Can a non-profit switch to become a for-profit company?
If so, how difficult is that process?
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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.
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