Why Nonprofits Can and Should Make a Profit
A non-profit (sometimes called not-for-profit) differs from a for-profit corporation because non-profits don’t have owners. That’s right, no one owns a non-profit. Compare that with for-profit corporations that have shareholders (or owners). When the company profits, the owners get a piece of the profit. And the purpose of a for-profit company is to increase the profits for the owners.
That is not the purpose of non-profits. Non-profits exist to achieve social goals, not to increase profits for owners. An easy way to remember this is to think of the phrase not-for-profit as missing a few words. Think of it as not–for–an-owner’s–profit.
Just because the purpose of a nonprofit isn’t to increase profits for the owners, doesn’t mean the company shouldn’t focus on its bottom line. After all, a profit is realized when revenue exceeds expenses and that’s goal of every business. Because, frankly, if your expenses consistently exceed your revenue, you won’t be in business for long.