Legal Definitions - inurement

Definition: Inurement is a term that means "benefit." It refers to the actual benefit received, rather than the action that grants the benefit. For example, if a non-profit organization provides a benefit to an individual who has a close relationship with the organization, that would be considered inurement.

Examples:

• A non-profit organization provides a large salary and luxurious benefits to its CEO, who also happens to be the founder of the organization. This would be considered inurement because the CEO is receiving excessive benefits from the organization.
• A non-profit organization provides a scholarship to a student who is not related to anyone in the organization and who was selected based on merit. This would not be considered inurement because the benefit is not excessive and is being provided to someone who does not have a close relationship with the organization.

These examples illustrate how inurement can occur when a non-profit organization provides excessive benefits to individuals who have a close relationship with the organization. This is prohibited by the inurement prohibition and the nondistribution constraint, which are rules that non-profit organizations must follow in order to maintain their tax-exempt status.