Creating Supporting Organizations: An Option for Conversion Foundations

Across the country, nonprofit health care organizations are converting to for-profit status. When this happens, the converting nonprofit organization is legally required to ensure that its charitable assets continue to be used in the nonprofit sector. It cannot give its assets to the new for-profit without violating the law. Neither the for-profit corporation, its owners, executives, staff, nor its board members, can benefit from the nonprofit's assets. In many states, the best way to preserve charitable assets in the nonprofit sector is to create a new and independent foundation that can continue the charitable health purposes of the former nonprofit healthcare organization.