April 11, 2022
While the U.S. Department of Education was conducting a recently completed rulemaking process regarding for-profit colleges and universities, a small cohort of activists were lobbying Congress and the department to make it more difficult for these schools to make the transition to nonprofit status. The critics assert that these transitions are a disaster waiting to happen. The facts say otherwise.
In a world where talent is the currency driving our economy, most employers aren’t asking graduates about the tax status of their alma maters. Yet, while those opposing such transitions seem to focus solely on a university’s tax status, the beneficiaries of these changes – graduates, employers, entrepreneurs, and community members – argue that these conversions only broaden and strengthen America’s system of higher education.
The track record of these schools clearly demonstrates that business conversions to nonprofit entities have helped the institutions in fulfilling their missions, while expanding and enhancing the valuable services they provide to their students and communities. Colleges and universities have made these transitions for a long time as a part of their natural evolution to further their missions.
Schools such as Embry Riddle Aeronautical University, founded by two aviation pioneers, evolved, and became a nonprofit in 1959. This transition helped it become one the foremost aviation technology institutions in the world. In 1963, Johnson and Wales University changed its corporate status to become a nonprofit. Southern New Hampshire University took the same step five years later. Our country benefited from these changes: Johnson and Wales is one of the leading hospitality institutions in the world; Southern New Hampshire is one of the top schools in the U.S. in providing affordable distance education.
Similar transformations have long occurred in other sectors as well. More than 270 hospitals responded to the needs of their communities and changed from for-profit to nonprofit status in the late 20th century. According to most observers, this trend has been a positive transition for our healthcare system.