Comment by ryan_j_naughton
22 days ago
No one owns a nonprofit, so your analogy is fundamentally incorrect and based on a misunderstanding of how nonprofits work.
It is actually extremely important that no one “owns” a nonprofit in the way shareholders own a corporation. A nonprofit has no equity owners. It has directors/officers with fiduciary duties, and its assets must be used consistently with its charitable/public-benefit purpose.
But to be clear, that is in no way equivalent, even metaphorically, to it being "owned by the public".
“Public benefit” does not mean “whatever the median taxpayer would vote for” or “whatever the government currently approves of.” It includes many causes supported by small, unpopular, eccentric, religious, ideological, scientific, or advocacy-oriented communities, so long as the organization fits within an exempt purpose and does not operate for impermissible private benefit.
simple examples can easily elucidate this. One can found a nonprofit for a purpose that society generally disagree with. For instance: - a nonprofit to advocate for the rights of hemorrhagic fevers as living organisms - nonprofit museum devoted to preserving a deeply unpopular ideology’s historical artifacts - a nonprofit to educate the public about an eccentric scientific theory - a nonprofit advocating for legal recognition of some fringe moral concern
All of these could be legitimate nonprofits under the law, even though we may deeply disagree with them. This is by design.
IMO, those arguments are grasping for specific definitions of 'ownership'. In its essence, the non-profit structure represents the concept of 'public ownership' to the fullest extent possible under the law. Of course, it's missing some characteristics typically associated with private ownership but it has the core component which is "It should serve the public" which mirrors the idea that a corporation should "Serve its shareholders."
I think if the non-profit retained over 50% of the shares of the for-profit subsidiary, a case could have been made that the public-benefit aspect is still dominant. But with only a 26% stake, that argument cannot be made.