For-Profit Grand Canyon University Set To Go Nonprofit

Screen Shot 2016-02-22 at 4.15.29 PMMore than a decade after Grand Canyon University became the first Christian college to get into the for-profit education field, the chain’s operators have announced plans to take the school and its 75,000 students back to the non-profit sphere. 

According to the Arizona Republic, Grand Canyon University — where most of the students attend classes online — is in the process of being sold to a yet-unnamed nonprofit. However, Grand Canyon Education (GCE) would continue on as a for-profit business offering supporting services to the school.

GCU president Brian Mueller says the buyer would likely begin selling tax-exempt bonds to acquire the university’s key assets soon.

“Grand Canyon University would become a not-for-profit university governed by an independent board of trustees,” Mueller tells the Republic. “GCE would become a service technology company … providing services to Grand Canyon University, including technology, marketing, enrollment and student support services under a long-term contract.”

The Republic reports that GCU has been working toward nonprofit status since 2014, when Mueller first outlined plans that would allow the company to reduce its tax bills and avoid the stigma now associated with for-profit colleges.

The deal, which could be finalized by June, would require approval from the Department of Education, the Internal Revenue Service, and Higher Learning Commission, the school’s accrediting agency.

“We are hopeful we will receive the necessary approvals,” Mueller said. “Once the required regulatory approvals are received the (nonprofit) would attempt to raise the financing necessary to fund the purchase of the assets, as well as required cash reserves.”

While it’s not unheard of for a for-profit education company to take its business nonprofit, the Republic reports that splitting a company into nonprofit and for-profit is unusual.

Still, Mueller tells the Republic that the basic relationship between GCU and GCE would be similar to contracts between public universities and private for-profit companies.

BuzzFeed reports that the for-profit portion of the company would continue to recruit students and power its online courses.

There are benefits for colleges turning nonprofit. Last year, the New York Times reported that several college chains have made the switch to running a traditional higher education institution a profitable enterprise in its own.

While transferring to nonprofit status means schools must follow stricter restrictions on moneymaking ventures, some former owners aren’t having trouble with finances.

In some cases, owners have been able to finance the purchase of their for-profit colleges by offering loans and tax-deductible donations to an affiliated nonprofit. The new nonprofit then rents the buildings used for the school from the original owner and more often than not, the management team for the institution remains relatively unchanged.

Grand Canyon University may convert to non-profit by summer [The Arizona Republic]
America’s Most Valuable For-Profit College Has A New Plan To Go Non-Profit [BuzzFeed]