Fordham Law Prof. Linda Sugin is quoted in a New York Times article discussing reports that a pro-Trump nonprofit had paid millions to companies with ties to its own leaders.
Federal law allows nonprofits like this one to hire insiders as long as they properly disclose the payments and ensure the insiders do not overcharge. Legal experts still advise against it because of the temptation for insiders to abuse their power over charity funds.
“You have an obligation to behave in the interest of that organization,” said Linda Sugin, a professor of nonprofit law at Fordham University. “The problem is, when you’re on both sides of the transaction, then we’re skeptical that you’re going to put the organization’s interests before your own.”
Ms. Sugin said the institute could have reduced its risk by soliciting bids from competing firms to gauge whether the insiders were charging market rates. The institute could have asked its leaders to recuse themselves from the decision to hire their own companies, she said.
Read “Pro-Trump Nonprofit Paid Millions to Companies Tied to Its Own Leaders” in The New York Times.