Eli5: How do non-profits make money & pay their employees? Recently saw a video on YouTube where this random dude working for a non-profit for homeless, earns upwards of $200k every year. Where’s the money flowing from? Besides donations of course.
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For an ELI5, non-profit organizations operates the “same” as a for-profit organization. The reason they’re called non-profit is that they don’t have “owners” and profits are not accrued or returned to these owners.
A non profit can do “business” (ie buy and sell stuff), employ people, have organization structures, salaries, bonuses, benefits and set up operations much like any other corporation. Any excess they obtain through donations or their operations (after costs) must be reinvested or held for the benefit of the non-profit.
This is a very simple overview and there are a number of other things related to tax, financial reporting, oversight etc specific to non-profits for them to qualify as non-profits (this is in context of the US but is generally true).
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