Public Disclosure
A key to ensuring that conversions benefit the public, and not just a few highly-placed officers, directors, and executives of the nonprofit, is to bring the discussions, financial data, and terms and conditions of each transaction out from behind closed doors and into the light of day. Full disclosure allows the public an opportunity to participate meaningfully in conversion proceedings, to learn the facts, to ask informed questions, and to demand that the public’s rights be protected. Public notice and access to all information is essential at the earliest stage of a conversion, not after the regulator’s decision, if any, has been made and the plans have been finalized. When the nonprofit’s board of trustees and state regulators communicate and share all information with the public from the outset, community concerns can be raised and properly addressed.
At every phase of a conversion, it is important that transaction documents be released for public inspection and review. As the intended beneficiary of the nonprofit’s assets, the public must have the opportunity to learn about the details of the transaction, to raise concerns, and to influence the process as it unfolds. Without access to information, the public is left in the dark about where the assets will go, how much they are worth, who will control them, and who will benefit from them. Community groups have convinced policymakers in the health care arena that public disclosure is essential when reviewing conversion transactions.
“Consumers Union’s Model Nonprofit Conversion Act” (PDF) requires that all documents submitted to the Attorney General become part of the public record. The National Association of Attorneys General (NAAG) agrees and has taken a strong position in favor of public disclosure in the “NAAG Model Act for Nonprofit Health Conversions.” (PDF) The model also requires that all documents submitted to an Attorney General must be made public. It was adopted by the National Association of Attorneys General through a resolution passed in July, 1998.
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