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Recognizing a conversion
A conversion occurs when a nonprofit corporation transfers some or all of the control of its nonprofit assets to a for-profit corporation or to another nonprofit with a different purpose and mission. See the Consumers Union’s Model Conversion Act (PDF) for more essential definitions. A health corporation’s assets can include everything from its building, furniture and equipment to its trademarks and patient lists. Conversion transactions include sales or leases of assets, joint ventures, mergers, affiliations, acquisitions, mutualizations, the formation of for-profit subsidiaries and holding companies, or other deals that effectively transform the nonprofit into a for-profit corporation. In these transactions, which are explained in the sections below, assets are changed from nonprofit to for-profit purposes.
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