Unfriendly Competition?: For-Profits and Nonprofits

    As nonprofits and for-profits increasingly compete in the same fields, several legal issues are emerging.  Two of the main issues are the following: (1) UBIT and (2) for-profit attempts to limit the market nonprofits can attract.  Nonprofit Quaterly featured an article highlighing this tension, which explored Alabama Dental Association’s (ALDA’s) opposition to the expansion of Sarrell Center, a nonprofit that provides dental treatment to poor children.  ALDA has considered advancing state legislation to “control” the nonprofit, and Sarrell brought a suit against the University of Alabama at Birmingham when it announced its students were no longer available to volunteer at Sarrell clinics.  Even the YMCA has been under attack from for-profit exercise clubs in Idaho.  Ultimately the Board of Equalization decided to impose a 19% tax on YMCA profits.  The issue has arisen in numerous areas, including day care centers, theaters, etc.  The line between nonprofits and for-profits has been overlapping tremendously, and unfair competition appears to be an issue that will persist.  Read more about this issue here.

Khrista Johnson