There is some perception in the for-profit world that should all else fail, becoming a nonprofit can offer salvation.
This fallacy is proven as such whereby Dream Center purchased a number of for-profit educational institutions that had been economically failing. According to the Washington Post,
Dream Center Education Holdings, a Los Angeles-based nonprofit organization, has struggled for two years to transform the flagging for-profit colleges Argosy, South University and 31 Art Institutes, into thriving nonprofit schools. Dream Center has spent months trying to close and sell some campuses, but could not meet its financial obligations and in January entered into receivership -- a form of bankruptcy.
But with apparent failure at this effort, one should wonder what on earth made the board at Dream Center undergo this effort. According to "advocacy" groups:
Dream Center’s purchase of Argosy, South University and 31 Art Institutes campuses was met with skepticism who derided the sale as a means to avoid regulations aimed at for-profit colleges. Turning the schools into nonprofit entities meant they were no longer subject to what’s known as the 90/10 rule, which bars for-profit colleges from getting more than 90 percent of their operating revenue from federal financial aid.
Interesting enough but perhaps not surprising, a visit to Guidestar reveals that no information is available on the nonprofit. This of course should affirm that something was fishy to begin with. Was this whole transaction a ruse just to get the original owners out of huge lawsuits? And how many of the original owners are currently board members? While I certainly can't find more details, the old adage that one should be suspicious of wolves in sheep clothing tolls gently in my mind.