EXECUTIVE DIRECTOR’ S REPORT
EXECUTIVE DIRECTOR’ S REPORT
MITCHELL C. SKLAR
Rules of the Road for Use of Association Funds
Perhaps the number one question I am asked is about the Association’ s legal aid rules that govern the use of association funds in terms of Legal Aid.
As a general matter, members can( and of course quite often do) contact me or our Legal Aid Chairman with questions or seeking input or advice. If the question of request cannot be handled at the State Office or Legal Aid Committee level, the member Chief will be referred to the Association’ s outside General Counsel for a telephone consultation. These are for more or less routine or frequently occurring type issues.
On many occasions, the issue facing the chief is one that has broad or widespread application to the membership at large, touching on an issue or circumstance that might realistically impact a large segment of the membership. In those cases, there is no legal bar to the use of association resources( generally in the form of payment to our attorneys).
The tricky situation occurs when the issue at hand is much more in the nature of a personal matter between the member and their local officials( or other parties). For instance, contract negotiations or other such matters that does not actually have a realistic impact on the membership at large.
The Temptation
In the not-for-profit, professional membership association world, it is a familiar scenario: a loyal member asks to use the association’ s resources to help with a problem that, while it may pertain to their professional life, is specific and personal to them. Such a gesture may seem harmless, even generous. But in the world of not-for-profits, they can spell trouble.
The Internal Revenue Service( IRS) has clear rules: the resources of a tax-exempt association exist to serve the organization’ s mission and membership as a whole— not to enrich one member or insider.
The Line Between Service and Self-Interest
The New Jersey Police Chief Magazine | September 2025
Nonprofits are expected to create broad benefits: education, advocacy, professional development, or community service. When resources are diverted for individual use, two legal doctrines come into play:
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Private Inurement: Benefits directed to insiders— officers, directors, or key employees. Even one instance can jeopardize exempt status. Private Benefit: A broader rule. If a regular member, or even a non-member, receives more than an incidental advantage from the association’ s assets, the organization is offsides.
Think of it this way: if the benefit serves just one person more than it serves the group, it is a problem. Real-World Examples
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Covering a member’ s personal expenses( like legal bills or family travel). |
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Allowing a member to use office space, staff time, or equipment for private business. |
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