Q: can a non profit contract transport services of it's clients to it's CEO's medical transport company?
I own a medical transport company and about registering a non profit that is to provide services to teen mothers. I am wondering if I can contract all transportation activities to my private company. These activities include transport to and from doctor's appointments, meetings, seminars, therapy sections etc. The non profit will be a public non profit organization.
A: Sounds like an egregious conflict of interests. Why are you doing this?
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A:
You can contract transportation services from your medical transport company to the nonprofit, but you must be very careful to avoid any conflicts of interest. Since you are the CEO of the nonprofit and own the transport company, this relationship could raise concerns about self-dealing or improper benefit, which can jeopardize the nonprofit’s tax-exempt status. It is important that the contract is fair, reasonable, and made in the best interest of the nonprofit.
To protect both the nonprofit and yourself, you should ensure that the contract is approved by the nonprofit’s board of directors, with full disclosure of your interest in the transport company. The board should compare other potential service providers to ensure the rates and services offered by your company are competitive and beneficial for the nonprofit. This process should be well-documented to demonstrate that the decision was made impartially and with the nonprofit's mission in mind.
Additionally, it may be wise to seek legal guidance to ensure that the contract and the process meet all legal and ethical requirements, helping to maintain the integrity and public trust in your nonprofit organization.
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