Can a non-profit switch to become a for-profit company?
If so, how difficult is that process?
Observing members:
0
Composing members:
0
5 Answers
Yes, I think that some, at least, of the Blue Cross-Blue Shield companies have gone from being non-profits to for-profit companies.
Edit: From the Wikipedia article:
Prior to the Tax Reform Act of 1986, organizations administering Blue Cross Blue Shield were tax exempt under 501©(4) as social welfare plans. However, the Tax Reform Act of 1986 revoked that exemption because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation but entitled to “special tax benefits”[9] under IRC 833. In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations.[5] Some plans[specify] are still considered not-for-profit at the state level.
So it is possible. I just don’t know under what circumstance and what the process would be.
Well you could participate in lobbying, or not file your 990 form for 3 years…
I think it’s an easier process than receiving tax-exempt status, but you probably need to consult with a lawyer who specializes in non-profits. Or perhaps you have a local organization whose mission is to assist small businesses (like SCORE)?
Response moderated (Unhelpful)
Yes, easily. A non-profit has regulations that they must put a certain amount of their revenue into the project they are working with. Some non-profits put as little as 1% or so in, and expense out the rest. If zero money goes to the project/charity they become a profit making company.
In the UK, organisations are free to switch between incorporation models whenever they like. It usually also involves a great deal of paperwork and getting their accounts in order, so it’s not something to be taken lightly.
Answer this question
This question is in the General Section. Responses must be helpful and on-topic.