Giving Compass' Take:

• At Education Dive, Natalie Schwartz details a recent California bill that monitors non-profit schools who've recently made the transition to for-profit status.

• What can you do to ensure your funding gets into the hands of those who will use it responsibly and effectively?

• Read more about oversight of for-profit and non-profit schools.

California lawmakers recently passed a bill that could make it easier for the state to oversee nonprofit colleges that previously operated as for-profits.

The bill would require colleges that have converted to nonprofits to meet certain criteria before they can receive an exemption from the Bureau for Private Postsecondary Education (BPPE), which oversees private colleges operating in the state.

The proposed legislation, which would take effect in 2022 if signed into law, aims to crack down on nonprofit conversions that use complicated legal structures or include agreements with the former for-profit's owners.

Some large colleges that enroll California students in online programs are in the process of or have already transitioned from for-profit to nonprofit status. However, critics of these deals say they take advantage of loosened standards at the IRS, which approves the conversions, and that the schools are operating as nonprofits in name only.

Their students also have to pay fees that go toward the state-managed Student Tuition Recovery Fund, which is meant to help students financially recover if their institution closed. The fund, however, hasn't collected from students since 2014 because it's barred from holding more than $25 million, according to a 2019 report from The Institute for College Access and Success.

"Although somewhat limited in scope, if signed into law, this bill could impact any institution that has converted from for-profit to nonprofit status in the last decade, or institutions seeking to make that change in the future," Kate Lee Carey, special counsel at the law firm Cooley, wrote in a blog post on Tuesday.

Read the full article about non-profit schools by Natalie Schwartz at Education Dive.