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The Internal Revenue Service last week determined that Ashford University is exempt from federal income tax. Ashford, which is owned by Bridgepoint Education, is one of several large for-profits that have pursued converting to a nonprofit. Some have criticized the conversions, in several cases raising concerns about structure of the new nonprofits and their corporate holding companies. Grand Canyon University succeeded in making the change last year. The Dream Center, a nonprofit religious organization, acquired several struggling university chains from Education Management Corporation and is now facing bankruptcy. And Purdue University acquired Kaplan University to create a new online, nonprofit institution dubbed Purdue University Global.
IRS approval is a step in Ashford's conversion bid, which still requires a green light from other federal agencies and the university's accreditor. In announcing the planned change last year, Ashford's leaders said the university would be able to better serve students as a nonprofit. The university would be independent from Bridgepoint under the proposed arrangement. And the holding company, which will remain a for-profit, is seeking to join the crowded field of online program management providers.
