TLG Managing Partner Jeff Tenenbaum Quoted in LA Times Article About a Reported Federal Investigation of Nonprofits Controlled by CA Governor Gavin Newson’s Wife Jennifer Siebel Newsom

TLG Managing Partner Jeff Tenenbaum was quoted in a Los Angeles Times article about a reported federal investigation into nonprofits controlled by California Governor Gavin Newson’s wife Jennifer Siebel Newsom.

“Jeff Tenenbaum, a nonprofit attorney with 30 years of experience advising nonprofit, tax-exempt organizations, declined to comment on Siebel Newsom’s specific case. But generally, he explained the legal framework that would apply to an arrangement like the one described in the filings.

Under federal tax-exempt organization law, he said, the “private benefit doctrine” governs whether a nonprofit’s overall activities unduly benefit any single individual — including through indirect payments to entities they own. The tax law asks whether too much benefit flows to one person or entity.

This is separate and distinct from the “private inurement” doctrine, which prohibits nonprofits from paying greater-than-fair market value compensation to insiders, including founders, and which requires that such compensation arrangements be approved by individuals with no conflicts of interest.

“Theoretically, a situation like this could raise some private benefit concerns,” Tenenbaum said, when the structure of the arrangement was described to him.

The doctrine does not prohibit all private benefit, he said, only what the federal tax code calls “impermissible” private benefit.

“There has to be too much benefit compared to the benefit to the public,” he said. Whether that threshold is crossed here, he said, would require a fuller review of the organization’s finances, contracts, and other considerations, including copyright ownership issues relating to the films produced.”