Bill
Bill > S1801
NJ S1801
NJ S1801Establishes process to monitor proprietary institution that converts to nonprofit corporation for transactions that constitute private inurement.
summary
Introduced
01/13/2026
01/13/2026
In Committee
01/13/2026
01/13/2026
Crossed Over
Passed
Dead
Introduced Session
2026-2027 Regular Session
Bill Summary
This bill establishes a process to monitor a proprietary institution that converts to a nonprofit corporation for transactions that constitute private inurement. The bill provides that, if a proprietary institution converts to a nonprofit corporation, the institution is to annually submit its Internal Revenue Service Form 990 to the Secretary of Higher Education for a period of five years following its incorporation as a nonprofit. The bill requires the secretary to annually review the Form 990 to ensure that there exist no reportable incidents that constitute private inurement. The secretary may, upon a finding of a reportable incident, recommend to the Secretary of State that the institution's certificate of incorporation be revoked.
AI Summary
This bill establishes a process to monitor for improper financial dealings when a for-profit educational institution becomes a non-profit organization. Specifically, if a proprietary institution, meaning a business that is owned by individuals or shareholders, converts to a nonprofit corporation, it must annually provide its Internal Revenue Service Form 990, a tax form for tax-exempt organizations, to the Secretary of Higher Education for five years after becoming a nonprofit. The Secretary will then review these forms each year to check for any "private inurement," which refers to transactions where the organization's income or assets benefit individuals in a position of control or influence, rather than serving the organization's charitable purpose. If the Secretary finds evidence of such improper benefit, they can recommend to the Secretary of State that the nonprofit's charter be canceled.
Committee Categories
Education
Sponsors (2)
Last Action
Introduced in the Senate, Referred to Senate Higher Education Committee (on 01/13/2026)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.njleg.state.nj.us/bill-search/2026/S1801 |
| BillText | https://pub.njleg.gov/Bills/2026/S2000/1801_I1.HTM |
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