and is due to reasonable cause. If the excess benefit is not corrected within the taxable period, a further tax equal to 200 percent of the excess benefit is imposed on the disqualified person. An excess-benefit transaction is one in which the economic benefit provided to a disqualified person exceeds the value of the consideration, including services, received. You decide whether the transaction is an excess-benefit transaction and what the board must do. |
| Written for | United States |
| Applies to | [Draft board-governance materials against the charity standards](https://ailawframework.com/practice/not-for-profit-charities-and-associations/draft-board-governance-materials-against-the-charity-standards.md) |

## Checking plan

- What the AI does: Extract compensation, loans and other benefits to insiders from the minutes and the accounts into a table with the consideration the file records. Do not decide whether a benefit is excess.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Who is a disqualified person is defined in § 4958(f). Open that subsection before labelling a director or a major donor.
- Section 4958 also has special rules for donor-advised funds and supporting organisations. Those paragraphs were not applied here.

## Sources

- [26 U.S.C. § 4958, taxes on excess benefit transactions](https://www.law.cornell.edu/uscode/text/26/4958) (checked 2026-10-22)
- [26 U.S.C. § 501(c)(3), private inurement condition](https://www.law.cornell.edu/uscode/text/26/501) (checked 2026-10-22)
- [IRS: Exemption requirements, including excess-benefit transactions](https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations) (checked 2026-10-22)

## Forms and precedents for this task

| Form or precedent | Kind | AI level | Summary |
| --- | --- | --- | --- |
| [Section 501(c)(3) conflict of interest policy](https://ailawframework.com/precedents/not-for-profit-charities-and-associations/us-501c3-conflict-policy.md) | Policy | Yellow | A starting-point conflict of interest policy for an organisation described in section 501(c)(3). The IRS sample does not prescribe the terms. Adoption is not required for exemption. |
| [Board or committee resolution approving the ACNC Annual Information Statement and annual financial report, with reporting checklist](https://ailawframework.com/precedents/not-for-profit-charities-and-associations/board-resolution-approving-acnc-annual-information-statement.md) | Form | Yellow | Minute and resolution for a registered charity’s responsible persons approving the Annual Information Statement and financial report, confirming charity size and review or audit, authorising… |
| [Nonprofit board minutes checklist](https://ailawframework.com/precedents/not-for-profit-charities-and-associations/us-board-minutes.md) | Checklist | Yellow | Checklist for minutes of a section 501(c)(3) governing body, including the conflict records described in the IRS sample. No opened source prescribes an ordinary minute form. |

Signed-in accounts can read the full text of each one.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*