Does anyone know or have an opinion whether the following violate private benefit or inurement rules.
A member of our board works for a company that donates money to our nonprofit. In return we promote this arragements though our newsletters, etc. The board member is paid(by the company) a commision and our PTO only receives money based on his sales.
Any help is greatly appreciated.

certainly sounds like a gray area, at best, jjant. What does your board think? We have it in our bylaws that our PTO won't do business with a board member. I could see a case where this wasn't a big deal, but you guys have to decide whether it's a good practice.

It is only my opinion but if this company is donating to your PTO then regardless of what happens at the company (who gets paid what), that it is just fine. If your PTO is benefitting then that is what counts. We often have companies that donate and yes we have board members who work for them. And we also give these generous companies advertising every chance we get. I wouldn't worry about it, unless you have to use PTO funds for this. If what you receive is based on this person's sales then by all means go with it...It is basically no different than participating in Target's Take Charge Program, Target makes big bucks on us for using their credit card and they in return send us a small check every now and then and we do advertise for them to promote their sales. What you are doing is keeping it local and that seems good for everyone:)

Thanks for your reply's so far. I'm concerned because the IRS has rules that prohibit "disqualified person" - those on the board from benefiting from a 501 (c) 3. Unfortunately, the code is gray on fundraising. It just says "net earnings" of a 501 (c) 3 can't benefit an insider. In addition, our board advertises this one more than any other fundraiser/sponsor.
thanks

Like your points Chrystal, but we are pretty strict. For example, we wouldn't have an Avon fundraiser if the Avon lady was on our board. I know the Board member would be looking out for us, but we just wouldn't want the bad appearance. I also wouldn't do Target if a Board member was getting commission as well as our PTO. There's always people looking to make a stink, why give em any ammunition?