Preserving Assets

A conversion- turning a nonprofit organization into a for-profit business- can have a tremendous impact on community assets and resources. A nonprofit operates in the public interest and for the benefit of the community it is organized to serve. Conversion transaction players mindful of the potential loss of such services can preserve these community benefits. This can be done by the creation of a new foundation that holds the former nonprofit’s assets for the benefit of the community. Or, a community can decide to create and permanently fund a new nonprofit, such as a clinic or revolving student loan fund, with these assets. If a conversion neglects to protect the public’s interest, it can result in the loss of millions, if not billions, of dollars that would otherwise have been available for community resources such as indigent health care services, adult literacy programs, day care facilities, and job training centers. Consumer advocates, regulators, lawmakers, the media, the courts, and those in the nonprofit sector must be diligent in order to ensure that the nonprofit’s resources are protected for the public’s benefit when a conversion occurs.