Private inurement certainly manifests itself in "protean" ways, but regardless of form, the prohibition against private inurement must be rendered consistent with the generally accepted notion that exempt entities are singularly distinguishable from taxable entities by the act of forbearance with respect to individual profit, since that is the distinction the prohibition was originally intended to enforce. Rendering the prohibition consistent with the single notion underlying the existence and theories of tax-exemption will resolve much of its elasticity, elusiveness, and long-lasting evolution. Such a result is necessary and good not only because of the imposition of personal liability under section 4958, but also because the effectiveness of the charitable delivery of goods and services is at stake. As a practical matter, the uncertainty inherent in a protean prohibition acts to discourage efficiency and ultimately harms charitable beneficiaries. Alternatively, the private inurement prohibition should be questioned and perhaps discarded. Determining whether the prohibition against private inurement is the necessary linchpin of tax-exemption will have the same resolving effect and will also allow the evolution of a more appropriate theory upon which exemption from tax ought to be granted.
Darryll K. Jones, The Scintilla of Individual Profit: In Search of Private Inurement and Excess Benefit, 19 VA. TAX REV. 575 (2000).