Can a Foundation Fund a Non-Profit Where a Family Member is Employed?

Yes, as long as the grant isn’t earmarked for their compensation. However, consider an example where the total operating budget of the non-profit is $250,000, of which $100,000 is their compensation, and you provide a $200,000 grant. You’re really getting into an indirect self- dealing possibility where, as a matter of fact, you are paying their salary and it’s unavoidable. This is an extreme example, but you’re going to want to be very careful if you’re providing substantial funding to an organization that employs a disqualified person.