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Comment by Seattle3503 | Hacker News Reader

> "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.

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The NFL was a 501c6 trade association, not a 501c3 though?

Ah interesting. How are those different?

The 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!)

Interesting, TIL. That is the basis for why the conversion is illegal?

Sorry, 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.

OpenAI 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.

That doesn't explain how the conversion is illegal.

The NFL passes net income back to the team owners. The taxation is generally the owner's problem.

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