Overcoming challenges to tax-exempt status.

The tax-exempt status of not-for-profit healthcare organizations increasingly is being challenged by private, for-profit, investor-owned organizations. Often, the business practices of not-for-profit organizations are virtually indistinguishable from those of for-profit organizations, and not-for-profit organizations sometimes provide less charity and unfunded care than their for-profit competitors. Moreover, the tax subsidies not-for-profit organizations sometimes are used to support activities that compete with those of for-profit organizations. To withstand challenges to their tax status, financial managers in not-for-profit organizations should assume an active role in developing clearly articulated, empirically based information about the extent of community benefit their organizations provide and its value.