An Examination of Joint Ventures between Nonprofit Hospitals and For‐Profit Businesses

Kent Swift, Zayed University

Document Type

Article

Source of Publication

The ATA Journal of Legal Tax Research

Publication Date

1-1-2003

Abstract

Nonprofit hospitals have increasingly found that it is to their advantage to enter into joint ventures with for-profit entities as a means of raising capital and/or obtaining expertise. A number of IRS letter rulings, revenue rulings, and court cases have addressed the issue of the types of joint ventures between nonprofit hospitals and for-profit entities that are within the hospital's charitable mission and those joint ventures that cross the line and would cause the hospital to lose its status as a tax-exempt entity under I.R.C. §501(c)(3). An examination of this literature suggests that nonprofit hospitals can avoid jeopardizing their charitable status when entering into joint ventures with for-profit entities by (1) requiring the joint venture operating entity to provide care to a broad segment of the community; (2) maintaining control over the joint venture, preferably by controlling a majority of the positions on the operating entity's board of directors; and (3) crafting joint venture agreements such that they place primary importance on the venture's charitable mission.

ISSN

1543-866X

Publisher

American Accounting Association

First Page

41

Last Page

53

Disciplines

Business

Indexed in Scopus

no

Open Access

no

Link to Full Text

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