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For-Profit Conversion to Nonprofit

Moving from a for-profit to a nonprofit corporation requires a number of critical steps and considerations. All of your current business assets will belong to the nonprofit corporation you’re converting to and not to the individuals who started the nonprofit. And, even if the corporation fails, these assets will not revert back to you or the individuals since they are no longer under your control. The assets would instead be transferred to another nonprofit according to the “Distribution of assets on dissolution or final liquidation” clause in your state’s Nonprofit, or Nonstock, Corporation Act.

Corey Scott

Believer. Husband. Father of Six. Joshua 24:15. Corey Scott is the Founder and CEO of The 508 Company and has worked with more than 100 ministries and faith leaders since 2022 to help them to establish and operate their nonprofits under Section 508(c)(1)(A) — the right way.

Moving from a for-profit to a nonprofit business requires a number of critical steps and considerations. Which may include:

  • Creating an official Plan of Conversion document that your corporation’s board of directors must adopt and sign
  • All, or most, of corporation’s shareholders must approve the Plan of Conversion
  • Filing a Certificate of Conversion and Articles of Incorporation with your state’s Secretary of State


“The I.R.S. examined 1.4 million individual income tax returns in 2010, about 1 percent of the total number filed. In 2018, the latest year with available data when Republicans started making these claims, audits decreased to 370,000, or about 0.2 percent… The budget office estimated increasing I.R.S. funding would return enforcement to its 2010 levels. Doing so would result in about 1.2 million more audits; of those, 583,000 would target people making less than $75,000.”

The New York Times, “Fact-Checking the Misleading Claim About 87,000 Tax Agents”, November 6, 2022

“…For example, you educate believers on national issues that are central to their belief in the Bible as the inerrant Word of God. Specifically, you educate Christians on what the bible says in areas where they can be instrumental including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations. The bible teachings are typically affiliated with the Republican party and candidates. This disqualifies you from exemption under IRC Section 501(c)(3).”

Stephen A. Martin, IRS Director, Exempt Organizations, Rulings and Agreements