Easily Identifiable Conversions

A Nonprofit is Sold to a For-Profit Corporation: This generally occurs when a nonprofit hospital sells all or a significant portion of its assets to a for-profit hospital or hospital system.

A Nonprofit Changes Itself to a For-Profit Corporation: A nonprofit organization’s management (the board, executives, and officers) reincorporates the nonprofit into a for-profit corporation. For example, Blue Cross of California changed from a nonprofit public benefit corporation to a publicly traded for-profit stock company and preserved 100% of the value of its assets in two nonprofit grantmaking foundations.

Other transactions may be more complex or occur in several stages over a period of time. Regulators and community groups must carefully scrutinize the structure and effects of these transactions to determine whether nonprofit assets, which belong to the public, have been converted to for-profit purposes or been diverted from the original mission of the nonprofit.