3 ms·
> "We are turning our non profit into a for profit because we want to make money" isn't legal. Source? The NFL did this because they were already making a lot
by Seattle3503 2y ago
> "We are turning our non profit into a for profit because we want to make money" isn't legal.
Source? The NFL did this because they were already making a lot of money. As I understand it, the tax laws practically required the change.
- jefftk 2y agoThe NFL was a 501c6 trade association, not a 501c3 though?
- Seattle3503 2y agoAh interesting. How are those different?
- jefftk 2y agoThe key thing is that assets of a 501c3 are irrevocably dedicated to charitable purposes, which is not the case for a 501c6. If the NFL had somehow started as a 501c3 before realizing that was a bad structure for their work, the standard approach would be for the 501c3 to sell their assets at fair market value to new for-profit. Then either those proceeds could be donated to other 501c3s, or the old NFL could continue as a foundation, applying those assets charitably. (Not a lawyer, just someone interested in non-profits. I'm on the board of two, but that doesn't make me an expert in regulation!)
- Seattle3503 2y agoInteresting, TIL. That is the basis for why the conversion is illegal?
- jefftk 2y agoSorry, which conversion? If you mean OpenAI, it's not clear that what they are currently planning is illegal. If they do it correctly, the non-profit is fully compensated for their stake in the for-profit.
- swalberg 2y agoThe NFL passes net income back to the team owners. The taxation is generally the owner's problem.
- foobiekr 2y agoOpenAI isn't making money. They are like a giant furnace for investment dollars. Even putting aside that the NFL and OpenAI aren't the same kind of entity, there is also no taxes issue.
- Seattle3503 2y agoThat doesn't explain how the conversion is illegal.