US – A New Type of Entity

We posted an articleearlier this week on a symposium hosted by Catholic University in Washington,DC.  During the symposium, RussellSullivan, staff director for the Senate Finance Committee, raised an issuecurrently under consideration by Congress; the creation of a new type of entitysomewhere between tax exempt nonprofits and private taxable companies.  Mr. Sullivan referred to the new choice ofentity as a “for-benefit corporation.”

TheChronicle of Philanthropy reports that an example of the kind of companythat falls into this in-between category are the state-based cooperatives beingcreated to sell insurance under the new healthcare reform legislation.  These cooperatives are not state-ownedentities, but they are also not the usual private-sector driven corporations

Mr. Sullivan statedthat the issue is that the US tax code tries to put companies in one of twobuckets, either for-profit and taxable, or not-for-profit and exempt.  The problem is that profit and social goodare less mutually exclusive than they once may have been and companies are blurringthe lines more as the purposes for which they are organized become increasinglycomplex. 

SS